CODEWORD

The Panel recently considered whether: (a) the Code permits a partial offer to successfully close with an offeror having acquired less than the specified percentage set out in the offer document, provided that the minimum acceptance condition is met in accordance with rule 10(1)(a); or (b) the Code requires an offeror in a partial offer to obtain not less than its specified percentage.

The words of the Code do not support the proposition that a partial offer fails simply because the offeror does not receive acceptances for at least the specified percentage. This is because:

• there is no provision in the Code which expressly restricts an offeror from acquiring less than the specified percentage (provided the minimum acceptance condition is met). If this was not the intention, it would be expected that the Code would simply provide that the minimum acceptance condition for a partial offer was the specified percentage plus the control percentage held prior to commencing the offer;
• rule 10(1)(a) and rule 23 appear to presuppose that an offeror might end up holding a control percentage of more than 50% but less than the specified percentage;
• clause 5A of Schedule 1 of the Code outlines certain disclosure requirements that relate to the particulars of the voting securities sought by an offeror when making a partial offer. Clause 5A(1) requires an offeror to disclose:
  • the number of voting securities of a class that the offeror would hold or control in the target company after the successful completion of the offer; and
  • the number of voting securities of a class that the offeror would hold or control in the target company if the offeror received acceptances in respect of the minimum number of voting securities required to satisfy the condition included in the offer under rule 23 (i.e., the minimum acceptance condition).

These disclosures suggest that it must be possible for an offeror to receive less than the specified percentage; if this was not the case, it would not be necessary for both disclosures as the latter would be irrelevant.

The Panel’s view is that an offeror making a partial offer can acquire less than the specified percentage, provided that the minimum acceptance condition is met.^[1]

The Panel expects where an offeror makes a partial offer, the offer document should be drafted carefully to explain the potential outcomes in a way that shareholders can understand. The level of disclosure should allow a retail shareholder to understand precisely what possible outcomes may arise if, for example, the offeror receives acceptances for less than the specified percentage.

The Panel has updated its guidance to clarify its position that a partial takeover offer does not fail simply because the offeror does not receive enough acceptances for at least the specified percentage (provided the offer meets the minimum acceptance condition). See the Panel’s Guidance Note on Offer Documents and Variations, as well as the Panel’s Basic Guide for Shareholders and the Basic Guide for Directors.

The Panel has recently updated a number of Guidance Notes. Available on the Panel’s website are the new versions, as well as compare versions showing all updates, of the following Guidance Notes: 

• Guidance Note on Independent Advisers;
• Guidance Note on Costs Recovery; and
• Guidance Note on Offer Documents and Variations.

In summary:

• The Guidance Note on Independent Advisers has been amended to clarify matters relating to reports required for compulsory acquisitions, the Panel’s processes with receiving draft reports and the Panel’s policy on approval of independent advisers.
• Amendments to the Guidance Note on Costs Recovery have been made to clarify the process on costs recovery reimbursement applications.
• Amendments to the Guidance Note on Offer Documents and Variations have been made to clarify several points in relation to partial offers.

In January 2019 the Panel announced the appointments of Anna Buchly and Martin Stearne to the Takeovers Panel. These new appointments were effective from 1 February 2019 for a term of four years.

Anna Buchly is the current Chair and a Partner in national law firm, Bell Gully. She has extensive experience advising on mergers and acquisitions and capital market transactions. Ms Buchly is ranked as a leading lawyer in Chambers Asia Pacific 2018 and The Legal 500 Asia Pacific 2018.

When announcing the appointments, Andy Coupe, the Panel Chair, said, “Ms Buchly is a highly experienced legal practitioner in mergers and acquisitions, and has expertise in corporate and securities law. She will be an asset to the Panel.”

Martin Stearne is a corporate consultant, and a member of the NZX listing sub-committee and the investment committee of Impact Enterprise Fund. He was a former investment banker with First New Zealand Capital and has extensive experience in takeovers and equity capital markets.

“Mr Stearne has a strong investment background and experience in mergers and acquisitions. The Panel will benefit from his wide-ranging expertise,” said Mr Coupe.

Mr Coupe also announced the recent reappointment of current members Richard Hunt and Tony Pigou for a further term effective from 3 September 2018.

“Both Mr Hunt and Mr Pigou have made important contributions to the Panel during their respective tenures, and I am pleased that they have accepted a further term,” said Mr Coupe.

Mr Coupe also acknowledged outgoing members Murdo Beattie and Tina Symmans, and thanked them for their valuable contributions and dedication to the Panel. Mr Beattie had been a member since 2008, and Ms Symmans since 2013.

The Panel has recently amended the Class Exemptions Notice (No 2) 2001. The amendments follow targeted market consultation and extend the 6-month top-up and sell-down periods in clauses 5 to 10 of the Class Exemptions Notice to 12 months. The amendments to the Class Exemptions Notice will be published in the next few days.