The Panel's ruling is the latest twist in an eventful takeover and will cause embarrassment to the Triplex Lloyd camp, which has still to decide whether to trump an pounds 80m management buy-out led by Andrew Cook, William Cook's executive chairman. Triplex's takeover offer values William Cook at pounds 73.8m.
"It is reprehensible, as in this case, intentionally to leak to the press during an offer a letter which contained references to a piece of confidential information," the Takeover Panel said. "Accordingly, both Triplex Lloyd and Citigate are criticised.
"Companies or their representatives and their advisers must take extreme care in discussions with journalists."
Triplex and Citigate were found to have breached Rule 20.2 of the Takeover Code, which concerns the "equality" of availability of information between rival bidders. However, the Panel exonerated Schroders, the merchant bank advising Triplex Lloyd. It is understood that Schroders only discovered that Triplex Lloyd and Citigate had agreed to leak the letter after it had already been shown to the press.
Both Triplex Lloyd and Citigate accepted the Panel's decision and no appeal is planned.
The Panel said that on 30 January Triplex Lloyd's solicitors wrote a letter to the DTI which made reference to some of the information passed to it by William Cook. The Takeover Panel said later that day, Citigate showed journalists at two national newspapers a draft of the letter, adding that Citigate was under instructions from Triplex to do so.
The next day the Financial Times and the Guardian quoted from a letter addressed to the DTI asking it to look into discrepancies in trading forecasts made by William Cook shortly before Triplex tabled its bid.
The reports alleged that the DTI had been formally asked to open an insider dealing inquiry into William Cook. The request was said to centre on William Cook's decision to buy back 5 per cent of its shares in October, just three days after issuing a downbeat interim trading statement.
Six weeks later, after Triplex Lloyd launched its hostile bid, William Cook had become more confident about its prospects. The letter reportedly asked Ian Lang, Trade and Industry Secretary, to make an investigation under the 1985 Companies Act.
Details of the financial information stated by William Cook in a memo to its bankers in September emerged after Mr Cook unveiled his MBO plan a fortnight ago. A document passed to the DTI prepared by William Cook to help secure a pounds 22.5m credit facility appeared to show the company forecasting increases in profits and turnover for the year to March 1997. The letter questioned whether this was inconsistent with William Cook's interim statement.
William Cook acknowledges a request has been lodged with the DTI to investigate the company but denies impropriety.
Comment, page 19