Takeover Panel Publishes 2023-2024 Annual Report

Overview of market activity

There was a gradual rebound in market activity throughout this FY 2023-24. The first six months saw lower deal volumes compared to the second half of FY 2022-23 but deal activity gradually improved in the second half. Overall, 61 firm offers announced totaling approximately £28.5 billion (FY 2021-22: 48 firm offers). This was the highest number of firm offers seen since 2019-20 and notably, seven offers were valued at over £1 billion.

Panel proceedings

MWB Group

The Panel recently concluded proceedings regarding the breaches of Rule 9 and other provisions of the Takeover Code by the former management team of MWB Group Holdings plc, who acquired control over additional shares in MWB without a general offer being made to the other shareholders in the company and concealed their interests in these additional shares with the use of a sham entity. After a lengthy and complex process, the management team in breach was subjected to cold-shouldering sanctions ranging from one to five years and for the first time in its history, the Panel exercised its power requiring the management personnel to pay compensation to the holders or former holders of shares in the target company. The latter reflected the fact that the company had gone into administration in 2012 and dissolved in 2018, so that it was not possible to remedy the Rule 9 breaches with requiring an offer to be made.

OnTheMarket plc

The second case which is highlighted in the Annual Report was the Panel's summary dismissal of a complaint lodged by OnTheMarket that CoStar Group Inc. (as the offeror), had violated the General Principle 1(1) of the Takeover Code by not incorporating certain contractual arrangements in its offer. These arrangements included fee agreements that OnTheMarket had made with shareholders, who were also estate agents, in exchange for listing properties on the OnTheMarket portal. The Panel found no violation of the General Principle, on the basis that these rights were personal and not attaching to shares, meaning that all shareholders were treated equally concerning their shares and receiving the offer consideration.

A year of important changes to the Takeover Code

A number of important changes to the Takeover Code were made during FY 2023-24, which included amendments to Rule 21 (Restrictions on frustrating action), together with the new Practice Statement 34 setting out its practice. and an updated Practice Statement 5 in relation to Rule 13.5 (on invoking conditions and pre-conditions). Finally, there was the publication of Practice Statement 31 in relation to private sale processes. Interestingly, it was flagged that as a matter of procedure, the complainant in this matter was not a shareholder in either company, neither the outcome of the complaint nor the transaction generally would affect him and therefore, he lacked standing to request that any Hearings Committee be convened.

Digital version of the Takeover Code

One welcome development which launched in October 2023 was the delivery of the digital version of the Takeover Code. The digital version is accessible from the Takeover Panel's website and includes helpful functions such as pop-up boxes for defined terms and tabs linking rules with related Practice Statements.

Key statistics related to transactions regulated by the Panel for FY 2023-24

The Report sets out some of the usual statistics relating to transactions regulated by the Panel in FY 2023-24, together with comparatives against the previous financial year. Of note during this period, an offer period commenced in respect of 87 offeree (2022-23: 74). Of the 61 firm offers announced (FY 2022-23: 48), ten were structured as contractual offers and 51 as schemes of arrangement at the time of announcement, reflecting the continued preference for schemes where a target welcomes the offer.

Full details of the transaction key statistics, as well as detail on all the matters covered here can be found in the Panel's report at https://www.thetakeoverpanel.org.uk/wp-content/uploads/2024/09/AR2024.F.pdf.

Authors

David Dowling, partner

Abby Chung, trainee solicitor