No harm done

21 Oct 2010 By Chris Hughes

Britain’s takeover watchdog has rejected bad ideas like imposing higher acceptance hurdles and disenfranchising hedgies in bid battles. But it is rightly making it harder for suitors to lay siege without launching a formal offer. Greater disclosure of fees also can’t do any harm.

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Britain's takeover watchdog on Oct. 21 unveiled proposals to make hostile bids harder but stopped short of endorsing the most radical proposals floated since Cadbury was taken over by Kraft Foods. Its proposals, unveiled on Oct. 21, include:

* Increasing protection against "virtual bids" by forcing suitors to clarify their position in a short period of time.
* Requiring disclosure of offerrelated fees.
* Better disclosure about intentions regarding the target company and its employees, and making it easier for employees to raise concerns.

"It is clear that some rebalancing of the rules is needed to check the evolution of market practice which has run in favour of the offeror," said Lindsay Tomlinson, chair of the Takeover Panel's code committee.

"We will propose proportionate measures to do this, which do not require changes to law or compromise shareholders' rights."

The two most radical ideas had been to raise the threshold for a successful bid from 50 percent plus one vote and to disenfranchise hedge funds and others who bought stock during a bid battle.

But the panel said they were "almost unanimously rejected" in its survey and were "impractical" given current company law.

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"We will propose proportionate measures to do this, which do not require changes to law or compromise shareholders' rights."

The two most radical ideas had been to raise the threshold for a successful bid from 50 percent plus one vote and to disenfranchise hedge funds and others who bought stock during a bid battle.

But the panel said they were "almost unanimously rejected" in its survey and were "impractical" given current company law.

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