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Flashcards in M&A Deck (21):

What is the scope and purpose of the Takeover Panel?

-independent body
-issue and administer the City Code on Takeovers
-to ensure that shareholders of an offeree company are treated fairly


What is the purpose of CMA?

-promotes competition for the benefits of consumers within and outside UK.its aim is to make markets work well for consumers, business and economy


What may the pensions regulator (TPR) issue in case there is a concern?

-contribution notice: whereby a company must make a payment into the pension scheme
-financial support direction: whereby financial support arrangements must be made (if the company is unable ti fund its won pension scheme)
-restoration order: action to be taken to restore the asses if there has been a transaction at undervalue


eu takeover directive

-implemented in the uk by combination of interim statutory provisions (make city code the law) and amendments to city code
-aims to create a level playing field across the EU to ensure equal treatment of shareholders furing takeovers
-applies to all eu companies


How is PTM funded?

-funded by levies on LSE transactions of greater than 10k (£1 flat fee)


What are the stages in the CMA?

-for CMA, there is a concern for CONSUMERS
-independent of other regulators

Initial assessment: phase 1
If there is realistic prospect of a substantial lessening of competition
Jurisdictions to consider merger if:
more than £70m UK turnover taken over or 25% legal monopoly
CMA has 40 business days to complete the review

if there is a problem, the regulator asks to dump some of their businesses

In depth inquiry (phase 2)
dialogue with the companies, if companies can come up with reasonable solutions

Final decision
This decsion would be binding in a UKL context


What happens if CMA refuses to give permission?

Competition Appeal Tribunal


What is the name of the EU merger control?

Directorate General (DG)


What are the rules of the concentration with community dimension (CCD)?

CCD is satisfied if:

Test 1:
combined global turnover of ore than 5 billion euros AND
EU turnover 250 million euros each

Test 2:
-combined global turnover more than 2.5 billion euros AND
-combined EU turnover more than 100 million euros in at least 3 states (at least 25 million in each EU state)

In these cases parties must obtain DG clearance before proceeding

Once DG gets involves, national EU regulators cease to have power. Non-EU regulators are not affected by this


Contribution notice

TPR says the sponsor has to contribute to the deficit


Financial support notice

parent to support subsidiary scheme


clearance statement

green light, no concern from the regulator


what is the purpose of the takeover code?

-ensure shareholders are treated fairly
-promote an orderly framework in which takeovers are conducted (timetable)
-ensure integrity of financial markets
-based on general principles (6 principles)
-enforcement (may apply to the courts of enforcement of its rules)


Scope of Takeover Code

UK private companies if listed in the last 10 years
transactions such as taking over (gaining control) and consolidating control


what are the 6 general principles of the Takeover Code?

-all shareholders must be treated equally during takeover and protected after takeover
-shareholders must be given sufficient time and information to reach a decision on the bid (min 21 cal days)
-the Board of the company must act in the interests of the company as a whole (no poison pills)
-false markets will not be created in the shares of the predator, target or any other company affected by the bid (no manipulation of share price)
-the predator must announce a bid only after insuring that it can fulfill obligations (cash offers, i.e. if you bioid more than 30% of the stake then you have to fulfill the offer in cash)
-the company must not be hindered in its affairs for longer than a reasonable time (MAX cal 60 DAYS)


What is acting in concert?

as it hits more than 1%, becomes important
-companies within a group (subsidiaries)
-company and its directors (add personal holdings of these directors with that of the company)
-company (assets) and its pension funds
-fund manager (own individual stake) and any discretionary client
-connected adviser and their client
-directors of the company subject to the offer


Rule 2
Announcement rule

-pre-bid environment:
absolute secrecy before an announcement
-to reduce the possibility of false markets based on rumour
*firm announcement (formal letter)
*talks announcement (possible offer)
- a 'no intention to bid announcement' - to put up or shut up (by 28th cal day since initial announcement and stay away fro 6 moths)

The offer period begins with the announcement


Rule 3

Independent advice

-board of the offeree company
-disclose substance (what is found) to shareholders - not only on request - have to make the advice available anyway


Rule 4
Prohibited dealings

-affects offeror and concert parties
-prohibition of the sale of the offeree secs
-prior consent from the Panel AND
-after 24 hour public notice


Rule 5

Restrictions (%) on acquisitions

-acquisition of 30% or more of voting rights
-consolidation of control between 30 and 50%


Rule 6 and 11
Offer consideration and cash offers

Rule 6: when you have a consideration, it has to be high price paid in the last 3 months: NO CASH NECESSARY.

Rule 11: if more than 10% has been acquired when you went for the takeover, then have to offer high ptice in the last 12 months