Share incentives considerations on a public-to-private takeover
Share incentives considerations on a public-to-private takeover

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

  • Share incentives considerations on a public-to-private takeover
  • Structure of public-to-private takeovers
  • Regulatory regime—is the Takeover Code relevant to the transaction?
  • Impact of the transaction on share incentives of the target company
  • Alternatives and considerations for dealing with share incentives of the target company
  • Corporation tax deduction
  • Share incentives for the group's employees post-deal
  • Employee expectations, shareholder concerns and regulatory regime
  • Designing the right share incentives—business objectives
  • Creating an internal market for the company's shares
  • More...

Structure of public-to-private takeovers

A public to private transaction is one where an unlisted company acquires a listed company, so that the target company becomes privately owned as a result. These types of transaction occur most commonly on a management buyout, where key executives of the listed company join with a private equity house in order to acquire the listed company. The acquisition will usually be structured as either:

  1. a court sanctioned scheme of arrangement of the listed company, or

  2. a general offer for the listed company's issued share capital

Typically, a newly incorporated company will be used as the acquisition vehicle.

The target listed company is very likely to have share incentive schemes in place. They may have extended such schemes not only to key executives but also to the wider workforce. The acquiror company will want to ensure that it acquires all of the existing shares in the target listed company under the transaction. Therefore, the treatment of employees' outstanding rights to acquire the target listed company's shares will need to be addressed by the offeror company as part of the transaction. It is unlikely that the acquirer will want employees to acquire shares in the target company post completion of the transaction and therefore it will want to:

  1. ensure that the employees' rights to acquire the target company's shares crystallise on or before completion

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