UK Law and Practice Contributed by: Carly Gulliver, Giles Distin, David Anderson, James Dawson, George Danczak and Elvan Hussein, Addleshaw Goddard
is not the norm. Stakebuilding can have a variety of implications on the pricing, terms, timing and deliver- ability of any subsequent formal offer. Various disclo- sure obligations can arise, depending on the size and timing of any stakebuilding. Stakebuilding Outside of a Formal Offer Stakebuilding in UK incorporated companies, whether by a bidder or by another party, will be publicly dis- closable at the 3% level and any whole percentage above it. Such disclosures must be made to a UK issuer as soon as possible following a trade but in any event within two trading days of it. For Main Market listed companies, disclosure must also be made to the UK’s Financial Conduct Authority. It is important that bidders are mindful of the mandatory offer rules (see 6.2 Mandatory Offer ). Stakebuilding During Offer Periods Any stakebuilding by a bidder, target or person inter- ested in 1% or more of a company’s shares, during an “offer period” (as defined in the UK Takeover Code) will require disclosure under Rule 8 of the Takeover Code, by no later than 12pm on the business day fol- lowing the date of dealing. Ordinarily, an acquirer will not need to state the reason for its share acquisition(s) nor its plans for the target company. Later in the pro- cess, if a formal takeover offer is announced, a bidder will need to state publicly its plans for the target busi- ness should its takeover complete. Put Up or Shut Up Periods Once the possible interest of a potential bidder in making an offer is publicly announced, there is a requirement under the Takeover Code for a bidder to either announce a firm intention to make an offer (in accordance with Rule 2.7) or announce that it does not intend to make an offer (in accordance with Rule 2.8) by no later than 5pm on the 28th day following the date of the announcement in which the potential bidder is first identified. This 28-day “put up or shut up” period can be extended only with the consent of the target board in consultation with the UK Takeover Panel. 6.2 Mandatory Offer Under Rule 9 of the Takeover Code, if a person acquires interests in shares which, together with interests held
by its connected parties (“concert parties”) carry 30% or more of the voting rights of a company or, if already interested, together with its concert parties, in a posi- tion of between 30% and 50% of a company’s voting rights, the person then acquires any further interests in voting rights of the company, a mandatory bid obliga- tion is triggered to make a cash offer to all remaining shareholders. A bidder and its concert parties should generally be careful in respect of stakebuilding since there are various other rules setting price floors and similar as a result of share acquisitions. 6.3 Transaction Structures An acquisition of a public company in the UK will usu- ally be carried out using two alternative structures. Takeover Schemes of Arrangement Court-sanctioned schemes of arrangement are fre- quently used. This is a process initiated and led by the target company, and requiring: • approval by a majority in number representing at least 75% in value of the target shares voting at a court-convened shareholder meeting; and • sanction by the court. Once the scheme is sanctioned by the court and made effective, it becomes binding on all target sharehold- ers. Contractual Takeover Offers A contractual takeover offer arrangement (akin to a “tender offer”) is another structure used for an acquisi- tion of a public company in the UK, whereby the bid- der makes an offer directly to the shareholders to con- ditionally purchase their shares, with such purchases to complete on the offer becoming unconditional. This is less commonly used, and usually only in hostile, unsolicited and/or competitive takeovers. Merger Regulations The UK does not have a domestic merger regulation regime akin to that available in the EU. 6.4 Consideration and Minimum Price Cash Offers Acquisitions of UK public companies in the technol- ogy industry are typically structured as cash transac-
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