Takeover Panel tables M&A code overhaul

The Takeover Panel has moved a step closer to drastically overhauling its code as it seeks to remove the "tactical advantage" for hostile bidders targeting UK companies.

The body has been considering changes to the Takeover Code for some time, but insiders said Kraft's controversial takeover of Cadbury last year "crystallised the concerns that were already there".

Yesterday, it published the latest proposals for changes to the Takeover Code, which cover the timetable of deals, the abolition of deal protection, disclosure of advisory fees and greater recognition of employee's interests.

Stephen Wilkinson, the joint global head of M&A at law firm Herbert Smith, said: "There was a sense it was too easy to take over UK companies. These proposals would mark a significant change to the code. We have been through two rounds already and much behind the scenes lobbying, so these proposals are not a huge surprise."

The panel initially set out its response to a public consultation paper on the code in October, when it first outlined the moves designed to reduce the bidding companies' advantage and redress the balance. Since then the ideas have been fleshed out. The most dramatic proposal relates to the timetable of a deal. At the moment targets have to approach the panel to issue the suitor with a "put up or shut up" order. This forces the bidder to table a firm offer or walk away in the following six to eight weeks.

Under the revised rules the clock will start ticking as soon as information about a potential bid leaks, or there is an erratic share price movement, and the bidder is given just 28 days. That bidder's name must also be disclosed.

Paul Whitelock, a corporate finance partner at the law firm Norton Rose, said: "This in effect creates a 'put up or shut up order' from day one."

The panel wants the order to increase the protection for targets against protracted "virtual bid" periods – when bidders express an interest but never make a firm offer, a practice that has grown heavily in the past 15 years. The body also hopes to block most deal protection measures and break fees and increase transparency and quality of disclosure. Included in the increased levels of disclosure will be a publication of the costs for advisory work and the financing fees for the first time.

The panel also wants greater recognition of the interest of the target's employees, including clarity over the bidder's intentions for jobs once a deal has been done, and called for an improvement of the ability of employee representatives to make their views known.

Mr Whitelock said: "Post Cadbury and the panel's previous statement, the tightening up on the rules about holding a bidder to statements it might make as to plans for a target company are as expected." Yet, he added the new rules extend to cover any statements made during the offer and not just the offer document itself, which "means that bidders will have to take care as to any future statements of their plans".

This followed criticism for Kraft over how it handled the £11.5bn takeover of Cadbury. Anger was particularly fuelled when Kraft pledged to reprieve the closure of Cadbury's Somerdale factory near Bristol before a takeover agreement was reached, only to promptly shut the plant after the deal was completed.

Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Life and Style
food + drink
John Profumo and his wife Valerie Robson in 1959
voicesWard committed no crime, and the truth is still being covered up, writes Geoffrey Robertson QC
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
news... you won't believe how bad their skills were

Arts and Entertainment
Mark Wright and Mark Wright
tvStrictly goes head-to-head with Apprentice
footballPremier League preview: All the talking points ahead of this weekend's clashes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas