After reviewing amendments to takeover rules taken in 2011, a UK government panel said the revisions were effective despite lawyers' criticisms that they overprotected target companies from acquisitions.
These changes included the early naming of bidders; a “put up or shut up” regime (which starts a 28 day clock for potential bidders to make an official offer); greater disclosure on bidders' financing arrangements; and the removal of bidders’ rights to agree break-up fees.
The panel’s review argued that the “put up or shut up” period was successful, giving the target more control over the “period of uncertainty and disruption”. But a client memo from SJ Berwin indicated that at least 15 bidders out of 39 have had to request extensions, suggesting that the 28-day period is too short, especially for private equity firms who need to put together finance packages.
Selina Sagayam, an M&A lawyer for Gibson Dunn & Crutcher, also noted in a statement the time-frame could be disadvantageous: “’Put up or shut up’ conditions mean that bidders have been put off progressing bids which they think they won’t be able to deliver on time.”
The panel did, however, make one concession relating to market flex disclosure, which allows the issuers of debt finance to change previously agreed finance terms to syndicate a deal. The panel will now, on a deal-by-deal basis, allow market flex terms to be redacted until the bid document is sent out. However this still means that any syndication would have to be done before then if the bidder’s cards are not to be exposed to potential syndicate members early on. This can lead to conflicting time pressures for bidders, according to SJ Berwin’s memo.