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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.
This week the Australian Government released its hotly anticipated package of reforms in response to the Convergence Review and the Independent Inquiry into the Media and Media Regulation ('the Finklestein Inquiry'). The proposed changes will 'bolt on' additional regulation to the already complex media landscape and principally affect traditional news organisations.
In this edition of Mergers & Acquisitions Newsletter, we look at:
The bare trustee exception is relied on by intermediaries who hold securities for others to avoid having a relevant interest in the securities. We look at cases including the Panel's decision in Knights Capital, which illustrates how reliance on the exception may be unsound where underlying discretionary powers exist - even if they are not used in practice.
The Takeovers Panel has published an Index of Reasons for 2006-2012. In this short note, we outline why it's worth checking out.
The regulation of foreign investment in the agricultural sector is becoming an increasingly prominent issue in Australia public policy debate. In this article we provide an overview of the regulatory regime governing foreign purchases of Australian agribusiness and agricultural land, in contrast to the New Zealand position. We also review the Government and Opposition's stance on foreign investment and how this will underpin the proposed reforms to the regulatory framework governing foreign investment in the agricultural space.
Demergers have become an increasingly popular method for releasing shareholder value in Australia since 1 July 2002 when tax relief was introduced for business restructures undertaken by demerging one or more subsidiaries for commercial reasons. This article touches on a number of key points that companies should keep in mind in relation to demergers, particularly those involving associated acquisition transactions.
Bid conditions are a much scrutinised component of any takeover bid. They must be well crafted so a bidder is protected against adverse outcomes occurring during the bid period, yet sufficiently minimalistic so the bid is not characterised as being too conditional and thereby uncertain. Bid conditions cannot, however, be self defeating or turn on the bidder's opinion, belief or state of mind. In this article we take a look at two of the conditions of Cathay Fortune Investments' takeover bid for Discovery Metals and the issues these two conditions raise.
The Commonwealth Government progressed its agenda to assist in deepening the domestic retail corporate bond market by releasing an exposure draft Corporate Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 on Friday, 11 January 2013. In this alert we examine the features of a 'simple corporate bond' and the mandatory two-part prospectus, and consider the implications of the reforms for the retail corporate bond market.
What's on the cards for Australian markets and companies for the coming year? Read what we think:
Crowd funding is a rapidly evolving form of new capital raising that is likely to be actively embraced by small enterprises. Crowd funding broadly encompasses schemes that seek to raise funds, typically for projects and ‘start up’ companies, through donations from internet users.
The Federal Government has outlined its generally welcoming stance on foreign investment in Australia's agribusiness sector in its recently announced Australia in the Asian Century White Paper as well as its Green Paper on the nation's National Food Plan. In this article we discuss the Government's approach to foreign investment in the context of recent M&A activity in the agribusiness sector.
On 17 October 2012, ASX released a consultation draft of its updated Guidance Note 8 on Continuous Disclosure. ASX's new draft Guidance Note is a welcome step forward for listed entities dealing with M&A issues.
Target directors love to say 'no' in response to takeover proposals, but risk breaching their duties if the approach is not hopeless. In this article we consider the existence of a 'duty to engage' and how this ought to affect target directors.
A recent English case has held that an agreement to pay a prospective bidder a break fee amounted to unlawful financial assistance by 'smoothing the path' to the acquisition of shares – even though there was never any acquisition of shares because of a change in transaction structure to an asset sale, and ultimately a break down in negotiations. Could a similar principle apply in Australia?.
Numerous recent market examples demonstrate the risks that arise when negotiating M&A transactions with foreign bidders. It is important for boards of Australian listed companies to manage their exposure to execution risks when negotiating with foreign bidders. In this article, we explore some of these risks and how they might be appropriately managed.
The influence of social, decentralised and digital media sources is increasing rapidly, the task of a company meeting its continuous disclosure obligations is becoming increasingly complex. This creates a balancing act between immediacy and the quality of information disclosed.
Despite ASIC's calls for the Government to consider abolishing the '3% creep' exception to the 20% takeovers prohibition, recent market examples have demonstrated that a large shareholding is not required in order for a shareholder to control, or have significant influence over, a company. Instead of law reform, we consider that the current principles underpinning public takeover regulation are, in this instance, more than sufficient to deal with any issues arising from unacceptable acquisitions of control.
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 taken a different approach to dealing with this situation that might offer a way forward.
In this edition of Mergers & Acquisitions, we look at:
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.
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.
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.
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.
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.
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?