Changes to Takeover Code come into effect

Last October, the Panel on Takeovers and Mergers (the ‘Panel’) published proposals to make certain changes to the City Code on Mergers and Takeovers (the ‘Code’) relating to offer conditions, especially those which relate to regulatory and merger control clearance, and the offer timetable (PCP 2020/1).

There were two main themes to the proposals, being: (i) to simplify the offer timetable under the Code for contractual offers and (ii) to ensure that the provisions of the Code relating to any official authorisation or regulatory clearance to which an offer is subject are applied consistently across all relevant regulatory regimes and are not limited (as is currently the case) to the UK and EU merger regimes. Following a repose statement issued on 31 March 2021, changes to the Takeover Code provisions on conditions to an offer, particularly those relating to regulatory / merger control clearance, and the offer timetable came into effect on 5 July 2021.

The revised rules apply to all firm offers which are announced (Rule 2.7 announcement) on or after 5 July. Firm offers announced prior to that date (or in competition with an offer announced prior to that date) will continue to be subject to the old Rules.

There were three themes in the consultation:

  • Regulatory clearances – The historical, special status for EU merger clearance and UK Competition and Markets Authority (CMA) clearance has been removed, and the Panel's existing and longstanding policy of allowing a bidder to invoke regulatory conditions only where sufficiently “material” has been restated with additional guidance on when a condition may be invoked;
  • Simplifying the timetable for contractual offers – All offers will run until Day 60 (unless a bidder chooses to implement a 21 day “bullet” offer or otherwise accelerate closing), reflecting the fact that the vast majority of offers run until Day 60 in practice and shareholders ordinarily expect them to; and
  • Introducing the idea of a flexible contractual offer timetable – It will be easier to suspend the offer timetable on a contractual offer, to accommodate regulatory timetables running longer than 60 days and remove some disadvantages of the old fixed contractual offer timetable when compared to schemes of arrangement.

The revised Takeover Code, effective 5 July 2021, can be accessed here.

Published 8 July, 2021

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