on the proposed resolution in respect of the increase in the
percentage of Gould Holdingsí and the Trustsí voting rights in
Designer Textiles arising from the buyback.
The Panel considered that it was appropriate to grant the
exemption because
- although a buyback is an accepted method of reducing capital,
a buyback is not able to be excepted from the fundamental
rule under rule 7(c) of the Code as the increase in voting
control is not due to an acquisition. Accordingly, an exemption
from rule 6(1) of the Code is necessary. However, the
exemption is subject to the condition that all the matters that
are required to be satisfied for a rule 7(c) exception must be
met; and
- if the shareholders of Designer Textiles approve the maximum
possible increase in the percentage of Gould Holdingsí and the
Trusts’ voting rights in Designer Textiles, then it can be taken,
by implication, that those shareholders have approved that
Gould Holdings and/or the Trusts may increase the percentage
of their voting rights by a lesser amount.
The Panel considered that the exemption was consistent with the
objectives of the Code because the non-associated shareholders of
Designer Textiles would have an opportunity to vote on
- the immediate and potential increase of voting rights of the
Trusts and Gould Holdings as a result of the buyback; and
- the potential acquisition of voting rights by Gould Holdings
from the Trusts.
Exemptions relating to upstream acquisitions
| ABN AMRO CAPITAL (BELGIUM) N.V. (2002/203)
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A wholly-owned subsidiary of ABN AMRO Capital (Belgium) N.V.
was making a takeover offer in Australia for AUSDOC Group
Limited. AUSDOC owns all the ordinary shares in Freightways
Express Limited. Freightways also has on issue non-voting
preference shares which are listed on the New Zealand Stock
Exchange. Because Freightways is a party to a listing agreement it
is a Code company. As a result of its takeover in Australia, ABN
AMRO would, if the offer was successful, obtain indirect control
of Freightways’ voting rights. Accordingly ABN AMRO sought an
exemption to enable its offer for AUSDOC to proceed without
breaching the fundamental rule.
An exemption was granted to ABN AMRO and every whollyowned
subsidiary from the fundamental rule in respect of any
increase in their voting control in Freightways as a result of their
acquisition of shares in AUSDOC. The exemption was subject to
the condition that the offer for AUSDOC is made in accordance
with the Australian Corporations Act 2001 and the listing rules of the Australian Stock Exchange.
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The Panel considered the exemption was appropriate because:
- there is a single corporate shareholder of Freightways Express
Limited holding all of the voting securities of the company and
the Code mechanisms for effecting a change of control of a
Code company are, in this case, either impractical or
unworkable; and
- the possible change in voting control will be made in
accordance with the Australian Corporations Act 2001 and the
Australian Stock Exchange’s Listing Rules.
The exemption is consistent with the objectives of the Code
because it maintains a proper relation between the costs of
complying with the Code and the benefits resulting from it.
| BRUNEL HOLDINGS PLC (2002/348)
|
Brunel Holdings plc proposed to merge with Guinness Peat
Group plc (“GPG”) by acquiring all of the shares in GPG by way
of a scheme of arrangement under section 425 of the UK
Companies Act 1985. The shareholders of GPG would be offered
shares in Brunel in exchange for their GPG shares.
GPG held 46% of the total shares in Turners & Growers Limited and
46% of the total shares in Turners Auctions Limited. As a result of
this merger Brunel would become the controller of the voting
securities GPG held in Turners & Growers and Turners Auctions.
In addition GPG had made a partial takeover offer for Rubicon
Limited which if successful would result in GPG becoming the
holder or controller of just over 50% of the voting rights in
Rubicon. As the effective date of the Brunel/GPG merger was
likely to be after any acquisition of Rubicon shares pursuant to
the partial takeover offer, the merger could result in Brunel
becoming the holder or controller of more than 20% of the voting
rights in Rubicon.
The Panel granted an exemption to Brunel from rule 6(1) of the
Code in relation to Brunel’s acquisition of control of more than 20%
of the voting securities in each of Turners & Growers, Turners
Auctions and Rubicon as a result of the merger of Brunel and GPG.
The Panel considered that it was appropriate and consistent with
the objectives of the Code to grant the exemption because:
- the merger transaction between Brunel and GPG would not
result in a change of effective control of the voting rights in
Turners & Growers, Turners Auctions, and Rubicon held by
GPG because the ultimate shareholding structure of the
merged group will not be materially different from the
structure and control of GPG prior to the merger;
- the achievement of an increase in the percentage of voting rights
controlled by Brunel in Turners & Growers, Turners Auctions, and
Rubicon was incidental to a significant merger transaction
between Brunel and GPG, which itself was not directed at the
attaining of control of voting rights in those companies;
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