FOCUS POINT: TRENDS IN TAKEOVER ACTIVITY
Written on the 18 August 2011
AN increase in takeover activity in 2011 looks set to continue with the recent increase in hostile takeovers at significant premiums to recent closing prices, both domestically (see ASX codes: MCC, QML, CAH, EQN, AZX) and internationally, see the April 4 offer for NYSE listed NSM by fellow NYSE listed TXN at a 75 per cent premium to NSM’s then current share price.
Response team members need to be ready and reachable at all times during any approach or bid period and will need to have a good grasp of legal and commercial considerations that will impact on both the bidder’s and the company’s strategies.
Ensure that you understand how your company generates value, what the risks to value creation and key dependencies are, as well as external factors that may impact upon the perceived value of your business by the market and how this may differ from the Board’s view on value.
Remember, in a takeover situation messages about value are highly regulated, so be certain that all ‘value’ messages can be substantiated by more than just the Board’s opinion.
These themes can be used to support ‘reject’ recommendations.
In the case of listed entities, all communication needs to be considered in light of the entity’s continuous disclosure obligations and whether there is a requirement to disclose any specific information to the ASX first.