'Preparation is the best defence'. If there is one
context in which this expression rings truer than most, it is in
'Responding to a Takeover Bid'.
One of the worst scenarios that a company could find itself is
to be unprepared for a takeover bid. Without a readily available
and robust system for responding to unsolicited takeover bids
– in particular, a hostile bid – statements
could be made by officers or employees of the target company that
prejudice the company's ultimate response strategy;
limit the company's future actions;
mislead the market;
provoke unwanted selling by long-term or cornerstone investors;
expose its directors to personal liabilities.
The difficulty of course is that there is no such thing as an
'optimal' takeover response system. As discussed in
Addisons' publication, 'Responding to a Takeover
Bid', a company must maintain appropriate flexibility when
it comes to assessing a takeover offer, not only to maximise
shareholder value but also to ensure that the board and management
are doing – and seen to be doing – the
'right thing' for all shareholders and not simply
"defending at all costs".
In 'Responding to a Takeover Bid', Addisons
explores some common issues that the board of a target company is
likely to face in the event of an unsolicited takeover bid,
what considerations the board should have regard to in
developing its strategy and tactics for responding to a takeover
what preparatory systems should be established to identify key
potential bidders and to deter inadequate bids;
what actions should and should not be taken
when a takeover offer is first received;
what duties and responsibilities does a director owe or have in
the event of a takeover bid; and
what should be included in a Target's Statement.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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