The Irish Takeover Panel published a consultation paper on 2 February 2012, which proposes a number of changes to the Irish Takeover Act 1997, Takeover Rules, 2007 to 2008 (the "Takeover Rules" or the "Rules").
The Irish Takeover Panel regulates takeovers and certain other transactions involving Irish companies quoted on all markets in Ireland, on regulated markets in the EEA and on the NYSE and NASDAQ.
Relaxation of restriction on offeror's ability to acquire offeree securities after first closing date
An exception to Rule 5.1 of the current Rules, which generally restricts an offeror from acquiring offeree securities either to bring its holding to 30% or more, or, if initially 30% or more, by increasing its holding by 0.05% or more, permits acquisitions if the first closing date of its offer or a competing offer has passed but only if there were no competition or other governmental or regulatory restraints on completion of the offer. It is proposed that the requirement that there are no competition or governmental or regulatory restraints will be dropped.
Mandatory securities exchange offer in certain circumstances
Rule 11 of the current Rules requires that where an offeror or any person acting in concert with it acquires any securities of the offeree during the offer period or where they acquire 10% or more of the securities of the offeree in the 12 months prior to the commencement of the offer period, the offer to be made by the offeror must be in cash or accompanied by a cash alternative. Currently the Rules do not contain any specific requirement for an offeror who has acquired securities of the offeree in exchange for securities to make a securities offer. The Consultation Paper sets out the circumstances where a full securities offer will be required to be made where an offeror has acquired any offeree securities during the relevant period in the same way as an offeree would if it had acquired any offeree securities for cash.
In an attempt to Rule 16 relating to management incentivisation, it is proposed to require the disclosure in the offer document of the details of any incentivisation arrangements with members of offeree management which do not involve offering securities of the offeror.
Equality of information to competing offerors
The proposed amendments to Rule 20.2 seeks to address concerns which a target company may have regarding how information provided by it can be used, where it may not be permitted to impose conditions on how such information can be used on a second or subsequent offeror notwithstanding having imposed them on the first offeror, by setting out restrictions which can be imposed on offerors generally.
Contents of offeree circulars
It is proposed to amend Rule 25 so that the requirement on offerors to disclose in the offer document any known material changes in the financial or trading position of the offeror or make a negative statement as to such changes will be imposed on the offeree in the first response circular.
"No extension" and "no increase" statements
It is proposed to amend Rules 31.5 and 32.2 to permit offeree not be bound to a "no extension/no increase statement" where an offeree board releases material new information after Day 39 of the offer timetable.
Changes to definitions
There is a proposal to delete the definition of "associate" having regard to the considerable overlap in relation to deemed and presumed concert parties in the definition of "acting in concert". If this amendment is made, a limited number of categories of persons who are currently regarded as associates will no longer be required to disclose their interests and dealings in relevant securities of the offeree and (if applicable) the offeror unless they are interested in 1% or more of a class of relevant securities.
Having waited to see the effect of the replacement of the term "market-maker" with "principal trader" had on the UK City Code since 2005, the Panel is now proposing to adopt the term "principal trader" in the Rules. The Panel has warned that it will undertake a careful review of applications for exempt status in respect of principal trading operations, so as to enable it to understand the nature of such operations and so as to be satisfied as to the independence of such operations from their respective advisory and corporate broking operations.
Debt syndication note
A new Note 4 on Rule 16 provides the basic parameters which the Panel would set down (including effective information barriers where a syndicatee has both an equity and debt department involved in an offer) when consenting to a debt syndication exercise to be undertaken during an offer period.
The Consultation Paper also sets out various miscellaneous amendments including notes on Rules 16 and 20.1 which will provide guidance on the approach which the Panel may take in relation to debt syndications undertaken during an offer period.
It is notable that, again, no attempt has yet been made to emulate any of the Cadbury reforms in the UK although we understand that consideration may be given to this in the near future. While it remains to be seen how this will develop, we do not believe that many of the Cadbury reforms, other than the inducement fee ban and certain of the employee related reforms will be proposed by the Irish Panel. In particular, as transaction agreements have not proven to be problematic in the Irish context, on balance we do not expect it to be proposed that they be eliminated for Schemes in Ireland.
As regards the changes actually proposed, many of them are sensible and incremental and we do not expect market opposition. We welcome in particular, the clarity to be brought by the removal of the definition of "associate" and the helpful introduction of a note on syndication, which means that guidance similar to Practice Statement no 25. of the UK Panel is available to Irish practitioners.
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