New changes to the Takeover Code say bid approaches must be made public from the outset and all interested parties named, while the “put up or shut up” deadline has been cut to just 28 days.
Deal protection incentives such as break fees will been banned from 19 September and bidders must disclose their financing plans and intentions towards the target’s employees, the Takeover Panel said.
But deal advisers said the rules would make bidders wary of exploring ideas for fear of being exposed.
“While the ban on break fees probably won’t be a show-stopper in all cases, there’s little doubt that the changes to rules on virtual bids will be,” said Allen and Overy partner Richard Cranfield. “Publicity shy potential bidders will be worried and may be less willing to start negotiations or more inclined to withdraw from negotiations rather than risk being outed under the new rules.”
Others said the Panel had ignored valid concerns voiced by many who responded to its consultation.
“Market concerns were voiced again on identifying bidders and the prohibition on break fees but the panel is going to implement the changes it published in March without material amendment,” said Norton Rose partner Paul Whitelock.
The catalyst for the changes was the controversial takeover of iconic chocolate maker Cadbury by US food maker Kraft in 2009. The rules were criticised for failing to protect targets from hostile bids and allowing short term investors to vote sales through.