Share incentives in quoted companies—takeovers by way of an offer
Share incentives in quoted companies—takeovers by way of an offer

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

  • Share incentives in quoted companies—takeovers by way of an offer
  • What are the offeror's obligations in relation to the target company's share plan participants?
  • Significance of the target's share incentive arrangements for the offeror company
  • Practical steps to be taken by the offeror company
  • Due diligence on target share plans
  • Deciding on the terms of any offer to be made to the target company's share plan participants
  • Determining any processes which need to be in place when administering the share awards
  • Communicating the offer to share plan participants
  • Dealing with awards that are not crystallised, or where the offer is not accepted
  • Proposals for share plan participants
  • More...

What are the offeror's obligations in relation to the target company's share plan participants?

If an offer is made for the shares of a listed company, the offeror is required to make an appropriate offer or proposal to any individuals who hold rights to subscribe for or options over shares of the same class. In the case of employee options, the panel on takeovers and mergers considers that an offer or proposal will normally need to be for no less than ‘see through value’ (being the offer price less the exercise price) (Practice Statement 24 (para 2(a)).

This requirement will include any employees and former employees of the target group who hold outstanding options and awards granted under the target's employee share plans.

All relevant documents and announcements or other information in relation to the offer must, where practicable, be sent to these share award holders at the same time as it is sent to the target's existing shareholders.

When making offers or proposals to share plan participants, the offeror is required to ensure that they are treated equally.

The offer document does not have to include details of the proposals for share plan participants, but it must state that an appropriate offer or proposal will be made to them. The letter that is subsequently sent out to share plan participants which does provide details of the proposals

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