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Briefings

Video: What the UK's new Takeover Code rules will mean for public M&A

25 August 2011

The UK Takeover Panel is set to overhaul the rules for the conduct of hostile bids in the UK as part of its much-anticipated plans to change the Takeover Code.

The proposed rules will significantly change the way public M&A is carried out in the UK, and will require both bidders and target companies to adapt their approach to hostile takeovers.

Among the changes, the Takeover Panel intends to curb some of the tactical advantages that unsolicited bidders were perceived to have had in the context of what have become known as virtual bids by introducing an automatic 28-day "put up or shut up" period.

The new 28-day limit will force bidders either to put forward a formal binding offer and follow the Takeover Code timetable, or to withdraw and be precluded from pursuing their target for six months.

The Panel's new rules are also set to prohibit some of the deal protection mechanisms that had become market practice in the UK.

Measures, such as non-solicitation agreements, break fees and matching rights, which are perceived by the Panel to restrict the ability of competing bidders to offer alternative proposals, and the ability of targets to support them, are set to be virtually removed.

In Spotlight on Takeovers, the first of a new series of Clifford Chance videos analysing the most important developments in global M&A, Corporate Partner Patrick Sarch and Senior Associate Isabelle Hessell Tiltman discuss the Takeover Panel's imminent changes to the UK Takeover Code and explain how bidders and target companies should prepare for the new M&A environment.

View the video