EU to curtail 'poison pill' takeover defences

The EU is to help companies to mount pan-European hostile takeovers by outlawing "poison pill" defences that have not been approved by shareholders, under a deal agreed yesterday by the narrowest of margins.

The move opens the prospect of a new round of rationalisation in continental Europe and a boost for the City, which prides itself on its skill in preparing takeover bids.

Yesterday's deal was approved, 8 to 6, in a key committee made up of representatives of member states, the European Commission and the European Parliament. The agreement overcame objections, particularly from Germany, France and Belgium, where there is widespread fear of more bids of the type Vodafone mounted for Mannesmann.

The accord now needs approval from governments and EU parliamentarians over the coming weeks, with a final verdict expected in July.

"This is a crucial piece of legislation for the restructuring of European industry, and so for making Europe the most competitive economy in the world," said the Internal Market Commissioner for Europe Frits Bolkestein.

The rules would limit measures common in some EU countries but prevented in the UK, which are designed to thwart cross-border acquisitions. They will also increase minority shareholder protection by obliging a company seeking to take over another to make an offer for all shares held by minority investors of the takeover target. As a concession to the countries that have led the opposition, the European Commission offered "additional safeguards" for employees in the target company.