Irrevocable commitments and letters of intent
Irrevocable commitments and letters of intent

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

  • Irrevocable commitments and letters of intent
  • Brexit impact
  • Code definitions
  • Irrevocable commitments and letters of interest
  • Acting in concert
  • Interests in securities
  • Types of irrevocables
  • Giving and accepting irrevocables
  • Withdrawing from an irrevocable
  • Advantages and disadvantages of irrevocables
  • More...

This Practice Note examines the law and practice on giving irrevocable commitments or undertakings or letters of intent in the context of a public company takeover (whether by way of contractual offer or scheme of arrangement) as governed by the City Code on Takeovers and Mergers (Code). It covers the differences between irrevocables and letters of intent and the main advantages of deploying one form over the other.

Irrevocable undertakings to accept an offer are normally sought by an offeror from significant offeree shareholders immediately prior to the announcement of a firm intention to make an offer (Rule 2.7 announcement), so as to secure as much comfort as possible that the offer will be successful. They enable the offeror to show it has substantial support for its offer as soon as it is announced and may also assist the offeror in obtaining the recommendation of the offeree board.

Letters of intent are usually obtained as an alternative to irrevocable undertakings. Institutional shareholders, in particular, may be unwilling to contractually commit to one offeror, either as a matter of policy or if there is a competitive situation and the possibility of a higher offer being made. The shareholder might, however, still wish to express its support for one offer/potential offer as opposed to another.

Brexit impact

The operation of the UK takeovers regime has been affected by Brexit, although

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