AUSTRALIA Law and Practice Contributed by: Alberto Colla, Keith Tan, Hugh McDonald and Dean Zinn, MinterEllison
If and when a definitive, legally binding agree - ment is entered into, disclosure will then be mandatory. For market transparency, the disclo - sure should attach the full form of the agreement (see 5.2 Market Practice on Timing ). 7.2 Type of Disclosure Required Generally, if shares are being issued as con - sideration for a takeover bid or a scheme, pro - spectus-level disclosure is required in either the bidder’s statement (for a takeover bid) or the scheme booklet (for a scheme). This typically entails disclosure of: • a profile of the business operations of the merged group; • the capital structure of the merged group, including pro forma historical financial infor - mation for the merged group; • the composition of the board and senior man - agement of the merged group (or, if that is still to be confirmed, the principles for determin - ing the composition); • the rights attaching to securities in the merged group; and • the risks associated with an investment in the merged group. 7.3 Producing Financial Statements If shares are being issued as consideration for a takeover bid or a scheme, it is common for bidders’ statements and scheme booklets to include pro forma historical financial informa - tion. This provides target shareholders with a clearer hypothetical view of what the financial profile of the merged entity would have been like if the merger had been finalised in the past six months. It is also common for an investigating accountant’s report to be included, providing assurance as to the methodology adopted for the pro forma historical financial information.
In terms of forward-looking financial information, profit forecasts or cash-flow projections are not typically included because they are inherently speculative. As a result, these forecasts are not always helpful and may potentially be mislead - ing unless they are appropriately qualified and/ or accompanied by a sensitivity analysis to show impacts if certain key variables or assumptions change materially or cease to be correct. 7.4 Transaction Documents In a public M&A transaction, the Takeovers Panel stated in 2013 (which has since become estab - lished market practice) that the definitive trans - action document (ie, either a bid implementation agreement or a scheme implementation agree - ment) is to be disclosed in full. This is typically done by attaching it to the ASX announcement released by the target following the signing of the agreement. In a private-treaty M&A transaction involving an ASX-listed entity as the buyer or seller of a discrete business, ASX notes that it is up to the listed entity to lodge a copy of the defini - tive agreement as part of its announcement of the transaction. However, ASX recognises that a listed entity may be reluctant to do this (eg, if, as is often the case, it contains commercially sensitive information). In those circumstances, the listed entity’s announcement of the transac - tion should: • contain a fair and balanced summary of the material terms of the agreement; and • include any other material information that could affect an investor’s assessment of its impact on the price or value of the listed entity’s shares.
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