The Public Takeover Bid – Assessment And Risks

The business decision to make a public takeover bid ("PTB") depends on the assessment of a number of legal, business and financial elements/questions. One of the most peculiar questions remains as to how to gain insider information on the target lawfully, before the announcement of the PTB and without causing overreaction on the market with a potentially price-increasing effect. Alternatively, investors might consider whether it is possible to carry out post announcement due diligence, the outcome of which may allow the bidder to walk away from the offer.

While in a number of jurisdictions friendly bidders may gain access to high levels of confidential information on a target prior to the public announcement of a PTB, in others, even in the case of recommended bids, management is generally reluctant to provide information on the target, citing the duty not to disclose confidential information on the corporation and not to serve