UK: Forget About The Price Tag: What Else Must A Bidder Offer?

Last Updated: 30 April 2018
Article by Richard Spedding and Amy Grammer

In two recent high-profile takeovers, bidders gave binding commitments as to the conduct of the target business post-completion, in order to protect broader stakeholder interests. This legal briefing considers the regulatory framework for these commitments, and highlights that a bidder needs to consider not only the price to offer shareholders, but also what protections it is extending to other stakeholders.


Until very recently, only Softbank, in connection with its recommended offer for ARM, had given binding "post-offer undertakings" in accordance with the new regime introduced into the Takeover Code in 2015. This might have been dismissed as a one-off, but two recent bids suggest that external pressures for the protection of stakeholders will continue to be a feature of high-profile bids.

Prior to its bid for GKN succeeding, and in response to a letter from the Department for Business, Energy and Industrial Strategy, Melrose gave a suite of commitments and undertakings in relation to the combined business's presence in the UK, employees, R&D and pensions.

In Comcast's announcement of a firm intention to make a bid for Sky this week, Comcast confirmed that it "voluntarily intends" to put in place a series of commitments that would guarantee the long-term future of Sky News and its ongoing editorial independence, as well as support the growth of Sky in the UK.

Although both bidders might have had confidence in their offer price being compelling, this isn't necessarily a guarantee of success. The Enterprise Act 2002 gives power to the Secretary of State to refer to the Competition and Markets Authority ("CMA") a takeover bid which gives rise to concerns over media plurality, national security or financial stability. In addition, the Secretary of State has indicated a wider concern that, where businesses the government considers to be important are involved, takeovers should not act against the interests of the UK economy, employees or the broader set of stakeholders. This is reflected in the recent consultations setting out the government's proposals to reform and strengthen the powers for scrutinising the national security implications of particular types of investments – please see our client note on this topic. In particular, on 15 March 2018, the government confirmed that it would be lowering the thresholds for changes in control over enterprises in certain sectors relevant to national security. Longer-term reforms are still being considered.

Therefore, even though there is not strictly a "public interest" test in the UK, the government has an ability, and willingness, to intervene in certain takeovers. Several media outlets have also taken a "no holds barred" approach to their commentary on bids, particular those by overseas bidders, feeding negative public opinion.


"Stakeholder" is a loose term used to describe any person, group or organisation interested in a business. In its broadest sense, it includes the UK economy, as well as suppliers, customers, employees and pensioners.


Under the Takeover Code, a bidder is required to state its intentions for the target business for the 12 months following completion, including the impact of its offer on employees, pension schemes and places of business. Following recent changes to the Code, these intentions are required to be disclosed at an early stage, namely at the time of the firm offer ("2.7") announcement, in order to give stakeholders (and the government) an opportunity to comment on these intentions.

These statements of intention are not binding, but must be an accurate statement of bidder's intentions at the time and made on reasonable grounds. The recent changes to the Code show an increased focus by the Takeover Panel on specificity in these statements, with further information required on a bidder's plans for R&D, or changes to the "balance and skills" of the target's workforce. Certainly, in circumstances where a bidder has quantified the synergies expected from the transaction, it is our experience that the Panel will expect any employee headcount reductions also to be quantified (on the basis that the bidder will know the information because at least some of the synergies will be derived from these reductions).

If, following its offer, the bidder does not take any of the actions it stated it intended to take, or takes a different course of action, it is required to make an announcement of this fact promptly. In addition, at the end of the 12-month period following its offer, the bidder will be required to make an announcement of its "compliance" with its intention statements.


Like Softbank before them, both Melrose and Comcast offered more than statements of intention to protect stakeholder interests. Perhaps unsurprisingly, in putting together its suite of protections, Comcast has clearly had regard to the remedies offered by 21st Century Fox to the CMA in response to its provisional finding that Fox's takeover of Sky is not in the public interest due to media plurality concerns.

Post-offer undertakings

Under the Code and subject to consultation with the Panel, a bidder may choose to make a post-offer undertaking (a "POU"). There is a set of detailed rules which set out the content and other requirements for a POU, including that:

  • a time period for the POU be specified (normally no more than five years);
  • the POU be specific and precise;
  • the POU be readily understandable and capable of objective assessment (and not depend on the subjective judgement of the bidders' directors); and
  • any conditions or qualifications to the POU be prominently stated.

Following the offer, the Panel takes on the role of policing the POUs. It can (and typically will) require a bidder to appoint a supervisor to oversee the bidder's compliance with its POUs and progress reports must be published every 12 months. If a bidder does not comply with its POUs, the Panel has the power to require enforcement, including through the courts if necessary. This being the case, POUs require extensive discussion with the Panel before they feel comfortable assuming this role.

Each of Softbank, Melrose and Comcast made POUs to maintain the target's headquarters in the UK, and to spend a certain amount on R&D/ news services (as applicable). Softbank also made POUs to increase ARM's total number of employees.

Other commitments

However, there are certain commitments which are not readily capable of meeting the requirements of the Code. In these circumstances, bidders can make (non-binding) statements of intention and/or, with the consent of the Panel, offer commitments to other parties. For example, Comcast proposes to give certain commitments to the independent directors of Sky News for a longer period than permitted for a POU under the Code. Melrose offered the government direct commitments as to R&D spend, and not disposing of certain parts of GKN's business, in addition to its POUs.


Whilst there will not be pressure on every transaction for a bidder to give POUs or other contractual commitments in relation to its conduct of the target business, we expect that every bid will be impacted by the increased focus from the Panel, the media and other interested parties on a bidder making meaningful and detailed statements of its intentions following the offer. This will be compounded by the announcements a bidder is now required to make if those intentions are not carried out following an offer. We therefore would encourage all bidders to start considering what it is able to offer to stakeholders at an early stage in considering an offer.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions