Takeover Panel withdraws timetable concession on Melrose/GKN offer

Takeover Panel withdraws timetable concession on Melrose/GKN offer
Corporate analysis: This news analysis looks at the recent decision of the Takeover Panel to withdraw previous guidance issued on the Melrose/GKN hostile takeover that it would permit the extension of the 21-day period referred to in Rule 31.7 of the City Code to provide further time for any outstanding regulatory conditions to be satisfied.

What was the background?

On 12 January 2018, GKN plc (GKN) announced that it had received a preliminary and unsolicited approach from Melrose Industries plc (Melrose) to acquire GKN. The GKN board unanimously rejected the offer, having concluded that the proposal was opportunistic and fundamentally undervalued the company and its prospects. Following discussions with GKN shareholders, Melrose issued a firm intention announcement on 17 January 2018, structured by way of a contractual offer with the consideration comprising cash and shares.

As GKN operated in the defence sector, the acquisition was conditional upon, among other things, certain regulatory approvals being received from US, German and French regulatory bodies (Defence Conditions).

What concession had the Panel granted?

Under Rule 31.7 of the City Code on Takeovers and Mergers (Code), except with the consent of the Panel, all conditions to an offer must be fulfilled or the offer must lapse within 21 days of the first closing date or of the date the offer becomes or is declared unconditional as to acceptances, whichever is the later. The Panel’s consent will normally only be granted if the outstanding condition involves a material official authorisation or regulatory clearance relating to the offer and it had not been possible to obtain an extension under Rule 31.6 (the Day 6

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