New Two-tier regime for undertakings in Code offers

The voluntary commitments made by Pfizer Inc during the course of its (failed) possible offer for AstraZeneca plc prompted much public debate on the effectiveness of the Takeover Code regime on statements of intent made during offers.

In response to that public debate, the Takeover Panel has introduced a new two-tier regime relating to undertakings made by bidder or target which takes effect from 12 January 2015. The new regime will apply to any statements made by a party to an offer from and including that date.

The changes:

  • distinguish between (i) voluntary commitments (tagged as “post-offer undertakings”) and (ii) statements of intention (tagged as “post-offer intention statements”), made by a party to an offer relating to any particular course of action it would take or not take after the end of the offer period;
  • mean that the entry into a post-offer undertaking entails a very limited ability to introduce conditions to the undertaking as well as a rigorous monitoring regime by the Takeover Panel; and
  • remove the current ability of a party to an offer to cease to be committed to a particular course of action via the unspecified “material change in circumstances” carve-out.

The final rules are largely the same as were originally proposed. See UK Corporate Update 25 September 2015 for a summary of the original proposals.

There will be a detailed briefing published on this soon.

Click here to see the Takeover Panel’s paper setting out the final rule changes. Click here to see the original consultation paper.