Put up or shut up

18 Jul 2004 By Hugo Dixon

M&S wants it to be harder for phantom bidders like Green who never made a hard offer to lay siege to a company. This would be a bad idea. The threat of hostile takeover is an important tool for galvanising companies to improve performance.

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The UK's Takeover Panel will this week review its rules on "phantom" bids. Such bids occur when an offeror announces an intention to bid but doesn't actually make a firm offer.

The Panel's review will have added piquancy coming shortly after Philip Green made a phantom bid for Marks & Spencer.

In recent years, phantom bids have grown in popularity. Another recent phantom offering is that from Permira for WH Smith. Because they are not firm bids, they don't fit within the Panel's normal timetable for hostile offers.

The Panel has, however, developed an ad hoc timetable for dealing with such situations. This involves allowing target companies to ask it to tell the phantom bidder to put up or shut up. The Panel normally sets a 68 week deadline for this. Shorter deadlines are set, as with M&S or WH Smith, when the process has already taken a long time.

At a socalled code committee meeting this week, the Panel is expected to discuss codifying this ad hoc approach into a new rule.

Meanwhile, a delegation from the M&S camp consisting of Citigroup, Morgan Stanley and Slaughter & May plans to lobby the Panel to make it harder for phantom bidders. It wants the 68 week timetable to kick off as soon as the phantom bidder announces his interest.

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