• Watchdog to shorten offer periods
  • More protection for employees
  • Will require bidders to publish more financial details
A handshake is not enough - Takeover Panel to overhaul UK M&A rules

A handshake is not enough - Takeover Panel to overhaul UK M&A rules

The UK's Takeover Panel has proposed tougher rules for bidding companies and greater protection for employees in some of the biggest changes to the country's mergers and acquisitions regulations for decades.

The Takeover Panel said today (21 October) that it would increase protection for UK-listed companies subject to takeover bids. It described the current system as weighted in favour of hostile bidders.

Potential bidders will have to show their hand sooner under proposed changes to the 'put up or shut up' clause in UK takeover regulations. Bidders would have four weeks from their name being made public to either declare a formal offer or withdraw interest, said the Panel, which monitors the fairness of mergers and acquisitions.
 
Its proposals, if adopted, would mean some of the biggest changes to UK takeover rules for decades. They follow the Takeover Panel's criticism of Kraft Foods' US$17bn acquisition of Cadbury earlier this year.

In a clear rebuff to Kraft's handling of the deal, the Takeover Panel said today that it would better protect employees by forcing bidders to be clearer about their plans for synergies.

Bidders would have to state whether or not they intended to sell or consolidate assets at the target company and would have to stick to this plan for one year from the takeover offer becoming unconditional. During the Cadbury takeover, Kraft initially said that it would keep the UK firm's plant at Somerdale open, but later announced that it would close the facility.

Under the new rules, the Panel also said that it plans to "improve the ability of employee representatives to make their views known".

The watchdog also aims to force bidding companies to disclose more financial information about themselves and how they would finance the deal. Bidders would also have to publish a prospective balance sheet for the combined entity.

The Takeover Panel's recommendations follow a public consultation, completed in July. It said that it would issue a further consultation on the proposals "in due course".

For the full Takeover Panel report, click here.