James Moore: Takeover Panel may have to bare its teeth since playing nice is outmoded

Outlook: Companies pledging commitments may find themselves landed with supervisors to ensure they keep their promises

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The Independent Online

When it comes to takeovers there are lies, damned lies and commitments. At least that has been the case up until now.

Most recently this could be seen in what Pfizer claimed were “binding” commitments to the UK as part of its tilt at AstraZeneca. Except that they weren’t, at least not really, if you read the small print.

Before that it was Kraft and the Cadbury factory that the US food giant said it would keep in the UK. Only for the work to disappear off to Poland (as Cadbury had planned) with the ink on the deal sealing Kraft’s takeover of the chocolate maker barely dry.

Unions, various scientific and medical organisations (in the case of Pfizer), politicians and others have all cried foul at some point in these situations.

So the Takeover Panel is proposing to extend its responsibilities as the City’s referee by drawing a distinction between an intention and a commitment, with only the latter being made binding.

There’s a good reason for this. The Panel wants to leave companies free to talk about intentions, because it wants companies to be free to talk generally.

In the tug of war of a takeover shareholders and others need to be able to hear from both sides – or even all sides if other parties enter the fray – to formulate a clear view.

So in future, they can bang on about their intentions with impunity. However, we’ll be well aware that lofty talk about “intentions” won’t amount to a hill of beans.

Those companies pledging commitments, however, may find themselves landed with supervisors to ensure they keep their promises. There will also be less scope for woolly get-out clauses that could (in theory) make commitments worthless. Such as, for example, Pfizer’s vague talk about fiduciary duty and material adverse change that could both have caused it to renege on its promises to the UK.

This takes the panel into new territory. For a start, it could find itself acting as policeman on behalf of organisations such as unions, possibly even pressure groups, and politicians to whom commitments are often made. It may also have its willingness to bare its teeth tested.

The panel has, up until now, in effect relied upon companies and their advisors playing nice to achieve its aims, despite the fact that this is an increasingly outmoded concept in the City.

It has always had the power to go to court to get its rulings enforced under the Companies Act, but it’s never actually had to do so.

Perhaps that’s partly because those involved in the mergers and acquisitions market have a vested interest in keeping the panel in place, given that the alternative would likely see the Financial Conduct Authority taking up the cudgels.

What happens now, though, if a company wants to, say, close a factory it had promised to keep open after a deal? That’s where things could get interesting.

Because powers the panel has deployed in the past – such as censure – won’t be anything like enough in such a situation.

Chump change maybe, but Microsoft still needs a hit

 “It’s not about the money,” the founder of Minecraft creator Mojang claimed.

Markus Persson now wants to tinker about with “small-scale” web projects.

His share of the $2.5bn (£1.53bn) purchase price from Microsoft will buy an awful lot of tinkering and relieves him of the pressure of being a chief executive, something he never wanted.

Not so Satya Nadella, the Microsoft boss who now needs Minecraft’s developers to come good. The price might be chump change for the software giant, but it’s still a hefty sum to play for a games designer that is still a bit of a one-trick pony.

Upgrades, enhancements, new twists – they could all help keep it on the track. But for Mr Nadella to make it pay, he really needs the firm’s developers to innovate rather than simply updating. He needs a new hit.

Both sides have been quick to stress that Minecraft will continue to be supported on other operating systems, such as Apple’s OSX. As long as Apple plays ball, that is.

But the real prize would seem to be brand-new content exclusive to Microsoft that could drive mobile gamers into its eco-system, and perhaps provide a boost to lacklustre sales of Windows phones.

That’s the big question mark hanging over this deal, particularly given the mixed record of similar transactions involving games designers. But perhaps Scrolls, the new card battle game that’s about to come out of beta, could change that? Has Mr Nadella spotted a hit?

Scots farewell may cause a flutter for the sake of form

 Is the Union between England and Scotland about to come to an end?

The business community in much of Britain might be having kittens over the prospect, but London’s financial markets don’t appear overly troubled. Even with the polls showing the result on a knife edge.

If the Yes campaign squeaks home there may be a flutter, for the sake of form. Dealers may look up from their screens for a few seconds. They may even cast their eyes over some of the more-excitable comments. But then it’ll be back to business as usual.

Unless, of course, a forecaster somewhere downgrades China’s growth prospects by a pip or two. Then it’s all hands on deck, and sell, sell, sell.

Honestly, ain’t globalisation grand?

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