Post-offer restrictions under the Takeover Code
Post-offer restrictions under the Takeover Code

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

  • Post-offer restrictions under the Takeover Code
  • Brexit impact
  • Rule 2.8: Statements of intention not to make an offer (6 month rule)
  • Rule 12.1: Offer lapsing following a CMA reference or EC proceedings
  • Rule 35.1: Withdrawn or lapsed bid (12 month rule)
  • Making a single confidential approach during a restricted period
  • Restrictions on acquisitions of shares

In order to effectively and fairly regulate takeovers of public companies, the City Code on Takeovers and Mergers (Code) sets out a very clear timetable for steps to be taken by the offeror and the offeree as the bid progresses from initial announcement through to the final settlement of consideration if the bid is successful.

If a potential offeror makes a 'no intention to bid' statement, or a bid made by an offeror lapses, is withdrawn or otherwise fails, it is equally important that the parties clearly know what they may or may not do. It is especially important that the offeree is able to get on with its business without unnecessary uncertainty or further disruption.

This is inherent in General Principle 6 of the Code:Code, General Principle 6

'An offeree must not be hindered in the conduct of its affairs for longer than is reasonable by a bid for its securities.'

This Practice Note summarises the key restrictions imposed under the Code:

  1. on a potential offeror under Rule 2.8 following its making of a no intention to bid statement—Rule 2.8: Statements of intention not to make an offer (6 month rule)

  2. on an offeror under Rule 12 following a reference to the Competition and Markets Authority (CMA) or the initiation of proceedings by the European Commission (EC)—Rule 12.1: Offer lapsing following a CMA reference or EC proceedings

  3. on an offeror under Rule 35 on the lapse, withdrawal or other failure of its offer it has made—Rule 35.1: Withdrawn or lapsed bid (12 month rule)

It also examines the circumstances in which these restrictions will cease to apply and where the Takeover Panel (Panel) may