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On 21st October 2010, the Takeover Panel published its feedback on its consultation on reviewing the Takeover Code, which resulted due to concerns with the Cadbury-Kraft takeover.  The Panel has proposed changes to mitigate the effect of hostile bids, to improve the offer process and take more account of people affected by takeovers in addition to offeree company shareholders.  Proposed measures include:

  • Further disclosures should be made in the offer documentation with regard to the financial position of the offeror and its group and the financing of its offer, and the offeror's future intentions with regard to the company it is seeking to takeover and its employees;
  • Require potential offerors to clarify their position within a short period of time;
  • Prohibit deal protection measures and incumbent fees other than in certain limited cases;
  • Clarify that the Code does not limit the factors that an offeree company board is able to take into account in giving its opinion on an offer and in reaching a conclusion on whether to recommend a bid;
  • Require the disclosure of offer-related fees with regard to the advisers' fees of both the offeree company and the offerors; and
  • Improve the ability of employee representatives to make their views known.

Some of the more controversial measures suggested in the original consultation document are not going to be taken forward by the Takeover Panel, including:

  • Raising the acceptance condition threshold above '50% plus one';
  • Disenfranchising shares acquired during the offer period; and
  • Providing shareholders in offeror companies similar protections to those extended to offeree company shareholders (although, as noted above, the Panel will be looking at further disclosures as to the financial position and intentions of the offeror.

The Takeover Panel notes in its feedback statement that it will publish at least one consultation paper out in due course on all the proposed amendments.

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