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Minter Ellison’s expertise covers the full spectrum of M&A transactions, both in the public markets domain and by private treaty. Our M&A lawyers advise across a range of industries, particularly energy and resources, transport, financial services, technology, media and telecommunications, and health and ageing.
We act for a large and established client base of international and Australian clients in both hostile and recommended public company takeover bids, public-to-private transactions, private treaty trade sales and acquisitions, as well as joint venture arrangements, mergers, privatisations and reconstructions by schemes of arrangement. Our M&A team is experienced in developing strategy and working closely with our clients’ financial advisers to successfully execute an agreed strategy. As Asia Pacific’s largest law firm, we have the ability to speedily assemble an M&A transaction team with the depth of resources required to implement transactions efficiently, including those with cross border operations. As well as assisting with clients’ negotiation and execution strategies, we advise on transaction risk identification and allocation. Our internal structure allows us to bring together expert, integrated M&A teams, including lawyers with applicable industry credentials and legal expertise in competition, tax structuring and acquisition finance, as client and transaction requirements dictate. Our tax structuring expertise is one of the deepest in our region, and has benefited many of our M&A clients. In competition law, we have leading experts, one of whom has written the leading textbook in the field that is now in its 30th edition.
In this edition of Mergers & Acquisitions, we look at:
In this article we set out a 'wish list' for ASIC's downstream acquisition policy following its release of Consultation Paper 170 Downstream acquisitions (CP 170).
Takeover proposals excite the equities market, even if they are contingent and leave room for a reduction in bid price. Once a proposal is rumoured or announced, the target's share price rises. For target directors, responding to these dynamics can be challenging.
A public announcement of a proposed takeover bid starts the clock running on a two month limit to make the bid, however a proposal to launch an M&A scheme does not. Conditions can also be used to avoid a firm obligation to bid. While clearly articulated conditionality is an appropriate exception from a firm obligation to bid, the announcement of a proposed scheme rather than a bid should not have such a different consequence.
If a bidder states that it won’t increase its bid price, ASIC’s 'truth in takeovers' policy requires the bidder to stick to its statement. However, the Takeovers Panel has recently allowed a bidder to depart from this type of statement and increase its bid price, but at what cost to the bidder?
Following the call for public comments in April 2011, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) formally promulgated the Foreign Investment Industrial Guidance Catalogue (2011 Revision) (外商投资产业指导目录（2011年修订）) (the "2011 Catalogue") on 24 December 2011. The 2011 Catalogue will take effect from 30 January 2012 and replace the current version, which took effect in December 2007 (the "2007 Catalogue").
An anomaly in the looming PPSA which threatened to affect the ability of a bidder to obtain clear title to shares compulsorily acquired or transferred under a scheme has now been resolved. Regulations recently introduced to address this anomaly prescribe the circumstances in which the security interest will now attach to the proceeds of sale. This gives bidders additional certainty in relation to schemes and compulsory acquisitions of shares.
The ACCC's failed attempt to injunct the proposed purchase by Metcash of Franklins marks the first decided case on mergers under the Competition & Consumer Act 2010 since the AGL case. Emmet J's findings on the 'counterfactual analysis' required under section 50 have significant legal implications for other merger clearances and arguably lowers the bar for the ACCC to clear acquisitions with potentially anticompetitive effects. We look at whether the legal standard under section 50 has been set higher and opened the floodgates for more merger clearances.
Nominee directors can be at risk of breaching their statutory and fiduciary duties as directors of the company to which they have been appointed when their nominator – who is often a major shareholder – is a participant or potential participant in an M&A transaction involving their company. We look at how a proactive, analytical approach and a set of protocols with a clearly defined framework can assist nominee directors in assessing the appropriate course when dealing with company information in such circumstances.
Peabody Energy achieved complete success in its bid for Macarthur Coal after giving strategic shareholder ArcelorMittal the option to keep its shareholding in the target, or to bid jointly with Peabody for the target. For its part, ArcelorMittal exited Macarthur Coal at a premium takeover bid price, after helping Peabody execute the bid. We look at how this outcome differed from what the parties could have achieved under a conventional pre-bid stake sale agreement.
Schemes of arrangement continue to be a popular method of implementing friendly takeovers. This has led to a number of innovations as to how schemes are structured, as well as legal developments on how schemes are regulated. We look at the increased use of call option agreements and voting agreements as a way of giving a bidder in a scheme context increased execution certainty as well as the changes arising out of the recent update to ASIC's Regulatory Guide 60 Schemes of arrangement.
After a hostile bid turns friendly, with the bidder securing the support of the target's board, the bidder, with ASIC relief, can abandon its Chapter 6 bid structure and proceed with a scheme. But what happens if the scheme should then fail? ASIC relief given in the SAB Miller/Foster's scheme requires that the earlier bid must go on.
On 10 November 2011, ASIC issued Regulatory Guide 228: Prospectuses: Effective disclosure for retail investors (RG 228) to addresses previous issues with prospectus disclosure, especially the need to provide retail investors with relevant information in a form that can be readily understood. This Alert highlights the key elements of RG 228.
Last week, ASIC released Consultation Paper 159 Acquisitions approved by members: Update to RG 74 (CP 159), proposing a number of changes to its policy in relation to acquisitions of relevant interests under item 7 of section 611 (item 7) of the Corporations Act. Item 7 provides an exception to the takeovers prohibition where an acquisition of relevant interests otherwise prohibited by section 606 of the Corporations Act is approved by the target’s members in a general meeting.
The Takeovers Panel’s recent decision in BC Iron Limited [2011] ATP 6 is a salutary reminder for bidders and targets in friendly takeovers to ensure the market is fully informed, at the time their proposed transaction is first announced, of all of their break fee and exclusivity arrangements, as well as all of the conditions and termination rights to which they have contractually agreed. This allows the market to make an informed assessment of the level of completion risk of the announced transaction, as well as the nature and scope of any lock-up arrangements. Failure to disclose these matters fully at the time a friendly takeover is first announced means the market won’t be trading the bidder’s and target’s respective securities on a fully informed basis.
The strength of the Australian dollar and recent regulatory developments have given Australian M&A practitioners a few more things to keep in mind. In this edition, we look at the implications of exchange rate movements for takeover bids, lessons from the Panel’s decision on the BC Iron scheme in relation to disclosure of implementation agreements and ASIC’s proposed update to its policy on acquisitions approved by members.
In this edition of Mergers & Aquisitions, we look at:
The Takeovers Panel delivered a number of important decisions in 2010. In this item, we dig down into the numbers and look to see whether there are any trends emerging in terms of the number of cases ending up in the Panel, the kind of matters that can lead to Panel proceedings and the likelihood of the Panel actually taking action.
The Chairman of Listed Co receives a 'love letter' from a private equity fund. How should the board respond? We discuss the ways in which a board can respond to unsolicited proposals to enable them to constructively but assertively manage the transaction process.
What evidence does the Takeovers Panel need before it is prepared to find a relationship of association? We take a look at the Panel's recent decisions in Brockman, Viento and CMI.
The PPSA is currently due to commence later this year. We consider some of the key items that may impact your future M&A transactions. The PPSA is not just for the banks, insolvency practitioners or lawyers!
By far the most important indicator of likely success in a takeover is securing a board recommendation. While it won’t guarantee that a superior bid won’t appear out of the woodwork, it is very difficult for a bid to succeed without a recommendation, particularly when a target has a large number of retail shareholders that will be likely to be looking for guidance from the board.
One of the features of takeovers that makes them interesting to observe is that the parties are constantly trying to anticipate what others will do and work out how best to counter those moves.
The Takeovers Panel’s recent decision in Ross Human Directions illustrates its readiness to intervene where, in a 'friendly' takeover, the deal protections in favour of the bidder in the Implementation Agreement do not strike an appropriate balance between, on the one hand, providing the bidder with a sufficient incentive to proceed with its bid and, on the other, ensuring that the scope for competing bids to emerge is not unduly restricted. If the contractual balance is too far in favour of the bidder, the Panel will be swift to redress that imbalance.
Material adverse change (MAC) conditions are difficult to invoke. In Australian takeover bids, they may also infringe the law if they require the bidder to form an opinion. Reliance on MACs in bids is therefore fraught. More specific out clauses will normally afford the bidder more reliable protection against changed circumstances.
In this edition of Mergers & Acquisitions newsletter, we look at:
When the board of a takeover target has decided to recommend against shareholders accepting the offer that has been made, the target's directors will typically state (whether in the target's statement or other announcement) that the board considers that the offer "does not represent fair value", "undervalues the shares in the target" or "does not adequately compensate shareholders for the value of their investment". In each case, the basis for the criticism is that the offer undervalues the securities in the target that are the subject of the offer (Undervalue Statement).
In this edition of Mergers & Acqusitions, we look at:
The Federal Court's refusal to convene a scheme meeting to consider the demerger of CSR Ltd's sugar business represents an enormous intrusion by the courts into a company's business decisions. Is this a justified intrusion on the grounds of public policy, or has CSR's proposed demerger been unfairly judged on the basis of the James Hardie debacle?