Readymix plc (“Readymix”)
Rule 9.1 states inter alia that, except with the consent of the Panel, any person who acquires control (defined as a holding of securities that confers not less than 30% of the voting rights in a company) of a relevant company shall extend an offer (on the terms and conditions required by Rule 9) to the holders of each class of equity share capital of the company and also to the holders of each class of non-equity share capital of the company conferring voting rights.
On 27 September, 2004 RMC Group plc (“RMC”) and CEMEX, S.A. de C.V. (“CEMEX”) announced their agreement on the terms of a recommended acquisition by CEMEX of RMC to be effected by means of a scheme of arrangement. On 17 November RMC and CEMEX announced that at a Court Meeting and an Extraordinary General Meeting of RMC shareholders held in connection with the recommended acquisition by CEMEX of RMC all the resolutions proposed were approved by shareholders. The announcement also stated that RMC and CEMEX expect to receive the relevant Regulatory clearances in due course and that it was expected that the scheme will become effective on 12 January, 2005.
RMC holds approximately 61.9% of the issued share capital of Readymix. Therefore, in the event that CEMEX acquires RMC, CEMEX would as a result acquire control of Readymix.
Following an application from CEMEX the Panel considered this matter at a meeting on 6 December, 2004. Having regard to the circumstances and taking into consideration the General Principles in the Irish Takeover Panel Act 1997 the Panel decided to grant CEMEX a waiver of Rule 9.1 in relation to the obligation to make a mandatory offer for Readymix which will arise if its proposed acquisition of RMC completes. The chain principle (which is set out in Note 7 on Rule 9.1) provides that a person acquiring control of a company may thereby acquire control of a second company, which is a relevant company, because the first company holds a controlling block of securities in the second company. In these circumstances the Panel in determining whether or not to require an offer under Rule 9 may take into account the following factors:
– whether the holding in the second company [Readymix] represents a substantial part of the assets or profits of the first company [RMC]; or
– whether one of the main purposes of acquiring control of the first company was to secure control of the second company.
In the circumstances the Panel decided that neither of the above factors were relevant in this case and that as the acquisition of control of Readymix would be an indirect consequence of the acquisition of RMC, it was appropriate to grant CEMEX a waiver of Rule 9.1
