AUSTRALIA Law and Practice Contributed by: Alberto Colla, Keith Tan, Hugh McDonald and Dean Zinn, MinterEllison
5.2 Market Practice on Timing Market practice on the timing of disclosure sometimes varies from the legal requirements. For example, many target boards elect to vol - untarily disclose the receipt of a non-binding indicative proposal. The usual rationale is that: • this signals to the market that the company is potentially in play, generating the potential for competing proposals to emerge; and • publicly announcing the receipt of an indica - tive proposal and its price may neutralise the pressure tactics that the prospective acquirer may otherwise use (eg, leaks to key share - holders and/or the media), and it puts the onus on the prospective acquirer to firm up its approach. 5.3 Scope of Due Diligence The scope of due diligence generally extends to financial, operational, legal, and regulatory mat - ters. An acquirer will focus its due diligence on areas of the target’s business which are of spe - cific concern or importance to it. These include the target’s capital structure, key contracts, real property ownership and/or occupancy arrange - ments, intellectual property, labour law (employ - ment) arrangements, debt financing and associ - ated security arrangements, litigation exposure, and regulatory compliance issues. For a Target Listed on ASX If the target is listed on ASX, there is typically a large volume of public filings and other publicly available information that a prospective acquirer can review beforehand. If the target agrees to allow the prospective acquirer to undertake due diligence, this will entail access to the target’s non-public information. Access to that informa - tion is intended to allow the prospective acquirer to confirm matters already identified in its prior due diligence review of the target’s publicly
available information and/or to close any specific information gaps. 5.4 Standstills or Exclusivity Standstill Restriction An ASX-listed target that agrees to provide a prospective acquirer with due diligence access to its non-public information will typically insist that the prospective acquirer agrees to a stand - still restriction. This precludes the prospective acquirer from acquiring any (further) target shares other than through a transaction structure that is publicly recommended by the target’s board or with the target board’s consent. Sometimes, other exceptions are negotiated. The Takeovers Panel’s expectation is that standstill restrictions should not exceed 12 months. Otherwise, they unduly inhibit a potential change of control of the target. The Takeovers Panel has also confirmed, through its 2024 decisions in Metallica Miner - als Limited and Westgold Resources Limited, that it is unlikely to interfere with commercially agreed standstill provisions to enable a party to be released from a standstill in circumstances where commercial situations have developed or changed following agreement of the standstill or despite no confidential information having been provided. Exclusivity In “friendly” takeover of an ASX-listed target, the prospective acquirer will, as part of its non- binding indicative proposal, usually request a period of exclusive due diligence access to firm up its proposal. Whether exclusivity is granted is a matter for the target board to assess. This entails evaluating whether other interested par - ties could likely emerge, as well as the overall attractiveness of the indicative offer.
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