Kraft/Cadbury Spur Hostile Takeover Re-Think
As a result of Kraft Food’s takeover of Cadbury, takeover watchdog reveals proposals to make hostile attempts harder in the UK
Thu Oct 21, 2010
The takeover watchdog has unveiled proposals to make hostile bids harder, but stopped short of endorsing the most radical proposals floated since Cadbury was taken over by Kraft Foods.
Britain is one of the world's most open regimes for takeovers and one of the biggest venues for deal making outside of the US.
However the anger over Cadbury prompted some business leaders and politicians to ask if that openness was harming Britain's long-term interests.
That stung the Takeover Panel in June into launching the most far-reaching review of the regime in decades.
Its proposals, unveiled on Thursday, include:
- Increasing protection against "virtual bids" by forcing suitors to clarify their position in a short period of time
- Requiring disclosure of offer-related fees
- Better disclosure about intentions regarding the target company and its employees, and making it easier for employees to raise concerns. "It is clear that some rebalancing of the rules is needed to check the evolution of market practice which has run in favour of the offeror," said Lindsay Tomlinson, chair of the Takeover Panel's code committee.
"We will propose proportionate measures to do this, which do not require changes to law or compromise shareholders' rights."
The two most radical ideas had been to raise the threshold for a successful bid from 50 percent plus one vote and to disenfranchise hedge funds and others who bought stock during a bid battle.
But the panel said they were "almost unanimously rejected" in its survey and were "impractical" given current company law.
The proposals were the panel's first significant step under new Director General Robert Gillespie, a veteran investment banker formerly at Evercore and UBS.
The full document is on the panel's website: www.thetakeoverpanel.org.uk/