Public Takeovers Flashcards
When must the Panel be consulted about continuing incentives to Target management?
Which Rule of the Takeover Code stipulates this?
If the Target’s management are to continue to be provided with “special incentives” after a takeover, which are “significant in value” and/or the “nature of the arrangements are unusual”.
Rule 16.
Has the Panel stated whether it expects to be consulted where standard rollover or management incentive arrangements are being offered?
If so, what is their view?
Yes.
They do not expect to be consulted where standard rollover or management incentive arrangements are being offered.
When will a Target’s Independent Advisers be required by the Panel to confirm that the agreed arrangements for incentives for the Target’s management are “fair and reasonable”?
This applies to any share incentives of the Target which continue after the takeover or new incentives put in place for them after the takeover.
Can (or will) the Panel require the Target’s shareholders to give approval to be sought for certain arrangements?
Yes
What is an example arrangements for which the Panel will require the Target’s shareholders to give approval to be sought?
If the management acquire shares up front in the buyer, if the Target shareholders cannot do this.
Do incentives arrangements in the Target need to be disclosed if there has been no need for i) Panel consultation, or ii) shareholder approval?
Yes, any (management) incentive arrangements must be disclosed.
Do (management) incentives need to be stated publicly where they have not been agreed yet?
Yes. Note that this can create a delicate area, as negotiations may be on-going before a final set of arrangements are announced.
In what capacities does the Takeover Code require a buyer to consider employees of the Target?
1) Employees
2) Shareholders
3) Option holders
4) Management (potentially)
What are the Buyer’s obligations in respect of Target Employees?
The Buyer must:
- Consider the effect of the takeover on the Target’s Employees.
- Provide certain documents and information to employees (whether or not they hold shares or options in the target).
Why are there some special considerations regarding SIPs on a public takeover?
As SIPs provide employees with the opportunity to acquire shares upfront (in contrast to share options), which are then held on trust by the Employees.
Should SIP participants be contacted at the same time as other shareholders?
On what basis?
Yes.
As they are shareholders as much as any other shareholders.
What will SIP participants need to instruct their trustee on?
1) Whether to accept the offer in respect of their shares.
2) How to vote (if the takeover is proposed by way of a scheme of arrangement).
3) Which form of consideration (if there is a choice) to accept on their behalf.
What are the general timing issues to consider on a public takeover as regards employee shares?
1) SIP participants need to be contacted as a matter of priority over other employee share plan participants, as the trustee will need to collate responses so that the trustee can in turn give instructions to the offer registrar.
2) (If by way of a Scheme of Arrangement): proposals should be sent to option holders to allow them to reply by the court sanction date.
What Rule of the Takeover Code provides that buyers must make an appropriate offer to safeguard the interested of option holders with rights to acquire shares in the same way as they must make an appropriate offer to safeguard the interests of shareholders?
Rule 15.
What is the meaning of “See Through Value”
See Through Value is the Offer Price less the Exercise Price.
