No more Cadbury style takeovers says watchdog

FIRMS should have more power to protect themselves from hostile takeovers in the mould of Kraft’s acquisition of Cadbury earlier this year, city watchdog The Takeover Panel has said.

The panel, which undertook the review following the backlash against the US company following its £11.6bn snatch and grab raid on the Bournville confectioner, in February, has made a number of recommendations.

It said measures that would help the situation included having bidders reveal their financing plans and their intentions for the company and staff post acquisition.

However, it stopped short of proposing radical measures such as raising the acceptance threshold for a successful bid above the current 50% level and disenfranching shares obtained during the offer period.

The panel said its Code Committee had deemed these proposals too impractical.

The review document stated: “After considering these concerns, and the views of respondents, the Code Committee has concluded that hostile offerors have, in recent times, been able to obtain a tactical advantage over the offeree company to the detriment of the offeree company and its shareholders.

“In view of this conclusion, the Code Committee intends to bring forward proposals to amend the Code with a view to reducing this tactical advantage and redressing the balance in favour of the offeree company. In addition, the Code Committee has concluded that a number of changes should be proposed to the Code to improve the offer process and to take more account of the position of persons who are affected by takeovers in addition to offeree company shareholders.”

The CBI welcomed the Takeover Panel’s proposals, saying they would “reduce periods of uncertainty for companies that are takeover targets”.

Matthew Fell, CBI Director for Competitive Markets, said: “The Panel makes some welcome changes that will reduce periods of uncertainty for companies that are takeover targets, and which give greater clarity about the bidder’s plans for the business, including the impact on employees.

“Greater transparency is also welcome to help ensure that the prospect of fees on completion of a deal does not bias the likelihood of it happening.

“However, there remains a need for a full debate about the role of short-term investors in determining the outcomes of takeover battles.”