Takeover Panel bulletin on statements of intention on an offer

The Takeover Panel has published Panel Bulletin 7 in which it discusses a bidder's statements of intention on a takeover offer, particularly around its intentions for the target business and employees.

Under the Takeover Code, a bidder making a takeover offer must set out its intentions as regards to the future of the target company's business and its employees.

The Panel says in Panel Bulletin 7 that it expects that a bidder will almost always have developed specific intentions in relation to these matters and they must be included in both the announcement of a firm intention to make an offer and in the offer document. If, exceptionally, a bidder has no intention to make any changes in relation to these matters, it must make a statement to that effect.

The Panel sets out a number of arguments that it says are not an acceptable basis for formulating intention statements, including:

• a bidder is not certain about expected synergies and so has not formulated any intentions;
• while some headcount reduction is envisaged, the bidder need not disclose the detail of that intention; and
• the bidder's only intention for the 12 months after an offer has completed is to conduct a strategic review, and that it will only formulate its intentions with regards to the target business after that review has concluded.

The Panel recognises that a bidder may sometimes wish to state that it will conduct a review of the target's business after completion of the offer. However, it says that such a statement will not, of itself, fulfil the Code requirements, and bidders should disclose what the review is likely to cover and their expectations in relation to it.