AUSTRALIA Trends and Developments Contributed by: Alberto Colla, Keith Tan, Hugh McDonald and Dean Zinn, MinterEllison
Panel considered two applications regarding the use of standstills in control transactions for ASX- listed targets. The Panel applications In Metallica Minerals Limited ( “Metallica” ), Dia - treme Resources Limited ( “Diatreme” ) made an application to the Panel in relation to a reciprocal standstill arrangement in a confidentiality deed between Metallica and Diatreme for the purpose of exploring a potential merger between the par - ties. Diatreme announced an unsolicited (‘hos - tile’) all-scrip takeover bid for Metallica in Febru - ary 2024 that was conditional on (among other things) Metallica waiving the standstill under the confidentiality deed. In response to the takeover bid, the Metallica Board announced that it may release Diatreme from the standstill at a future point in time if a superior proposal emerged for Metallica’s shareholders – ie, to ‘buy more time’ to allow a superior proposal to emerge. In Westgold Resources Limited ( “Westgold” ), Ramelius Resources Limited ( “Ramelius” ) made an application to the Panel regarding a recip - rocal standstill arrangement between Rame - lius and Westgold and the mutual exclusivity arrangements under an Arrangement Agree - ment between Westgold and TSX-listed Karo - ra Resources Inc pursuant to which Westgold would acquire 100% of Karora via a Canadian plan of arrangement. The Arrangement Agree - ment included an obligation on each of Westgold and Karora not to waive any standstill without the other party’s consent. Among other mat - ters, Ramelius complained to the Panel that the Arrangement Agreement prevented West - gold from releasing Ramelius from its stand - still restrictions vis-à-vis Westgold ( “Ramelius Standstill Restrictions” ) without Karora’s con - sent, which, together with the Ramelius Stand - still Restrictions, constituted an unacceptable
lock-up device and would prevent Westgold from pursuing a potentially better deal for its shareholders with Ramelius because of the requirement to obtain Karora’s consent (which presumably would not be given). In both applications, the Panel declined to make a declaration of unacceptable circumstances and did not disturb the commercially agreed standstill provisions. These decisions, particularly in light of the acquisition of ASX-listed Pendal Group Limited by ASX-listed Perpetual Limited in 2023, raise broader questions as to whether an ASX-listed acquirer must ensure that it has an unfettered fiduciary out provision enabling the acquirer to respond to a competing proposal for the acquir - er that is reasonably likely to result in a supe - rior outcome for the acquirer’s shareholders, as compared to proceeding with the acquisition of the target. The Panel appears to be leaning in the direction of giving primacy to the interests of the listed acquirer’s shareholders however further guid - Major reforms to Australia’s merger control regime are on the horizon. Legislation passed by the Federal Parliament in November 2024 over - hauled Australia’s existing voluntary, informal merger clearance regime and replaced it with a mandatory, suspensory regime that more closely aligns Australia’s merger control practices with those in other key jurisdictions, including the European Union, the United States, and China. The new regime will commence on 1 January 2026, with transitional arrangements commenc - ing on 1 July 2025. ance would be welcome. Merger control reform
116 CHAMBERS.COM
Powered by FlippingBook