Stitched up, or just standard practice? 
The Panel backs conventional deal protection in Cue Energy and Cygnus Metals

In brief

• Two recent Takeovers Panel decisions, Cue Energy and Cygnus Metals, each involved an unsuccessful attempt by an applicant to argue that a bidder had unacceptably locked up a target through a combination of pre-bid stakes, shareholder intention statements and other deal protection arrangements.
• In both matters, the Panel found that the arrangements, properly drafted within the Panel's published guidance and the Corporations Act, were conventional and not anti-competitive, whether considered individually or in combination.
• It was key to both decisions that the relevant arrangements preserved the ability for shareholders and the target to consider and respond to a superior proposal, reminding market participants that while pre-bid acquisition agreements, intention statements and exclusivity terms do give some comfort that a particular bid will be supported, they do not provide absolute deal protection.
• Neither decision records ASIC advancing a concern that the intention statements gave rise to a relevant interest. While not a clear ASIC endorsement of intention or no-disposal statements covering more than 20% of a target’s register, this is a useful additional data point for practitioners.

Cue Energy Resources Limited [2026] ATP 5 — Pre-bid stake and intention to accept statement

In Cue Energy, Horizon Oil Limited announced an off-market scrip and cash takeover bid for Cue Energy Resources Limited, together with a pre-bid agreement under which Echelon Resources Limited, Cue's largest shareholder holding 49.93%, agreed to sell Horizon 19.99% at a cash price below the implied offer value. Echelon also gave an intention statement that it would accept the offer for its remaining shares 21 days after the offer period opened, absent a superior proposal.

Cue’s independent directors complained to the Panel, alleging that the pre-bid agreement and intention statement together had deterred potential rival bidders and impeded an efficient, competitive and informed market for control of Cue.

In relation to the pre-bid agreement, Cue argued that it was uncommercial because the sale price was below the implied offer price and would only be completed after the offer period had closed. In relation to the intention statement, Cue argued that, although the 21-day waiting period was consistent with the Panel’s guidance, there were extenuating circumstances in this case — Horizon and Echelon had exhibited a high degree of coordination potentially evidencing an association, the offer period was open for longer than one month suggesting a longer waiting period should apply, and there was no rational explanation for early acceptance of an offer when it remained conditional.

The Panel rejected Cue’s arguments. It accepted there were no serious concerns with the commerciality of the pre-bid agreement, which had been negotiated at arm’s length, was for less than 20% of the target, and the consideration for which was in line with the longer-term price of Cue shares. The Panel also found that none of the circumstances highlighted in relation to the intention statement were in fact extenuating, noting that the market would have been aware of the statement for approximately 5 weeks before it was implemented, and that no potential competing proposal had in fact been received.

Arguments from Cue that Horizon and Echelon were undisclosed associates and that Echelon’s nominees on Cue’s board had failed to appropriately notify Cue of Horizon’s bid were also dismissed.

Cygnus Metals Limited [2026] ATP 13 — Voting Intention Statements, No-Disposal Statements and Call Option

Cygnus Metals concerned a scheme of arrangement under which Central Asia Metals PLC proposed to acquire all the shares in Cygnus Metals Limited. Several deal protection arrangements were present — voting intention statements from four shareholders holding 29%, conditional on there being no superior proposal; no-disposal statements from two of those shareholders holding 25% confirming they would not sell their shares before the scheme vote (again, subject to no superior proposal); a call option over 9.9% granted to CAML by one shareholder exercisable if a superior proposal emerged; and standard exclusivity terms in the scheme implementation deed.

The applicants, two minority shareholders, argued that this combination amounted to anti-competitive deal protection that structurally excluded competing bids and rendered their vote on the scheme meaningless.

The Panel rejected the applicants’ arguments. The voting intention statements and no-disposal statements were consistent with the Panel’s guidance because shareholders remained free to vote for a superior proposal, or dispose of their shares, if one emerged. Similarly, the call option was not of itself unacceptable, noting that a pre-bid stake of up to 20% is not ordinarily anti-competitive — it did not prevent a competing bidder from pursuing a scheme, or a takeover bid with a 50.1% minimum acceptance condition. The standard deal protection terms in the implementation deed were also unremarkable in the Panel's experience as they included a fiduciary out and kept the break fee within the conventional 1% guidance. In no sense was a competing bidder with a superior proposal for the company structurally excluded.

Although the Panel did recognise the possibility that a combination of individually acceptable deal protection arrangements could together be unacceptable in some circumstances, there was no reason to conclude in this case that the cumulative effect was anti-competitive or coercive.

Commentary

Implications for bidders

For bidders, Cue Energy and Cygnus Metals confirm that conventionally structured deal protection arrangements will generally not be treated as anti-competitive if they comply with Panel guidance and the Corporations Act. This regulatory backdrop preserves an element of contestability for the target company, so bidders should bear in mind that a motivated interloper willing to make a higher offer will generally remain free to put it to shareholders or the target company.

Implications for targets and shareholders

For targets and shareholders considering a challenge, these decisions demonstrate that a deal that initially appears sewn up by a bidder’s deal protection arrangements will not be unacceptable unless there is something that takes the arrangements outside the usual rules. In other words, there must be something in the facts that makes the arrangements truly anti-competitive or coercive.

Intention statements and the 20% rule

One other notable feature of both decisions is that ASIC does not appear to have expressed any concerns regarding intention statements covering more than 20% of the register. In Cue Energy, the intention to accept statement covered just under 30% of the register, while in Cygnus Metals, the voting intention statements also covered just under 30%, with the no-disposal statements covering around 25%.

In the past, ASIC has expressed concern that such intention statements might breach the 20% rule in section 606 of the Corporations Act, on the basis that a sufficiently firm intention by a shareholder could confer a relevant interest on a bidder, and had stated that it discouraged such statements from being given.¹

However, ASIC has been less vocal on this issue in recent years, and intention statements in excess of 20% that are subject to appropriate carve-outs (ie, no superior proposal emerging) are now commonplace. Following the decision in Dropsuite Limited [2025] ATP 10, which considered whether a voting intention statement implicitly required a shareholder to refrain from disposing of shares until they were voted, a recurring theme in market commentary was that targets might be reluctant to accept an express no-disposal statement over more than 20%, given that this might draw attention from ASIC.

Against that backdrop, it is notable that ASIC does not appear to have made submissions on this point in either Cue Energy or Cygnus Metals and was not party to the proceedings. The Panel’s commentary on the issue was also fairly limited — in Cygnus Metals, it simply noted that because the intention statements were “truth in takeovers” statements provided to the target rather than binding commitments, no relevant interest may have arisen (although the Panel acknowledged that may not always be the case).

In this regard, a point often lost in discussion on the topic is that a breach of the 20% rule in section 606 requires there to be not only the acquisition of a relevant interest leading to an increase in voting power over 20%, but the person acquiring the relevant interest must do so “through a transaction in relation to securities entered into by or on behalf of the person”. Often a statement given by a shareholder will not constitute a “transaction” unless there is some further agreement between the shareholders and the person receiving the benefit of the statement. A simple example would be a statement voluntarily given by a shareholder expressing support for a takeover or scheme. Even if it was couched in terms that attracted the “truth in takeovers” rule and prevented the shareholder from resiling from the statement, it would not be a “transaction” and, accordingly, would not breach section 606.

Apart from that important point, the two decisions provide a further data point for practitioners assessing how closely ASIC is likely to actively police such intention statements.

_____

1. Submission from ASIC to the Takeovers Panel dated 17 September 2015. This submission was written in response to the public consultation process undertaken by the Takeovers Panel prior to the publication of Takeovers Panel, Guidance Note 23, “Shareholder intention statements”, First Issue, 11 December 2015.