Legislation update

How long does a bidder have to wait following an attempted takeover before making a second bid?

Nicole Radice, Robyn Ferguson, and Luke Dawson / 15 March 2018

A long standing and commonly asked question looks like it may shortly be resolved following the recent issue of a Consultation Paper by the Australian Takeovers Panel (Panel) in respect of Guidance Note 1 on Unacceptable Circumstances. 

The proposed revision to the Guidance Note broadly states that unacceptable circumstances are likely to arise if, after a bidder has made a statement that they will not increase their bid (commonly referred to as a “best and final” statement), that bidder (or an associate) then makes another bid within four months after the bid closes and offers increased consideration.     

A general principal of Australian takeovers regulation (referred to as the “truth in takeovers” policy) is that a person who makes a statement in the context of a takeover should be held to account for that statement (irrespective of whether they are the bidder, the target or a shareholder). You can see our previous article here for more information.

Relevantly, the proposed revision leaves the door open for a bidder to qualify their “best and final” statement, provided that any such qualification is clearly stated. However, practically, it is difficult to foresee a situation where such a qualification would be made, given that a “best and final” statement is a powerful tool for bidders in seeking to procure acceptances from target shareholders. 

In our view, the proposed four month “wait period” between bids is a reasonable price to pay given the influential effect that a “best and final” statement can have on target shareholders.

The Consultation Paper is open for submissions until Friday, 20 April 2018. 

For more information, please contact HopgoodGanim Lawyers’ Corporate Advisory & Governance team.

Authors
Nicole Radice
Partner
Nicole is a Partner in our Corporate practice with a focus on corporate structuring, due diligence and corporate governance, capital raisings, mergers and acquisitions and takeover defences.
Robyn Ferguson
Partner
Robyn is a partner in our Corporate practice with significant experience advising Australian corporations and their respective boards and senior management on capital raisings, IPOs, takeovers, mergers and acquisitions and compliance.
Luke Dawson
Senior Associate
Luke is a Senior Associate in our Corporate practice.
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