On 15 May 2024, the Takeover Panel published Panel Statement 2024/14 announcing the publication of Panel Bulletin 7, which discusses provisions in the Takeover Code that require a bidder to make specific statements of intention regarding various aspects of a target's business in the announcement of a firm intention to make an offer and the offer document (see Takeover Code: Rule 19 standards of information, Q&A here).
Under Rule 2.7 and Rule 24.2 Takeover Code, a bidder must explain the long-term commercial justification for the bid and state its intentions regarding specified areas of the target's business, including the continued employment of target employees and employer contributions into its pension schemes. If the bidder does not intend to make any changes in relation to these matters, or if it considers that its strategic plans for the target will have no repercussions on employment or the location of the target's places of business, it must make a statement to that effect. The purpose of these disclosures is to enable target shareholders to reach a properly informed decision on the bid and assist the target board, employee representatives and pension scheme trustees (see Q&A here).
Bulletin 7 highlights that the Executive occasionally hears arguments made on various grounds that a bidder has not formulated any intentions towards the target that require disclosure under Rule 2.7 or Rule 24.2. Examples given in the Bulletin include where the bidder's only intention is to conduct a strategic review in the year after the offer has completed, or where the bidder does not envisage a material reduction in employee headcount.
In the Executive's view, these arguments do not provide an acceptable basis for formulating statements of intention. The Executive expects that a bidder will almost always have developed specific intentions in relation to the matters set out in Note 1(a) on Rule 2.7 and Rule 24.2(a), which must be stated in both the firm offer announcement and the offer document. In exceptional cases where a bidder has no intention to make any changes in relation to these matters, it must make the appropriate negative statement.
Panel Bulletins aim to remind practitioners of how specific provisions of the Code operate in response to issues that the Executive has identified on live transactions. For further information on the nature of guidance and rules which may be given on the Code, see Takeover regulation: overview, Q&A here.
FC Content is being updated to reflect Panel Bulletin 7.
First published on the Corporate News Service on 15 May 2024.
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