Miscellaneous changes to the Takeover Code published

The Takeover Panel has published two response statements (RS 2021/1 and RS 2022/1) following its recent consultations on various miscellaneous amendments to the Code.

The changes will take effect on Monday 13 June 2022.

The rule changes 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, that 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 (or the expiry of an acceptance condition invocation notice).
• 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, A must make an offer for Company C if the interest in shares which Company B has in Company C is “significant” in relation to Company B. In determining the significance of Company C to Company B:
  • the Panel will no longer look at whether securing control of Company C “might reasonably be considered to be a significant purpose” of A acquiring control of Company B; and
  • Company C will be viewed as significant to Company B if it represents more than 30% of the value of Company B. This is a reduction from the current threshold of 50%.
• Restrictions following the lapsing of an offer or a no intention to bid statement – There are minor changes to the restrictions following an offer lapsing or a bidder announcing it will not make a firm offer and the circumstances in which a bidder will be allowed to make a new offer following such a statement.
• Purchases of target shares by a bidder during an offer period – The prohibition on a bidder and its concert parties acquiring target shares through an anonymous order book system, unless it can be established that the seller is not an exempt principal trader connected with the bidder, is being deleted. When the rule change comes into effect, the Panel Executive will publish a Practice Statement in relation to purchases of target shares by a bidder during an offer period.