Mergers & Acquisitions Newsletter

6 June 2012

In this edition:

'Truth in takeovers': Can the policy inhibit price maximisation?

Does the 'truth in takeovers' policy have the potential to stop auctions? Is this in target shareholders' interests? Does this molly coddling consumer protection policy really need to apply to takeovers? James Philips considers these questions in light of Ludowici.

Resolving valuation impasses in public M&A transactions: the rise of contingent consideration structures

There has been a discernible trend in Australian public M&A transactions of designing flexible consideration structures that endeavour to bridge the gap between the divergent assessments of asset values, potential risks and expected benefits between, on the one hand, a prospective acquirer and, on the other, the target's board.

Strengthening 'put up or shut up' rules for takeovers: Should Australia follow the UK's lead?

There is a growing trend for potential bidders to make 'indicative, non-binding and highly conditional' approaches to commence negotiations with a target without being forced to make a bid. As transactions like the PEP offer for Spotless demonstrate, this can result in negotiations being dragged out publicly for an extended period without a bid being made. The UK has recently taken a different approach to dealing with this situation that might offer a way forward. 

Takeovers Panel re-affirms guidance on rights issues

In two recent decisions, the Takeovers Panel has provided a timely reminder that the potential control impact of a rights issue needs to be at the forefront of the issuer's mind. In particular, an urgent need for funds is not of itself sufficient to justify a rights issue whose structure may result in a person obtaining a substantial increase in control.

Is a control strategy unacceptable if it is designed to take a company outside Chapter 6? 

Do unacceptable circumstances arise when a public company's shareholder base is intentionally – or unintentionally – reduced in number so as to take the company beyond the reach of the public takeovers regime? We look at the outcome of the Takeovers Panel considering this question in Careers Australia Limited.

The Panel's revised guidance on acceptable (and unacceptable) information disclosure in takeover documents

The Takeovers Panel's Guidance Note 18 Bidder's Statements, renamed Takeover Documents (GN18), was recently updated. We highlight the key changes that consolidate market practice and broaden its scope to cover target's statements, expert's reports, premiums and intention statements as well as related marketing material and bidder's statements.