IRELAND: Ireland Takeover Panel consultation on amendments to the Ireland Takeover Rules

Thursday March 15 2012

The Ireland Takeover Panel has published a consultation paper setting out various proposals to amend the Irish Takeover Act 1997, Ireland Takeover Rules, 2007 to 2008. In summary, the main amendments being proposed are as follows:

1. Rule 5.2 – it is proposed to amend Rule 5.2(a)(iv)(3) so as to permit a person who has made a non preconditional Rule 2.5 announcement to acquire voting securities of a relevant company or rights over such securities after the first closing date of that offer or any competing offer has passed.

2. Rule 11 – the rule requires that where an offeror or any person acting in concert with it acquires any securities of the offeree during the offer period or where they acquire 10% or more of the securities of the offeree in the 12 months prior to the commencement of the offer period, the offer to be made by the offeror must be in cash or accompanied by a cash alternative. However, the rule does not require the offeror to make a securities offer where securities have been acquired in exchange for securities. The Panel is of the view that a new Rule 11.2 should be introduced setting out the circumstances in which a securities exchange offer is required.

3. Rule 16 – the rule provides that, except with the consent of the Panel, neither an offeror nor any person acting in concert it may make arrangements with offeree shareholders or with persons interested in relevant securities of the offeree if there would be attached to such arrangements a term favourable to such shareholder or such person which would not be extended to all shareholders. Note 4 on Rule 16 sets out some guidance in relation to when Panel consent may be granted where the arrangements relate to management incentivisation. It is proposed that a new Rule 16.2 (which will essentially replace Note 4 on Rule 16) will set out when (1) public disclosure of the arrangements, (2) the fair and reasonable opinion of the independent adviser to the offeree, and (3) offeree shareholder approval of the arrangements will be required if the offeror or any party acting in concert with it proposes to enter into arrangements with offeree management which will not be extended to all offeree shareholders.

4. Rule 20.2 – this rule sets out the circumstances in which an offeree, irrespective of its preference, must promptly provide information to a competing offeror if such information or substantially the same information has previously been given to another offeror. It is proposed that Rule 20.2 be amended to set out the types of conditions that an offeree can impose on any information being made available to an offeror. The rule will also set out how it will be applied in reverse takeover and merger situations.

5. Rule 25 – It is proposed to add a new Rule 25.8 to require the offeree board, in its first response circular, to include details of any known material changes in its financial or trading position since its last published audited accounts or alternatively a statement that there are no known material changes.

6. Rule 31.5 and Rule 32.2 – “no extension” and “no increase” statements respectively may be set aside only if the offeror has specifically reserved the right not to be bound in certain circumstances, and those circumstances occur, or the Panel consents to the offeror not being bound by the statement. The Panel is proposing to amend Rule 31.5 and Rule 32.2 so that the offeror will be required to inform offeree shareholders whether it will extend/increase its offer as soon as possible after the offeree announcement. A clarificatory amendment to both those rules is also proposed.

7. – Deletion of “associate” – there is significant overlap in the Rules between the definition of “”associate”” and the presumptions of concertedness.