Mergers & Acquisitions
9. Takeover Rules - Bids
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 22 Aug 2015
- There are two takeover bid types. These are off-market bids and market bids. In practice most bids are off-market. Making an off-market bid allows you to specify your conditions.
- There are various rules that you must follow when making a takeover bid. These include:
- that all offers are the same;
- the period of an offer must be between 1 and 12 months. It can be no less than 1 and no greater than 12 months;
- the bid amount must not be less than the price paid for a security within the last 4 months;
- no special deals or collateral benefits can be made with individual target security holders;
- a bidder must issue a 'bidder's statement' containing all material information including the terms of the offer;
- a target company or shareholder must issue a 'target's statement' setting out the board's recommendation; and
- if the bidder obtains 90% of the target securities they are entitled to compulsory acquisition of the balance of the target securities.
- In addition to these rules there are also standard practices that should be followed. For example a bidder will usually announce their intention to make a takeover bid at least 2 months before lodging the bidder's statement.
- There are also a range of prohibitions and penalties in place under the Corporations Act 2001 (Cth) such as the prohibition against making misleading or deceptive statements in relation to takeover bids.
- Including misleading or deceptive statements in a bidder's statement or target's statement is also prohibited. If such a statement is found the person may be required to compensate anyone who suffered loss because of the misleading or deceptive information. In some situations a person may even be considered criminally liable for the statement.
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