We have updated the toolkit to reflect that Takeover Code changes that came into effect on 1 April 2013.
A guide to PLC's materials on takeovers, which includes links to our materials.
Takeover offers for UK public companies (and certain private companies) are governed primarily by the Takeover Code (the Code), which is administered by the Takeover Panel (the Panel). The Code shapes the form, structure and timetable of takeovers in the UK (see The offer timetable below), and provides a framework which is designed to be flexible and to enable the speedy resolution of points of interpretation by consultation with the Panel. For materials that look at when the Code applies, see Application of the Takeover Code below.
The following materials provide an introduction to some of the key considerations on a takeover:
Practice note, Takeovers: overview (www.practicallaw.com/6-107-3605).
Takeover checklist: target (www.practicallaw.com/2-107-3626).
Takeover checklist: bidder (www.practicallaw.com/4-107-3625).
Practice note, Takeover offer or scheme of arrangement? (www.practicallaw.com/1-208-6992). (For additional materials on the structure of the bid, see Scheme of arrangement or offer? below.)
The bidder will need to address a number of issues when preparing a bid, including whether the bid is likely to be recommended by the target company board or to be hostile (see Hostile bids below); also, the source of financing of the bid and the form of consideration and whether there is likely to be a competition or other regulatory authority reference. For materials on these, and other issues that a bidder may need to address at the preliminary stages, see Bid planning: bidder's perspective below.
The target company board will also need to consider a number of issues if it receives a takeover bid, such as whether or not to recommend the bid, the directors' duties, due diligence from the target's perspective and offers of compensation to directors of the target. For materials on these, and other issues for the target board to consider, see Recommended offer: target's perspective below.
For information on recent and proposed changes to the Code, see:
Practice note, Takeover Code: recent and proposed changes (www.practicallaw.com/2-501-8536).
Practice note, Takeover Code: destinations table (www.practicallaw.com/5-507-1037) (19 September 2011).
For deal summaries of recent takeover offers, see What's Market, Public M&A deals.
Note that resources listed below which are followed by a date in brackets are articles and practice notes written as at that date; those materials are not maintained.
We have a number of resources that look at whether, and how, the Code applies to offers for particular target companies, as well as the status of the Code and the Panel for the purposes of regulating takeovers, and other statutory provisions that are relevant for the regulation of takeovers.
Takeovers: overview: The Code (www.practicallaw.com/6-107-3605).
Offers for unquoted companies (www.practicallaw.com/8-107-3765).
Panel on Takeovers and Mergers: Companies Act 2006 (www.practicallaw.com/6-202-4261).
Takeover Code know-how: Introduction to the Code (www.practicallaw.com/2-505-0442).
Takeovers Directive: When the Panel has jurisdiction (www.practicallaw.com/7-202-3483).
The City Code on Takeovers and Mergers (www.practicallaw.com/4-107-3606).
Changes to the UK takeovers regime from 20 May 2006: overview (www.practicallaw.com/1-202-4150) (6 April 2007).
The bidder will need to address a number of key issues when preparing to make a bid for a target company, including the potential structure of the deal (whether to make a contractual offer or whether a scheme of arrangement is a potential structure (see Scheme of arrangement or offer? below)). Other key issues to address at the preparatory stage include the source of financing of the bid and the form of consideration to be offered; whether there is likely to be a competition or other regulatory authority reference; due diligence enquiries; the obtaining of irrevocable undertakings and possible sources of information on the target.
Takeover checklist: bidder (www.practicallaw.com/4-107-3625).
Bid planning and due diligence (www.practicallaw.com/2-107-3607).
Deed of irrevocable undertaking: synopsis (www.practicallaw.com/4-107-3630).
Regulatory and competition issues: takeovers (www.practicallaw.com/2-107-3612).
Takeover Code know-how: Rule 20: Equality of information (www.practicallaw.com/5-501-4805).
Overseas shareholders: takeovers (www.practicallaw.com/5-107-3615) (30 July 2010).
Director's statement of responsibility (www.practicallaw.com/6-107-3634).
Memorandum on directors' duties and responsibilities: takeovers (www.practicallaw.com/6-385-3338).
Consideration and underwriting: takeovers (www.practicallaw.com/4-107-3611).
Cash underpinning agreement: synopsis (www.practicallaw.com/2-107-3631).
Takeover Code know-how: Rule 9: The mandatory offer and its terms (www.practicallaw.com/5-500-6792).
Rule 9 of the Takeover Code: whitewash and waiver (www.practicallaw.com/4-385-0369).
Takeover Code know-how: Appendix 1: Whitewash guidance note (www.practicallaw.com/1-504-9920).
For examples of recent Rule 9 offers, see What's Market, Public M&A: mandatory offers.
The target company board will also need to consider a number of issues if it receives a takeover bid, such as whether or not to recommend the bid, the directors' duties, due diligence from the target's perspective and offers of compensation to directors of the target.
Recommended offers: the target's perspective (www.practicallaw.com/1-107-3622).
Takeover checklist: target (www.practicallaw.com/2-107-3626).
Communications with shareholders and others: takeovers (www.practicallaw.com/9-107-3618).
Takeover Code know-how: Rule 3: Independent advice (www.practicallaw.com/6-384-3896).
Takeover Code know-how: Rule 20: Equality of information (www.practicallaw.com/5-501-4805).
Director's statement of responsibility (www.practicallaw.com/6-107-3634).
Memorandum on directors' duties and responsibilities: takeovers (www.practicallaw.com/6-385-3338).
Once a target board has received a hostile takeover bid, it will need to consider carefully the tactics that it can deploy in a defence of that bid, taking into account the Code and common law restrictions on defensive schemes. We have a number of materials that address these issues.
Preparing for a hostile bid (www.practicallaw.com/5-107-3620).
The offer timetable: The hostile offer timetable (www.practicallaw.com/8-107-3609).
Communications with shareholders and others: takeovers (www.practicallaw.com/9-107-3618).
Defensive tactics and the legal and regulatory constraints (www.practicallaw.com/3-107-3621).
For examples of recent hostile bids, see What's Market, Public M&A: hostile offers.
A potential bidder will need to consider whether a standard takeover offer is the most appropriate method of acquiring the target. It may be that it is necessary or desirable to use a scheme of arrangement under Part 26 of the Companies Act 2006, which is increasingly the case in all-share mergers, particularly where the companies are of a similar size, and on the larger cash deals.
Schemes of arrangement: takeovers (www.practicallaw.com/2-107-4013).
Takeover offer or scheme of arrangement? (www.practicallaw.com/1-208-6992).
Takeover offer and scheme of arrangement: comparative timetable (www.practicallaw.com/5-373-7962).
Takeover Code know-how: Appendix 7: Schemes of arrangement (www.practicallaw.com/6-505-3090).
For examples of takeover bids structured by way of a scheme of arrangement, see What's Market, Public M&A: scheme of arrangement, and for examples of takeover offers by means of a contractual offer, see What's Market, Public M&A: offers.
The offer timetable is strictly regulated by the Code which seeks to ensure that target shareholders are given sufficient information and advice to enable them to reach a properly informed decision and that they have sufficient time to do so, while preventing a target company from having a bid hanging over it indefinitely. The Code prescribes various deadlines for actions by both the bidder (such as publication of the offer document, revisions of its offer and declaring the offer unconditional) and the target (such as publication of new information).
The duties, obligations and liabilities of directors of parties to a takeover bid arise through a mixture of statute, common law and the Code. The Code sets out a number of requirements in relation to the responsibility of directors for the conduct of offers, including on their responsibility for takeover documents and general obligations to ensure equal and fair treatment of all shareholders.
Director's statement of responsibility (www.practicallaw.com/6-107-3634).
Memorandum on directors' duties and responsibilities: takeovers (www.practicallaw.com/6-385-3338).
The Code Rules contain a number of requirements which apply to all information and documents published during an offer period, relating to standards of care and accuracy of information, equality of information and how information and documents are provided to shareholders and other persons with information rights. Other Code Rules cover particular types of announcement (for example, possible offer announcements and firm offer announcements) or prescribe the content requirements which apply to offer documents and target board circulars, as well as to any such revised documents.
Communications with shareholders and others: takeovers (www.practicallaw.com/9-107-3618).
Takeover Code know-how: Rule 19: Information (www.practicallaw.com/0-501-4412).
Takeover Code know-how: Rule 27: Documents subsequently published (www.practicallaw.com/7-502-5209).
Takeover Code know-how: Rule 28: Profit forecasts (www.practicallaw.com/9-502-5213).
Takeover Code know-how: Rule 29: Asset valuations (www.practicallaw.com/2-502-5216).
Checklist of contents of takeover documents (www.practicallaw.com/0-107-3632).
Director's statement of responsibility (www.practicallaw.com/6-107-3634).
Website notification: Takeover Code (www.practicallaw.com/7-385-2418).
Announcing a takeover bid crystallises the obligation to make an offer under the Code (subject to any pre-conditions). Our materials on announcing an offer cover matters such as the content of the press announcement, irrevocable undertakings obtained before the announcement; and typical conditions applied to the bid.
Skeleton board minutes for pre-announcement bidder board meeting (www.practicallaw.com/6-107-3629).
Skeleton press release for a cash offer (www.practicallaw.com/0-107-3627).
Skeleton press release for a securities exchange offer (www.practicallaw.com/8-107-3628).
For recent examples of:
Possible offer announcements made under Rule 2.4 of the Code, see What's Market, Public M&A: possible offer.
Firm offer announcements made under Rule 2.7 of the Code, see What's Market, Public M&A: firm offer.
PLC Corporate's takeover materials cover key matters such as the terms and conditions of the offer, the content requirements for the offer document and target board circular, as well as the timings involved on an offer and the procedure for shareholders to accept an offer.
Checklist of contents of takeover documents (www.practicallaw.com/0-107-3632).
Takeover Code know-how: Rule 24: Offeror documents (www.practicallaw.com/3-502-0954).
Takeover Code know-how: Rule 25: offeree board circulars (www.practicallaw.com/9-502-2790).
Takeover offer and scheme of arrangement: comparative timetable (www.practicallaw.com/5-373-7962).
Takeover Code know-how: Rule 31: Timing of the offer (www.practicallaw.com/5-502-9005).
Takeover Code know-how: Rule 32: Revision (www.practicallaw.com/1-502-9088).
Takeover Code know-how: Rule 33: Alternative offers (www.practicallaw.com/1-503-3288).
Takeover Code know-how: Rule 17: Announcement of acceptance levels (www.practicallaw.com/9-501-3700).
Takeover Code know-how: Rule 34: Right of withdrawal (www.practicallaw.com/9-503-3294).
For recent examples of:
Offer documents, see What's Market, Public M&A: offer.
Scheme documents, see What's Market, Public M&A: scheme of arrangement.
The bidder's right to buy out the minority's shares (squeeze-out right) under section 979 of the Companies Act 2006 is triggered when the bidder has acquired or unconditionally contracted to acquire both 90% of the shares to which the offer relates and 90% of the voting rights in the company to which the offer relates. The right to buy out minorities is generally regarded as very important by bidders who almost invariably (other than for mandatory bids; see Practice notes: Rule 9 requirement to make a mandatory offer above) make the bid conditional on obtaining the acceptances needed to exercise the right.
Buying out minority shareholders (www.practicallaw.com/2-254-3971).
Takeovers: Companies Act 2006 (www.practicallaw.com/1-202-4536).
Compulsory acquisition procedure: Companies Act 2006 (www.practicallaw.com/4-244-0953).
The Code contains restrictions that apply to a bidder and anyone who acted in concert with the bidder after an unsuccessful bid, restricting them from acquiring shares for twelve months after the bid, unless the Panel otherwise consents under Rule 35 of the Code.
PLC Corporate has published a series of notes providing access to know-how and Panel practice relating to the Code Rules, on a Rule by Rule basis. Each of the notes includes links to documents which may help interpret the relevant Rules. Examples of know-how covered include relevant Panel Practice Statements issued by the Panel Executive, selected Panel annual reports, Panel consultation papers and response statements, Panel Statements and PLC materials.
For an index of all notes published, see Practice note, Takeover Code know-how: index (www.practicallaw.com/4-384-3897).
We have also published terms A-J of a planned Takeovers A-Z (www.practicallaw.com/6-518-4072) of key terms used in takeovers and the Code. The Takeovers A-Z is intended to collate, in one place, the relevant Code Rules and Notes on the Rules that cover a particular term, key Panel sources that provide know-how on each term, and relevant PLC materials. Further terms will be added in due course.
Our PLC What's Market (UK) deals database includes summaries of takeovers of UK public companies listed on the Main Market or with shares admitted to trading on AIM (see What's Market, Public M&A).
We also track recent public M&A deals published on What's Market in a separate deals table (see Practice note, What's Market (UK): recent deals published (www.practicallaw.com/6-503-8066)), and we publish trends pieces periodically, analysing key trends on UK takeover deals added to What's Market. For example:
Legal update, Public M&A: Trends and highlights from 2012 (www.practicallaw.com/3-523-2625).
Legal update, Public M&A: Trends and highlights from 2011 (www.practicallaw.com/5-517-0594).
Legal update, Public M&A: Trends and highlights from 2010 (www.practicallaw.com/6-504-3647).
Legal update, Takeovers: trends in recent deals (www.practicallaw.com/6-502-8760).
As well as PLC's resources on UK takeovers, PLC Cross-border has also published the Mergers and Acquisitions multi-jurisdictional guide 2011/12 (www.practicallaw.com/1-103-1825), which is a multi-jurisdictional guide that brings together practical information on topical cross-border M&A issues. It includes country-specific Q&A's on M&A law and practice in each of 33 key jurisdictions, answered by a leading law firm recommended for its M&A expertise in that jurisdiction, and details of recommended M&A lawyers and law firms in jurisdictions around the world following independent research carried out by PLC Which lawyer (www.practicallaw.com/9-501-7487).
For subscribers interested in US takeovers, PLC Corporate & Securities (www.practicallaw.com/6-380-7426) offers a comprehensive range of resources on public mergers & acquisitions from our New York office, and also summarises public M&A deals on the PLC US What's Market database.
The list below provides a selection of useful articles from 2007 to date from our takeovers archive of articles. Note that the following articles are not maintained, so may not reflect the current law and/or market practice.
Takeover Code: the Panel’s review (www.practicallaw.com/8-523-7989) (30 January 2013).
Kewill acquisition: a logistical challenge (www.practicallaw.com/6-521-2862) (26 September 2012).
Public to private: the impact of Takeover Code changes (www.practicallaw.com/3-520-8569) (30 August 2012).
DTZ's takeover process: M&A under the revised Code (www.practicallaw.com/4-517-1594) (25 January 2012).
Takeover Code changes: impact on private equity bidders (www.practicallaw.com/2-507-9308) (1 September 2011).
UK takeover regime review: the devil is in the detail (www.practicallaw.com/1-505-7458) (28 April 2011).
Proposed changes to the UK Takeover Code (www.practicallaw.com/9-504-4872) (17 January 2011).
Greencore/Northern Foods: a recipe for an Anglo-Irish merger (www.practicallaw.com/3-504-0570) (1 December 2010).
Takeover Code changes after Cadbury: a grittier road ahead? (www.practicallaw.com/8-504-0596) (1 December 2010).
Defending a hostile takeover: tactics and principles (www.practicallaw.com/2-502-5495) (30 June 2010).
Cadbury takeover: a krafty manoeuvre (www.practicallaw.com/1-501-5227) (24 February 2010).
Shareholder activism: a modicum of reassurance (www.practicallaw.com/9-500-3174) (1 October 2009).
Contingent value rights: a new takeover currency? (www.practicallaw.com/4-385-2052) (19 March 2009).
Enodis acquisition: cooking up a "premium" storm (www.practicallaw.com/1-384-4638) (22 January 2009).
EDF S.A. recommended offers for British Energy Group PLC: the Partial CVR Alternative (www.practicallaw.com/5-384-0657) (17 November 2008).
The auction of Resolution plc: a successful Resolution for shareholder value (www.practicallaw.com/5-382-7038) (24 July 2008).
US perspective: changing market practice in US takeovers (www.practicallaw.com/8-382-8611) (24 July 2008).
Battle of the banks: RBS wins ABN Amro (www.practicallaw.com/0-381-3289) (24 April 2008).
The scheme: a most convenient and modern arrangement (www.practicallaw.com/5-380-7686) (21 February 2008).
The role of pension scheme trustees in M&A transactions (www.practicallaw.com/4-379-8847) (7 December 2007).
Acquisition of Countrywide: safe as houses? (www.practicallaw.com/5-378-8843) (22 November 2007).
Bridge equity: crossing the finance gap (www.practicallaw.com/4-378-7410) (25 October 2007).
A scheme of two halves: the takeover of John Laing plc (www.practicallaw.com/5-239-5988) (22 March 2007).
Steel wars: the battle for Corus - market practice analysis (www.practicallaw.com/4-217-1960) (8 February 2007).
Alliance UniChem and Boots: a formula for a merger of equals (www.practicallaw.com/2-214-0955) (25 January 2007).