Schemes of arrangement—advantages and disadvantages
Schemes of arrangement—advantages and disadvantages

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

  • Schemes of arrangement—advantages and disadvantages
  • Brexit impact
  • Obtaining de facto control
  • Binding on all shareholders—achieving 100% control
  • Offeree co-operation and involvement
  • Shareholder apathy and opposition
  • Timing and flexibility
  • Competing bids
  • Acquisitions of offeree shares during a takeover
  • Costs
  • more

In recent years, schemes have been the structure of choice for the majority of offerors implementing a takeover despite the prohibition of cancellation schemes in the context of a takeover and the removal of the incidental stamp duty advantages of a cancellation scheme. In 2018, 74% of firm offers were structured as schemes of arrangement and this popularity of schemes was prevalent across all deal sizes. For further details and analysis, see: Public M&A deals 2018—UK––Market Tracker Trend Report.

This Practice Note discusses the advantages and disadvantages, from the offeror’s perspective, of effecting a takeover by way of a scheme of arrangement as opposed to a contractual offer. For a more detailed look at the options available for structuring a takeover and at the principal features of offers and schemes, see Practice Note: Structuring a takeover—offers vs schemes of arrangement, which includes a summary table—Structuring a takeover—offers vs schemes of arrangement—Key advantages and disadvantages of offers and schemes.

Brexit impact

The operation of the UK takeover regime may be affected by Brexit. For the purposes of this Practice Note, the key change is the removal of the ability to passport a prospectus from the UK to the EEA, which may make schemes of arrangement more popular on securities exchange offers where there are offeree shareholders in the EEA. This is because