10 - Conduct of a Takeover

Question 1

If a takeover goes through, what are the factors that might make it still be deemed unsuccessful?

Answer 1

1. Foreign ownership
2. Hedge funds buying shares to force through the deal
3. Issues with the acceptance condition
4. Cost of advisers
5. Whether takeovers ever make / save money
6. Factory closure which could lead to job losses

Question 2

What are the 3 options that the offeror has if they do not get the 90% threshold by the time of the first closing date?

Answer 2

1. Extend closing date - Rule 31.2
2. Revise the offer - Rule 32.1
3. Allow the offer to lapse

Question 3

What does the client have to do by 8am to comply with the takeover code?

Answer 3

• Rule 17.1

- Announcing the levels of acceptance for the offer by the offeree shareholders

Question 4

What might the effect of the offeror adding more cash to the consideration be and why?

Answer 4

• Offeree shareholders will be taking a risk on the value of the offeror shares being offered
• If cash element is as low as 40%, this is a significant risk.