Takeover Panel issues public censure for failure to make a mandatory cash offer

The Takeover Panel has published a rare public statement of censure for a failure to make a mandatory cash offer under Rule 9 of the Takeover Code and associated breaches of Rule 5 and Rule 2.

In February 2011 Mr Bob Morton and persons acting in concert with him acquired interests in shares carrying approximately 39.1 per cent. of the voting rights in Armour Group plc, an AIM-listed company. Following an independent shareholder vote in favour of the issue of shares to Mr Morton, the Takeover Panel had granted a waiver of the obligation to make a mandatory cash offer for the remaining equity share capital of Armour.

Later in 2011, Mr Morton declined an offer to purchase further shares in the company, due to his awareness that this would trigger a further obligation to make a mandatory cash offer. Instead, he arranged for his sons to purchase those shares, believing them to be independent from him (despite gifting his sons the money required to pay the purchase price). The Takeover Panel, reflecting its long-established practice in treating close relatives as concert parties, ruled that the sons were acting in concert with Mr Morton and, as no exemption applied, those purchases were made in breach of Rule 5.1, which prohibits a person that holds (together with persons acting in concert with him) between 30 per cent. and 50 per cent. of the voting equity share capital from acquiring further voting shares. The share purchases had also triggered the requirement to make a mandatory cash offer in 2011 which was not made.

On discovery of the purchase of shares in 2011 by the concert parties, the Takeover Panel required Mr Morton, as a principal member of the concert party, to make a mandatory cash offer for the remainder of the shares. The mandatory offer was made.


Advisers and companies subject to the Takeover Code should note that they must consult the Takeover Panel when they are in any doubt as to the operation of the Takeover Code in relation to any transactions.

The Takeover Panel’s most draconian power is to “cold-shoulder” individuals for serious breaches of the Takeover Code which essentially bars them from the City and prohibits institutions from advising them on transactions for a fixed period.

Although, Mr Morton was not “cold shouldered” and had co-operated fully with the Takeover Panel in its investigations, the Takeover Panel nonetheless found these breaches of the Takeover Code particularly egregious in the context of earlier private censures of Mr Morton for Takeover Code breaches, as well as his experience as an investor and significant experience with Code-governed transactions. The Takeover Panel also noted that Mr Morton had the opportunity to consult the Takeover Panel and/or his own advisers, but had failed to do so.

The Takeover Panel Statement is available here.