Hostile takeovers and defence tactics—the legal and regulatory restrictions
Hostile takeovers and defence tactics—the legal and regulatory restrictions

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Hostile takeovers and defence tactics—the legal and regulatory restrictions
  • Brexit impact
  • Code restrictions on frustrating action
  • Legal restrictions
  • Balancing directors' duties and Rule 21.1
  • Defence tactics

This Practice Note, produced with input from Rebecca Cousin of Slaughter and May on market practice, discusses some of the main defensive tactics an offeree might seek to deploy when facing an imminent or actual unwelcome takeover offer and looks at the legal and regulatory restrictions on the taking of defensive action.

When a company is, or predicts that it may be, subject to a takeover offer which is, or may become, hostile, it is likely to seek to employ a number of defensive tactics to either see off the offeror altogether or to encourage the offeror to increase its offer.

Such defensive tactics or frustrating actions are limited by both law and the provisions of the City Code on Takeovers and Mergers (Code).

Brexit impact

The operation of the UK takeovers regime may be affected by Brexit, although none of the government’s or Takeover Panel’s proposed amendments directly impact the treatment of hostile takeovers. For further details of its impact, see Practice Note: Brexit—UK takeover regime.

Code restrictions on frustrating action

The Code contains restrictions on frustrating action, consistent with the EU Directive on Takeover Bids (Takeover Directive), which limit the extent to which an offeree may take action which may frustrate an offer without the consent of its shareholders, and which have particular application in the context of an