Consultation on minor changes to the Takeover Code

The Takeover Panel has published a consultation paper  (PCP 2021/1) in which it is proposing a number of minor changes to the Takeover Code.

It has also announced that, with immediate effect, it will only accept documents in electronic form. It will no longer accept hard copies.

The changes it is proposing in the consultation paper include:

• Announcement of minimum offer consideration – When a potential offeror is publicly identified, it will have to disclose any minimum price (or particular form of consideration) it is required to offer under Rules 6 or 11 of the Code, i.e. as a result of purchases already made (and to announce if, during an offer period, it triggers a requirement to offer a prescribed level or form of consideration).
• Mandatory offers – On a mandatory offer, the bidder and its concert parties will not be permitted to acquire additional interests in target shares in the 14 days before the unconditional date.
• Chain principle – A mandatory offer is required under the so-called chain principle where a person (A) acquires control of a company (B) and in doing so also acquires or consolidates control of a second company (C). In that situation the acquirer must make an offer for the Company C if the interest in shares which Company B has in Company C is “significant” in relation to Company B. The Panel currently also looks in the alternative at whether securing control of Company C “might reasonably be considered to be a significant purpose” of A acquiring control of Company B. The Panel is proposing that it will no longer look at purpose when deciding whether a chain principle offer is required.
• Restrictions following the lapsing of an offer or a no intention to bid statement –  There will be minor changes to the restrictions following an offer lapsing or a bidder announcing it will not make a firm offer, and when a bidder is allowed to make a new offer following such a statement.

The consultation closes on 18 February 2022. The Panel expects to publish the final rule changes in spring 2022, with the changes coming into force one month after publication.