Takeover Panel slams move to dilute shareholder power

The Takeover Panel’s 2002-03 annual report comes out strongly against any Europe-wide takeover directive that dilutes the power of UK shareholders.
The panel criticised plans by other member states to dilute or even delete Article 9 of the proposed takeover directive, which restricts the power of company boards to fend off a takeover.
The report states: “The panel would struggle to see the benefits of a directive that removed or weakened Article 9, and hence allowed target company boards to frustrate offers against the wishes of the shareholders.”
The panel restated rule 24.10 on “unquoted paper consideration” – a move that could have been prompted by Hugh Osmond’s bid for Six Continents earlier this year. Osmond’s vehicle was AIM-listed, so rule 24.10 would not apply, but there were similarities between his bid and a takeover designed around an unlisted newco with no assets.
Linklaters corporate partner Carlton Evans, who was seconded to the panel between 1996 and 1998, said the policy restatement is designed to address a situation “where virtually the entire value is reflected in the value of the target and the target is unsurprisingly not cooperating”.
The panel also restated its rule on prior consultation. It said: “Where there is any doubt whatsoever whether a proposed course of action is in accordance with the general principles or rules of the code, the executive should be consulted in advance.”