Proposed Changes To The UK Takeover Code: A Hostile Environment For Hostile Bids?

On 21 March 2011, the UK Panel on Takeovers and Mergers (the Panel) published a consultation paper (PCP 2011/1) setting out detailed, and potentially far reaching, changes to the City Code on Takeovers and Mergers (the Code). If implemented, they would materially change the way in which takeover bids are conducted in the UK, and would alter the balance of tactical advantage between target companies and potential bidders.

Essentially, the proposals would:

• provide additional protection for target companies against protracted "virtual bids" (i.e., where a potential bidder announces that it is considering making a bid, but does not commit itself to do so) by requiring potential bidders to be identified at the start of the offer period, and for such bidders to clarify their position within a short period of time;