British takeover regulator proposes tougher rules

21st October 2010, Comments 0 comments

Britain's takeover watchdog proposed changes to its code on Thursday aimed at better protecting British companies from hostile takeovers, in the wake of Kraft's controversial buyout of Cadbury.

Key recommendations by the Takeover Panel included ensuring companies took account of the impact of a buyout on employees and requiring bidders to clarify their intentions within a shorter time period.

However it rejected calls for a radical overhaul to its code, such as increasing the level of shareholder support needed to secure a takeover.

It "concluded that hostile offerors have, in recent times, been able to obtain a tactical advantage over the offeree company to the detriment of the offeree company and its shareholders."

Former Business Secretary Peter Mandelson in March called for British rules governing takeovers to be substantially tightened in the wake of US giant Kraft Food's acquisition of confectioner Cadbury. Some observers saw this as an attack on foreign companies.

Mandelson said he deplored the role of speculators in the takeover of Cadbury, whose history dates back to 1824.

He put forward a range of proposals, including raising the voting threshold for securing a change of ownership of a company to two-thirds from 50 percent, but this was flatly rejected by the Panel.

Kraft Foods clinched its takeover of Cadbury in February following an improved cash-and-shares bid worth 11.9 billion pounds that ended a bruising, months-long takeover battle.

© 2010 AFP

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