Offeror’s Intentions for the Business Activities of the Target Company – Panel’s Expectations for Disclosures in Offer Document

Published 1 September 2011

A takeover offeror’s offer document must contain all of the information specified in Schedule 1 of the Code, stated as at the date of the offer.[1] Clause 14 of Schedule 1 of the Code requires the offeror to include in the offer document a statement “as to the general nature of any material changes likely to be made by the offeror in respect of the business activities of the target company and its subsidiaries”.[2]

Practice for making disclosures under clause 14 is variable. Some offer documents include quite detailed disclosures; others are light on their disclosure under this provision.

The Panel acknowledges that clause 14 is stated in quite general terms. It is working towards having clause 14 changed in order to raise the quality of these disclosures.

In the meantime the Panel draws to market participants’ attention its expectation that the disclosure obligation under clause 14 be met robustly.

An offeror is required to disclose its intentions regarding any material changes likely to be made to the target company’s business activities. Offerors need to bear in mind that their communications with the media and with shareholders, or with other regulatory agencies, about the offer need to be consistent with their clause 14 disclosures in the offer document.

Practice for making disclosures under clause 14 is variable.  Some offer documents include quite detailed disclosures; others are light on their disclosure under this provision.

Footnotes: 

[1] Rule 44(1)(d) of the Code

[2] However, this statement does not have to be included for a full offer that has a 90% non-waivable minimum acceptance condition: clause 14(2) of Schedule 1