How are formal sale processes treated under the Takeover Code?

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Published on LexisPSL on 12/11/2018

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • How are formal sale processes treated under the Takeover Code?
  • Panel dispensations
  • Conditions to a potential offeror’s participation in the process
  • Equality of information

Rather than being a passive participant in any potential offer process, an offeree may actively search for suitable offerors by putting itself up for sale publicly, by embarking on a formal sale process. One advantage of doing this is that, potentially, an offeree may have several offerors to choose from and where more than one possible offeror steps forward this may lead to a battle to acquire the offeree and result in higher/more competitive offers being made. Another advantage is that the offeree has greater control over the process.

The concept of a formal sale process was introduced in the City Code on Takeovers and Mergers (Code) in September 2011 as a sell-side mechanism available to offerees with the prior consent of the Panel. To commence a formal sale process, an offeree should announce that it is seeking one or more offerors for the offeree by way of formal sale process before any offeror has announced a firm intention to make an offer under Rule 2.7. The announcement will commence the offer period.

Where a formal sale process has commenced, an offeree will be able to seek dispensation from:

  1. the requirements to identify publicly all offerors that have approached the offeree (see Practice Note: Announcements—Identification of offerors)

  2. the automatic put up or shut up (PUSU) deadline (see Practice Note: Announcements—The 'put up or shut up' regime)

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