Panel warning on deal protections: UK Takeover Panel review of the 2011 changes to the Code

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The UK Takeover Panel has conducted its promised operational review of the reforms to the Code which took effect in September 2011. The Panel believes the reforms have operated ‘satisfactorily’ and concludes that no immediate changes to the Code are necessary, although it plans to keep certain areas under review, notably deal protection measures, formal sale processes and market flex disclosures.

Significant comments in the review highlight the Panel’s robust approach to the key area of deal protection measures such as break fees, exclusivity undertakings and implementation agreements.

The Panel believes the ban on deal protection measures has achieved its objective of redressing what it had perceived as the tactical imbalance between bidder and target. However, some bidders seem to have had difficulty in complying with the new rules, crossing the boundary of what is permissible…

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