The UK Takeover Code: Proposed Amendments 2014 [Be Careful What You Say!]

Author:Ms Jodie Dennis
Profession:Charles Russell Speechlys LLP


The UK Takeover Panel (the ''Panel'') released Consultation Paper PCP 2014/2 (the ''Consultation Paper'') on 15 September 2014, the aim of which is to introduce a new framework in the Takeover Code (the "Code") for the regulation of statements made by the parties to a takeover offer (i.e. either the offeror or offeree company) which relate to any particular course of action to be taken after the end of the offer period. In particular, the Consultation Paper distinguishes between statements which indicate an undertaking or commitment to take a certain course of action and those that amount to a mere statement of intention.

The deadline for responses to the Consultation Paper passed on 24 October 2014 and we eagerly await the Panel's response statement.

The need for change

The proposed alterations to the Code come in response to Pfizer Inc's recent attempts to takeover AstraZeneca plc in May 2014. In the course of that lengthy process Pfizer Inc issued a number of statements regarding its future plans and ambitions for AstraZeneca plc in the event the takeover bid was successful.

The degree to which such a statement would be binding was a source of considerable public debate and, helpfully, the proposed new Code provisions have now emerged to silence the debate and clarify the implications of such statements. In particular, the Consultation Paper addresses the following issues (amongst others):

the Code does not currently distinguish between a voluntary commitment made by a party to an offer, in which the party states what action it commits to take, or not take, and a statement of intention made by a party to an offer, in which the party states what action it intends to take, or not take; the Code does not currently include provisions relating to either the formulation of a voluntary commitment or the circumstances in which the party making the commitment can prescribe that it should cease to apply; and the Code does not currently include any mechanisms which the Panel can use to monitor the on-going compliance by a party to an offer with any voluntary commitment which it has made, which commitment might be stated to apply for a significant period of time following the conclusion of the offer. The key changes

The core proposal, as might be expected from the Pfizer example given above, is that the Code should distinguish between those statements that might be deemed to be undertakings and those which are mere statements of...

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