The business secretary has welcomed new proposals that would tighten up company takeover rules.
The Takeover Panel today published plans which would force bidders to “be more specific in their plans for a target company”. This would include declaring plans for research and development, employees and headquarters locations.
The proposals, under consultation for six weeks, come ahead of the government publishing plans to address “national security concerns that can arise from foreign investment” this autumn.
Business secretary Greg Clark said: “One of Britain’s biggest assets in competing in the global economy is our deserved reputation for being a dependable and confident place in which to do business.
“The Takeover Panel is a respected and important part of this regime and the government welcomes the valuable changes it is proposing.
“They will require bidders to make earlier and fuller disclosure of their plans for the target company, including its research and development, location of HQ, and the composition and skills of its workforce; and give companies subject to a bid more time to prepare their response.”
James Jarvis, corporate governance analyst at the Institute of Directors (IoD), said an initial reading of the consultation “shows a welcome focus on ensuring that companies subject to a bid are able to form a careful and informed opinion on a bid before responding”.
He added: “The IoD believes that the ultimate aim of a takeover should be to create long-term sustainable value for the resulting company.
“We would stress that any rule changes will need to balance disclosure with the need to move quickly when making bids and there should be caution around any move which could inadvertently have a negative impact on the UK M&A market.”
A CBI spokesman said:
In any takeover situation, ensuring that there is sufficient information for all parties to scrutinise and understand its impact is important.
It is appropriate for the Takeover Panel to consider whether the balance of information required under the current code is sufficient.
The best way to keep jobs and investment in the UK is to make sure we are the most attractive place in the world to invest in and do business from.
Under the proposals, bidders will need to announce their plans at the point when they declare a “firm intention to make an offer”. The bidder will then be unable to publish an offer document for 14 days “without the consent of the board of the target company”.
Companies will also need to publish reports on their compliance with the plans they have announced.
Prime Minister Theresa May declared an intention to tackle takeover issues when she took power last year. Deals to have attracted political controversy in the recent past include the 2010 Kraft Foods takeover of Cadbury, Pfizer's attempts to take control of AstraZeneca in 2014 and this year's abandoned Kraft Heinz pursuit of Unilever.