ER Cadbury chair Roger Carr yesterday called on the government to rethink its free-market stance on foreign takeovers, after the Takeover Panel recommended only modest reforms to UK rules.
Carr, who initiated a heated debate over the scope of the Takeover Code after US food giant Kraft’s acquisition of Cadbury, said the Panel had tackled the “practical and tactical” issues in its review, which stopped short of introducing the most extreme measures under consideration.
But he said it fell to the government to address the “philosophical” aspects of foreign takeovers in its own ongoing review led by business secretary Vince Cable – considering in particular the merits of increasing the bid acceptance threshold to above the current 50 per cent-plus-one-share level and of disenfranchising shares held by short-term investors.
“The Panel’s recommendations will not tip the scales back in favour of target companies, but they will help make the process fairer,” Carr told City A.M. “However, if as a country we are more accessible to foreign control than other countries are, we need to look at changing the philosophical stance on it rather than just the rule book – and that decision is a matter for the government.”
The Panel defended its decision not to recommend the higher threshold and disenfranchisement options, arguing that respondents to its consultation had been almost unanimously opposed to them and that both measures would be ineffective without changing company law.
Roger Barke at the Institute of Directors welcomed the Panel’s decision to err on the side of caution and said introducing more radical measures would have been “a mistake”.
The most significant of the new measures is a rule designed to trigger a put-up-or-shut-up deadline of four weeks as soon as an approach is revealed, a measure which was broadly welcomed by the City as a relatively radical step in the right direction.
The Panel also recommended prohibiting deal protection measures such as “break fees” when a takeover is abandoned, as well as forcing bidders to disclose offer-related fees, how they plan to finance a bid and their intentions with regard to the future of the target company and its staff.
Matthew Fell, the CBI’s director for competitive markets, said: “Greater transparency is welcome to help ensure that the prospect of fees on completion of a deal does not bias the likelihood of it happening.”