UK Law and Practice Contributed by: Carly Gulliver, Giles Distin, David Anderson, James Dawson, George Danczak and Elvan Hussein, Addleshaw Goddard
Possible offer or offer discussions In certain circumstances where a leak of the possibility of an offer has occurred or is suspected, a possible offer announcement is required to be made without delay to a regulatory information service (called a “Rule 2.4 announcement”). Those circumstances can arise where there is an untoward movement in the target’s share price (eg, 5% intra-day or 10% since an approach was first made) and/or where there has been public rumour or speculation concerning a pos- sible offer. Before an approach has been made by a bidder, the leak announcement obligation falls on a bidder. After a possible offer approach has been made, the obliga- tion falls instead on a target, unless an approach has been unequivocably rejected by a target board. For these purposes, an “approach” is extremely widely interpreted, and details regarding offer price, con- ditionality and/or timetable are not required to meet the threshold of a communication constituting an approach. 10.2 Prospectus Requirements Prospectus for Securities Exchange Takeover Offers The regulation in this area is subject to change in the near future, with the new rules regarding the issuance of prospectuses to be consolidated within “The Pro- spectus Rules: Admission to Trading on a Regulated Market (PRM) Sourcebook” in January 2026. Currently, for securities exchange offers, the issuance of a prospectus by a bidder is sometimes avoided. Sometimes, but not always, that can be achieved by making the offer by way of a scheme of arrangement rather than by way of contractual takeover offer. As an alternative, certain other restrictions might be capable of being imposed around the share element of the share consideration, to avoid the need for a prospec- tus. Potential Reduction in Prospectuses Under the soon-to-be-adopted PRM Sourcebook, in the case of a securities exchange takeover offer to which the Takeover Code applies, the offer document or scheme circular will normally constitute an “exemp- tion document”, which may avoid the need for the
issuance of a prospectus in respect of the bidder’s share consideration issuance, although that will not be the case where the offer is also a “reverse acquisition transaction” under applicable regulation. Listing Requirements Regarding Bidder Share Consideration For UK takeover offers, there is no requirement for a bidder’s shares offered in consideration to be listed on a UK stock exchange or any other identified markets; indeed, such share consideration will, on occasion, be unlisted. For takeovers offering unlisted bidder securities or bid- der securities listed only on foreign stock exchanges, however, issues might arise regarding the attractive- ness of such an offer to UK-centric target sharehold- ers, who may find they have no market on which to trade such shares or that trading will be difficult for them on foreign markets unfamiliar to them. A recent, albeit rare, example of foreign listed share considera- tion can be found in the announced takeover of tech- nology business TT Electronics plc by SIX-listed Cicor Technologies. In that case, the bidder subsequently decided to also offer a cash alternative. 10.3 Producing Financial Statements Publication of Financial Statements For UK takeover offers, offer documents and scheme circulars must contain sufficient information to allow target shareholders to make an informed decision on the offer made to them. Specific disclosure require- ments of the Takeover Code usually include the dis- closure of at least the two most recent years’ audited financial statements of the bidder and target, and of any interim or preliminary results published since such audited statements. Such statements/results can be disclosed by cross-reference to financial information that has been made publicly available on a website. Auditing Standards Audited information is very often prepared in accord- ance with IFRS for listed companies, but the Takeover Code makes no specific requirements in relation to the auditing standards pursuant to which audited state- ments must be prepared.
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