Prior to an approach—offeree preparation

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

  • Prior to an approach—offeree preparation
  • Internal organisation
  • Monitoring the market
  • Defence manual
  • Defence strategy—tactics and legality
  • Engagement with shareholders, media and other stakeholders
  • Profit forecasts, quantified financial benefits statements and asset valuations
  • Offeree open to an approach
  • Possible reasons for offeree welcoming an approach
  • Offeree actively seeking offerors—the formal sale process

Prior to an approach—offeree preparation

This Practice Note, produced with input from Rebecca Cousin of Slaughter and May on market practice, considers the preparatory actions a quoted company may take so as to be able to respond promptly and effectively to a potential bid. It examines the ways in which an offeree can defend itself from unwelcome approaches (whether they are anticipated or not) by ensuring adequate systems and procedures are in place before an offer is made. It also considers the relevant issues where a quoted company decides to actively search for suitable offerors by putting itself up for sale publicly, by embarking on a formal sale process (FSP).

For a discussion of the issues for an offeree to consider following an approach, see Practice Note: Preliminary issues for a target to consider following an approach.

Internal organisation

The offeree should have in place adequate systems and procedures so as to be able to respond promptly and effectively to any bid as and when it materialises. These include:

  1. the creation, maintenance and updating of a defence manual

  2. the appointment of an internal team or committee to both monitor the market and deal initially with an approach or offer

  3. ensuring that the directors are made aware of their responsibilities under the Code and the Companies Act 2006 (CA 2006) in relation to any potential approach—the offeree's legal advisers

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