Kraft takeover of Cadbury – Catalyst for consultation on proposed amendments to the Takeover Code


Kraft takeover of Cadbury – Catalyst for consultation on proposed amendments to the Takeover Code

You may remember the public (and Trade Union) furore over Kraft’s takeover of Cadbury. The Takeover Panel has recently published a consultation on proposed amendments to its Takeover Code, which have the aim, among other things, to give greater recognition of the interests of offeree company employees.

On 21 October 2010, the Code Committee of the Takeover Panel (the “Code Committee”) published a Statement (“Statement 2010/22”) setting out its response to a public consultation paper (“PCP 2010/2”), published on 1 June 2010, which had sought views on various suggestions for possible amendments to the Takeover Code (the “Code”).

The Code Committee concluded that amendments to the Code should be proposed in order to:

(a) increase the protection for offeree companies against protracted “virtual bid” periods by requiring potential offerors to clarify their position within a short period of time;

(b) strengthen the position of the offeree company by:

(i) prohibiting deal protection measures and inducement fees other than in certain limited cases; and,

(ii) clarifying that offeree company boards are not limited in the factors that they may take into account in giving their opinion and recommendation on an offer;

(c) increase transparency and improve the quality of disclosure by:

(i) requiring the disclosure of offer-related fees; and

(ii) requiring the disclosure of the same financial information in relation to an offeror and the financing of an offer irrespective of the nature of the offer; and

(d) provide greater recognition of the interests of offeree company employees by:

(i) improving the quality of disclosure by offerors and offeree companies in relation to the offeror’s intentions regarding the offeree company and its employees; and

(ii) improving the ability of employee representatives to make their views known.

The Full consultation can be viewed here:

Philip Henson, Partner in Bargate Murray.

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Filed under Ch ch ch changes, City Regulation/Risk/FSA, Politics

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