Public M&A – Takeover Code changes

Changes to make the Takeover Code gender neutral

The Takeover Panel has published Instrument 2021/2. It makes amendments to the Takeover Code replacing gender specific terms with gender neutral terms. The amendments do not materially alter the effect of any of the provisions and so the amendments have been made without formal consultation.

The amendments will take effect on 5 July 2021.

Changes relating to conditions to an offer and the offer timetable

In the latest episode of our public M&A podcast series, we discuss the changes to the Takeover Code which were published in April 2021 (see our blog post here). These changes will:

  • update the rules on regulatory clearances, including removing the historical, special status for EU merger clearance and UK Competition and Markets Authority (CMA) clearance;
  • simplify the timetable for contractual offers; and
  • introduce a flexible contractual offer timetable, to accommodate regulatory timetables which run for longer than 60 days.

These changes will come into force on 5 July 2021.

To listen to the full conversation please visit SoundCloud, Spotify or iTunes.

 

Mark Bardell
Mark Bardell
+44 20 7466 2575

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Robert Moore
Robert Moore
+44 20 7466 2918

Public M&A – Takeover Code changes relating to conditions to an offer and the offer timetable

The Takeover Panel has published its response statement (RS 2020/1) setting out changes to the Takeover Code relating to the conditions to an offer, particularly those relating to regulatory / merger control clearance, and to the offer timetable.

The rule changes will come into force on 5 July 2021 and will apply to all firm offers which are announced (Rule 2.7 announcement) on or after that date. Firm offers announced prior to that date (or in competition with an offer announced prior to that date) will continue to be subject to the existing rules.

The key changes are:

  • Conditions relating to clearance by the European Commission and CMA – The Takeover Code will no longer distinguish between EC/CMA conditions and other merger control clearance conditions, and a bidder will only be able to invoke a condition to an offer relating to merger control clearance in the EU and UK if the circumstances on which it is seeking to rely are material in the context of the offer (as is already the case for merger control conditions in jurisdictions outside the EU/UK);
  • Offer timetable –There will be a number of changes to the offer timetable, including a requirement that all conditions to an offer must be satisfied by Day 60 (rather than Day 81), but there will be a greater ability to freeze the offer timetable if there is an outstanding official authorisation or regulatory clearance.
  • Long-stop date – A contractual offer will have a long stop date, that is a date on which a bidder can seek to lapse an offer if not all the conditions are satisfied. In contrast to the long-stop date on a scheme, it is not an absolute walk right, but a bidder should have the expectation of normally being able to obtain consent from the Panel to lapse its offer where there is a material regulatory issue as at the long-stop date.
  • Guidance on when a condition can be invoked – Panel Practice Statement No. 5 will be updated to set out additional guidance on the factors that will be taken into account in deciding whether a bidder should be able to invoke a condition, in particular where the condition relates to an official authorisation or regulatory clearance.

Further information on the rule changes can be found in our public M&A e-bulletin.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Robert Moore
Robert Moore
+44 20 7466 2918

The regulatory regime for companies following the UK’s withdrawal from the EU

The UK ceased to be a Member State of the European Union on 31 January 2020. A transition period then applied until 31 December 2020. During the transition period, EU law continued to apply in and to the UK, and the UK continued to trade as part of the Single Market.

The Brexit transition period ended on 31 December 2020, with the EU and UK having agreed to the terms of their future relationship through a Trade and Cooperation Agreement – you can read more about the implications of the agreement here.

Retained EU law

As of 1 January 2021, EU law no longer applies in the UK. By virtue of the European Union (Withdrawal) Act 2018, directly applicable EU law in force in the UK at the end of the transition period is retained as part of the UK statute book. Retained EU law has broadly the same status as any other UK enactment and is subject to the same rules/processes for amendment as any other UK primary or secondary legislation (or if made under devolved powers, the rules of the relevant legislature in Scotland, Wales or Northern Ireland).

EU Exit statutory instruments

The Government has made secondary legislation dealing with a range of corporate law matters to ensure that both Retained EU law and existing UK law and regulation (for example that referenced EU concepts or bodies) could operate effectively once the transition period ended. These regulations include:

FCA Rules

The FCA has made a number of changes to its Handbook that apply with effect from the end of the Brexit transition period, including changes to the Listing, Prospectus Regulation, Disclosure Guidance and Transparency Rules.

The impact of the rule changes for UK incorporated companies which have securities admitted only to a UK regulated market will be minimal. Issuers which have shares admitted to a regulated market in the UK and in an EEA state will have to adjust their systems and controls and, for example, make additional notifications to regulators for certain matters, including in relation to PDMR transactions.

Takeover Code

The Takeover Panel has similarly made a number of changes to the Takeover Code that were required as a result of Brexit. The changes will not have a significant impact on transactions.

 

Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Barnaby Hinnigan
Barnaby Hinnigan
+44 20 7466 2816

Roddy Martin
Roddy Martin
+44 20 7466 2255

Public M&A podcast – Takeover Panel consultation

In our latest public M&A podcast, we discuss the consultation paper published by the Takeover Panel (PCP 2020/1), in which it is proposing to amend various provisions in the Takeover Code relating to the conditions to an offer and to the offer timetable.

The key changes include:

  • removing the special treatment afforded to conditions relating to clearance by the European Commission and the Competition and Markets Authority;
  • making it easier for parties to request a timetable freeze;
  • giving further guidance on when a bidder will be permitted to invoke a condition to an offer;
  • only allowing offers to go unconditional as to acceptances when all other conditions have been satisfied; and
  • introducing a long stop date on a contractual offer.

In the latest episode in our public M&A podcast series, Mark Bardell and Antonia Kirkby discuss the proposed changes and what impact they may have on bids in practice.

To listen to the full conversation please visit SoundCloud, Spotify or iTunes.

Our earlier blog post on the proposals is available here.

Our public M&A podcast series

All our UK public M&A podcasts are available on our public M&A podcast page. In earlier episodes we discuss:

  • formal sale processes;
  • standards of disclosure on public M&A;
  • statements of intention;
  • conditions to an offer and when a condition can be invoked;
  • public to private (or P2P) bids;
  • the influence of target shareholders on a bid; and
  • how the UK Takeover Code applies in a distressed situation.

 

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Mark Bardell
Mark Bardell
+44 20 7466 2575

 

Takeover Panel consultation on conditions to an offer and the offer timetable

The UK Takeover Panel has published a consultation PCP 2020/1 in which it is proposing to amend various provisions in the Takeover Code relating to invoking the conditions to an offer, particularly those relating to regulatory / merger control clearance, and to the offer timetable.

The consultation closes on 15 January 2021. The Panel says that it expects to publish a response statement in spring 2021 and that the rule changes will come into force three months later.

If implemented as consulted on, the key points to note are as follows:

Continue reading

Public M&A podcast – how the Takeover Code applies in a distressed situation

The Covid-19 pandemic has hit a huge number of businesses and they will be exploring various options to repair their balance sheet or protect their business.

Those options might include:

  • seeking a full takeover or
  • finding a cornerstone investor for the company

In each case, if the company is governed by the UK Takeover Code, the Code might be engaged and have an impact on the transaction.

In the latest episode of our public M&A podcast series, we look at when and how the Code might apply in a distressed situation, and what relaxations from the usual Code rules may be available.

To listen to the full conversation please visit SoundCloud, Spotify or iTunes.

Links to our previous episodes are below:

 

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Greg Mulley
Greg Mulley
+44 20 7466 2771

Our latest consolidated Public M&A update

We have published an overview of recent developments in public M&A in the UK. It covers recent market activity and the latest developments of interest to public M&A practitioners, including the ruling by the Takeover Panel that a bidder could not invoke a condition to its offer for Moss Bros, and changes to the foreign direct investment regime in the UK.

The update is available here.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Stephen Wilkinson
Stephen Wilkinson
+44 20 7466 2038

Takeover Panel ruling on bid conditions

The Takeover Panel has refused to allow a bidder to invoke a condition to its takeover offer in light of the COVID-19 pandemic.

Brigadier Acquisition Company Limited (the bidder) announced its firm intention to make an offer for Moss Bros Group plc (the target) on 12 March 2020. On 22 April 2020, citing the impact of the COVID-19 pandemic, and the related Government measures, the bidder lodged a formal submission with the Panel Executive setting out the reasons why it believed that it should be permitted to invoke certain conditions (including the no material adverse change condition) to completing its offer.

On 19 May 2020, the Panel Executive ruled that the bidder had not established that the circumstances were of material significance to it in the context of its offer (as required by Rule 13.5 of the Takeover Code) and as such, the bidder should not be permitted to invoke any of the conditions.

Following the Panel Executive’s ruling, the bidder requested a review of the ruling but subsequently withdrew that request.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Robert Moore
Robert Moore
+44 20 7466 2918

Cold shoulder ruling for breaches of the Takeover Code

The Takeover Panel published a cold shoulder ruling (PS 2019/16) in October 2019 in respect of David King, following various breaches of the Takeover Code in the context of the takeover of Rangers International Football Club. The Financial Conduct Authority (FCA) issued a statement confirming that the ruling means that no FCA-regulated firm can act for Mr King on any transaction subject to the Takeover Code for four years.

The breaches of the Takeover Code include:

  • Failure to make a mandatory offer – Mr King failed to make a mandatory offer despite having acquired more than 30% of the voting rights in Rangers, as required by Rule 9 of the Takeover Code.
  • Failure to consult the Panel and misleading the Panel – He failed to consult the Panel about concert party analysis and provided incorrect misleading answers to the Panel Executive during the course of their investigation.
  • Cash confirmation – He failed to include a cash confirmation statement in the announcement of the mandatory offer when it was finally made.

Cold-shouldering is the most serious sanction available to the Panel and this is only the fourth time it has used the power. The ruling serves as a reminder of the importance of consulting the Takeover Panel about any interpretation of the Takeover Code and of being open and co-operative when dealing with the Panel.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Robert Moore
Robert Moore
+44 20 7466 2918

Ben Ward
Ben Ward
+44 20 7466 2093

Stephen Wilkinson
Stephen Wilkinson
+44 20 7466 2038