Q&A: CONCERT PARTIES EXPLAINED

Q. WHAT IS A CONCERT PARTY?

A. A concert party is a group of people acting together to take over a target company. For example, when two major shareholders, perhaps owning about 15 per cent of the business each, attempt to replace a management team they believe is incompetent. The 30 per cent threshold at which a mandatory offer must be made is considered to have been reached when a concert party jointly hold 30 per cent of the shares.

Q. WHY IS THE ISSUE SO CRITICAL TO THE M&B TAKEOVER?

A. If Lewis secures the Irish tycoons’ support, they will jointly hold about 43 per cent of the business. This would make it extremely hard for the remaining shareholders, who include Standard Life, to reject any takeover offer the two parties subsequently make, however low. So the rules protect minority stakeholders, who lose out on receiving the price their investment deserves if the company is sold for less than its market price.

Q. WHAT HAPPENS NEXT?

A. The City is waiting for the next move from Lewis’s investment vehicle Piedmont, which has until 17 October to come back with a firm bid, or from a statement from Elpida, the investment vehicle owned by McManus and Magnier. But some commentators have suggested Lewis is not planning to take control of M&B, just to put it in play to attract a third-party counterbid to secure a better return on his stake.