Panel Announcement – Rule 32.1(b) Interpretation

Wednesday, 25 November 2015

Irish Takeover Panel Announcement

Rule 32.1(b) – Revision of an offer

  1. Under Rule 32.1(b), in the case of a securities exchange offer, an offeror, after the date from which it is precluded from revising its offer and before the end of the offer period, shall not, except with Panel consent, announce any material new information, including trading results, a profit or dividend forecast, an asset valuation, a merger benefits statement or a proposal for a dividend payment, which will or might have the effect of increasing the value of the offer. Under Rule 32.1(a) all offerors are prohibited from revising their offer after Day 46 of the offer timetable i.e. during the 14 days ending on the final closing date.
  1. In response to issues raised in a recent case, the Panel has been considering how Rule 32.1(b) should be applied in circumstances where the offeror has made a statement that it will not increase its offer (a “no increase statement”) prior to Day 46 and, specifically, whether the rule should apply from the date of such a statement or from Day 46.
  1. Underlying Rule 32.1(b) is the recognition that in a securities exchange offer there may be  material new information announced by an offeror which, while not amounting to a revision of the terms of the offer, nevertheless may have the effect of increasing the value of the offer. The rationale for the rule is that material new information released in such circumstances may affect the value of the offer and should not be permitted at a time when the offeror is prohibited from revising its offer.
  1. During the course of an offer an offeror may make a “no increase statement”.  Under Rule 32.2 an offeror who has made such a statement is not, except with Panel consent, permitted to amend the terms of its offer in anyway unless it has specifically reserved the right to do so in the statement. The principle underpinning the rule is the need to ensure certainty in the market with regard to a “no increase statement” i.e. such a statement must be capable of being relied upon by offeree shareholders and the market as an accurate statement of the offeror’s intentions with regard to its offer.
  1. Where an offeror in the case of a securities exchange offer has not made a “no increase statement” it is clear from Rule 32.1(b) that, except with Panel consent, it cannot after Day 46 announce any material new information which will or might have the effect of increasing the value of its offer.
  1. Where an offeror, in a securities exchange offer, has made a “no increase statement” prior to Day 46, the Panel will approach matters arising under Rule 32.1(b) as follows:

(i)     Having regard to the principle underpinning Rule 32.2 and the importance attached to such statements by offeree shareholders and the market, the Panel will interpret Rule 32.1(b) as applying from the date of the offeror’s “no increase statement”.  Consent would therefore be required from that date for any announcement of material new information by the offeror which will or might have the effect of increasing the value of the offer.

(ii)  However, the Panel is likely normally to consent to the issue of announcements up to Day 46 in and relating to the ordinary course of business that the offeror is compelled by law or regulation to release.  In such cases the Panel may wish to consult with the relevant regulator to satisfy itself that the particular announcement is in fact required.

(iii)   Corporate actions such as, for example, share buy-back programmes, distributions and material acquisitions/disposals will not normally be consented to after the date of the offeror’s “no increase statement”. Therefore, offerors should consult with the Panel before they propose to take any such actions.

After Day 46, Panel consent pursuant to Rule 32.1(b) will only be granted in exceptional circumstances.

The Panel should be consulted in good time where it is proposed to release any announcement which may fall within the scope of Rule 32.1(b). 

25 November 2015