Additional modifications to the framework for UK public takeover transactions, known formally as the City Code on Takeovers and Mergers (the “Code”), are expected to come into force early next year subject to the responses to the Consultation Papers published by the UK Takeover Panel on July 5, 2012 setting forth these modifications. These changes are not as significant as the recent changes to the Code that made public transactions more complicated for private equity bidders, but there are nonetheless several key “takeaways” for private equity bidders.
Some of these changes, such as enhanced rights for pension trustees, have been proposed to further the aims articulated in the reforms undertaken last year in response to the Cadbury/Kraft deal. Other changes, such as the increase in the number of public companies subject to the Code, are “tidying up” points that have been under consideration for some time, but were delayed whilst the Cadbury/Kraft reforms were being implemented. For further background on the other recent changes to the Code, see “Reform of the UK Takeover Code: The End of the Affair,” the Debevoise & Plimpton Private Equity Report, Fall 2010, and “Dealmaking in the UK Has Gotten Tougher: Impact of Takeover Reform” and “More on the UK Takeovers Code: Increased Debt Financing Disclosure,” the Debevoise & Plimpton Private Equity Report, Winter 2012.
While the proposed changes to the Code have broad consequences for deal activity in the UK generally, the key points to note for U.S. private equity bidders under these consultation papers published by the UK Takeover Panel are summarized here.