David Prosser: Is Cadbury's takeover law set to melt?
Friday 16 April 2010
Outlook Though Labour will no doubt have been happy this week to see headlines suggesting that its manifesto supports a populist new "Cadbury law" governing takeovers and mergers, what the party actually said was that it was looking forward to the Takeover Panel's report on the issue.
When that report will arrive remains to be seen, given that the panel is currently operating without a permanent leader. Robert Hingley, its last director general, is on his way to a new job at investment bank Lazard, while his replacement, Peter Kiernan, has as yet been unable to take up the post. As a result, Philip Remnant, a former director-general, has been asked to mind the shop on an interim basis. It is difficult to imagine the Takeover Panel making proposals as significant, for example, as raising the threshold needed for a positive takeover vote to two-thirds under an interim leader. Preventing short-term holders of shares – hedge funds and the like – from voting on takeovers would be even more controversial.
Even when Mr Kiernan does take up his post at last, will the Takeover Panel really throw its weight before these reforms? The new director-general will certainly bring very relevant experience to the role. He, too, is a Lazard man, having served as a senior member of its M&A team. One of Mr Kiernan's most important clients of late has been Kraft, the very US company accused of robbing Britain of its heritage with its hostile, but successful bid for Cadbury.
The measures under consideration by the Takeover Panel are not popular in the City – not least because many investors believe the threat of a takeover is a crucial weapon against underperforming companies' boards. The so-called Cadbury's Law may never see the light of day.
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