The takeover of UK confectioner Cadbury by Kraft may pose new challenges
UK takeover policy has traditionally been regarded as more relaxed than in other major economies. Previous major reviews to the Code have been infrequent – occurring once in the late Eighties following Nestle’s bid for Rowntree and then in 2005 concerning the use of derivatives during takeovers.
However the recent announcement by the Takeover Panel in February 2010 that it will soon publish a consultation for changes to the rules that govern hostile takeovers indicates renewed political and regulatory interest in hostile acquisitions of UK corporations.
Rt Hon Peter Mandelson MP, perhaps the most influential member of the current Labour Government, has described the review as ‘important’ and is believed to have been instrumental in ensuring that the Takeover Panel launched its consultation. In a further indication of political interest, the influential Business Innovation and Skills Select Committee has already announced a second evidence session with senior representatives from Kraft, Cadbury and Unite the Union later in March 2010. The Committee has publicly stated that it will seek to ‘identify any lessons that need to be learned from the process leading up to the takeover in the light of our earlier evidence session last month.’ This will result in a formal report to and response from the UK Government.
So while the Takeover Panel’s announcement that it has decided to ‘initiate a consultation to consider whether certain Code provisions and the timetable for determining the outcome of offers could usefully be improved’ was suitably anodyne, it is already clear that much of the debate will be about how to effectively discourage short-termism in takeovers.
This development is of considerable importance to financial services firms involved in this environment and we are happy to provide expert advice to companies who are interested in the consultation on the Takeover Code.
After a torturous and sometimes acrimonious five month process is likely to have political and regulatory impact well beyond initial concern about job losses and the end of almost 200 years’ independence for another well-known UK brand.
The takeover of UK confectioner Cadbury by Kraft after a torturous and sometimes acrimonious five month process is likely to have political and regulatory impact well beyond initial concern about job losses and the end of almost 200 years’ independence for another well-known UK brand.
UK takeover policy has traditionally been regarded as more relaxed than in other major economies. Previous major reviews to the Code have been infrequent – occurring once in the late Eighties following Nestle’s bid for Rowntree and then in 2005 concerning the use of derivatives during takeovers.
However the recent announcement by the Takeover Panel in February 2010 that it will soon publish a consultation for changes to the rules that govern hostile takeovers indicates renewed political and regulatory interest in hostile acquisitions of UK corporations.
Rt Hon Peter Mandelson MP, perhaps the most influential member of the current Labour Government, has described the review as ‘important’ and is believed to have been instrumental in ensuring that the Takeover Panel launched its consultation. In a further indication of political interest, the influential Business Innovation and Skills Select Committee has already announced a second evidence session with senior representatives from Kraft, Cadbury and Unite the Union later in March 2010. The Committee has publicly stated that it will seek to ‘identify any lessons that need to be learned from the process leading up to the takeover in the light of our earlier evidence session last month. This will result in a formal report to and response from the UK Government.
So while the Takeover Panel’s announcement that it has decided to ‘initiate a consultation to consider whether certain Code provisions and the timetable for determining the outcome of offers could usefully be improved’ was suitably anodyne, it is already clear that much of the debate will be about how to effectively discourage short-termism in takeovers.
This development is of considerable importance to financial services firms involved in this environment and we are happy to provide expert advice to companies who are interested in the consultation on the Takeover Code.
