Takeover Panel to follow up acquisition promises

Buyers of publicly listed UK companies will be required to report back one year after completing their acquisitions on whether they have kept their word about their plans for the target group under proposals unveiled on Tuesday.

The Takeover Panel, the independent custodian of the UK’s rules on mergers and acquisitions activity, suggested placing this duty on acquirers for the first time.

The proposals are the latest attempt to address concerns that buyers of UK companies break promises about what they intend to do with them.

There was an outcry when Kraft Foods, following its acquisition of Cadbury in 2010, closed the British confectionery company’s factory at Somerdale near Bristol having previously promised to keep it open.

The proposed requirement for buyers of publicly listed UK companies to report back one year after completing their deals about whether they have stuck to their plans for the target group would encompass matters such as strategic direction, fixed assets, staff, research and development and headquarters.

The proposals would oblige buyers to disclose whether they upheld non-binding statements of intent and binding undertakings in relation to their acquisitions.

Currently, bidders must outline plans for the businesses they are seeking to buy as they relate to staff, fixed assets, pension schemes and strategic direction, among other things.

The panel is now seeking to add disclosures regarding a bidder’s plans for the target company’s research and development, headquarters and workforce composition and skills.

The statements of intent would also need to be made earlier — at the time the would-be acquirer announces a firm intention to make an offer for a publicly listed UK company, rather than when the bid document is released, as is currently required.

The panel said its proposals come after suggestions made by parties including the Department for Business, Energy and Industrial Strategy.

Business secretary Greg Clark said: “The Takeover Panel is a respected and important part of this regime and the government welcomes the valuable changes it is proposing.

“They will require bidders to make earlier and fuller disclosure of their plans for the target company, including its research and development, location of HQ, and the composition and skills of its workforce; and give companies subject to a bid more time to prepare their response.”

The proposals follow a period of heightened sensitivity over foreign takeovers in the UK, which has traditionally been one of the most open markets to overseas investment.

Theresa May’s government has at times spoken out in favour of deeper government intervention in dealmaking.

Moreover, UK officials have for years pressed for stricter rules pertaining to takeovers as it relates to both binding pledges and non-binding statements of intent that would-be acquirers make during dealmaking.

The panel — which is wary of government interference and enforces its rule book with just a few tools including the surprisingly powerful act of naming and shaming transgressors — has taken steps to require bidders to be clearer about their statements of intent and pledges in relation to UK targets.

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