UK Law and Practice Contributed by: Federico Fruhbeck, Alice Brogi, Alex Bluett and Gisele Zouein, Gibson, Dunn & Crutcher LLP
porate poison pill-type defences in their governance documents. 4.11 Additional Governance Rights If a bidder cannot obtain 100% ownership of a target as a result of a contractual takeover offer (it being noted that a bidder will obtain 100% ownership of a target if an offer is successfully implemented pursu- ant to a scheme), the governance rights it obtains in respect of a UK company will be largely dependent on whether it holds more than 50% or at least 75% of the target’s voting rights. With more than 50%, the bidder will be able to, for example, remove and appoint directors and audi- tors. With 75% or more, the bidder will be able to, for example, delist the target, amend its articles of asso- ciation, disapply pre-emption rights and re-register as a private company. 4.12 Irrevocable Commitments Bidders will customarily seek irrevocable commit- ments or non-binding letters of intent from the direc- tors and principal shareholders of the target to sup- port the transaction. Bidders will often seek “hard” irrevocable commit- ments from director shareholders to vote in favour of the scheme or to accept the contractual takeo- ver offer. Depending on the circumstances, principal shareholders may only be willing to provide “soft” irrevocable commitments providing for an “out” if a better offer is made, “semi-hard” irrevocable commit- ments providing for an “out” if a better offer above a specified threshold is made, or merely a non-binding letter of intent. 4.13 Securities Regulator’s or Stock Exchange Process The offer or scheme document does not require Take- over Panel approval, but a copy along with specific checklists must be shared with the Panel. Consulta- tion with or consent from the Takeover Panel may be necessary for certain Takeover Code matters. In a scheme of arrangement the scheme document does, however, have to be filed with the court, nor- mally at least a week before the court hearing to con-
vene the scheme meeting of shareholders. Following the hearing, the scheme document and the notice of meeting are sent to target shareholders. For a securities exchange offer, the FCA must approve the prospectus or exemption document if required (see 8.2 Prospectus Requirements ), a process typi- cally taking six to eight weeks. The Takeover Code sets detailed timelines for contrac- tual takeover offers and schemes of arrangement. If a competing offer arises, the timetable for both offers generally starts from the new competing bidder’s offer document publication date. A bidder may issue an “acceleration statement” to expedite the offer condi- tions’ satisfaction or waiver date. For competing offers under a scheme, consultation with the Takeover Panel on the applicable timetable is required. 4.14 Timing of the Takeover Offer On a contractual takeover offer, all conditions must be satisfied or waived, or the offer must lapse, by the 60th day following the publication of the offer docu- ment. However, the Takeover Panel can agree to a suspension of the offer timetable from the 37th day at the joint request of the bidder and the target or, if one or more of the outstanding conditions relates to an official authorisation or regulatory clearance that the Takeover Panel considers to be “material”, at the request of the bidder or the target. On a scheme of arrangement, the court hearing to approve the scheme will only take place once the shareholders have voted to approve the scheme and all regulatory and other conditions have been satisfied or waived. For both contractual takeover offers and schemes of arrangement, the bidder must provide for a “long-stop date” by which the acceptance condition, together with all conditions relating to an official authorisation or regulatory clearance will need to be satisfied. The long-stop date can be extended by the bidder with the consent of the Panel and/or the target.
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