UK: UK Take Privates

Last Updated: 16 July 2019
Article by Mergers and Acquisitions Group

Bloomberg (here) recently reported that PE firms are increasingly scoping out take privates in the UK and "are fed up with waiting for Brexit". That is consistent with our experience and current mandates, and the recent deals for Merlin Entertainments and BCA Marketplace provide further evidence.

The UK takeover regime brings particular challenges to take private transactions which differ from the US in a number of significant respects. We thought it timely therefore to send out a reminder of a few of the early stage issues described in our client alert last year explaining how they can be overcome.

1. Who can management talk to?

Senior executives owe duties to act in the best interests of their companies and so need to tread carefully. However, they are free to have exploratory conversations with potential bidders provided they comply with a few basic principles:

  • they need to be sure they have internal authority and support – keeping the Chairman of the Board informed is usually sufficient during the early stages. Notably in the UK, the role of the Chairman and the CEO are invariably separate roles.
  • they must not disclose any confidential information to third parties – but usually there will be enough public information to allow for preliminary discussions.
  • the number of people they speak to should be limited, both to minimise the risk of a leak and to ensure compliance with the Panel's rule that there should be no more than six "live" discussions at any one time.
  • advice must be taken from financial advisers and lawyers prior to engaging in any discussion around management incentive arrangements or any possible equity participation in the bidder.

Once a bidder is willing to submit a written proposal to the target company, the Chairman will inform the entire board and an independent committee of the board, excluding anyone who might be involved with the bidder, will be established. The independent committee will determine what information can be disclosed to bidders and management have an obligation to share with the board any information they disclose to potential bidders. It should be remembered that any information disclosed to one bidder has to be disclosed to other potentially less welcome bidders.

2. Diligence, costs and timing

The due diligence process will be run by the independent committee so management should avoid disclosing any non-public information without prior approval from the independent committee. Target companies are not permitted to underwrite bidders' costs although if a white knight bid is made in response to a hostile offer then an inducement fee, capped at 1%, is possible.

There is also a rule ("Put up or shut up") that requires a formal offer to be announced not later than 28 days following the first public announcement of a possible offer. However, if discussions are ongoing it is usually possible to obtain an extension.

3. Management and other significant shareholdings

Sometimes management will own shares in the target company which are material in the context of an offer. Under the Takeover Code all target shareholders have to be treated equally. Therefore, if management wish to roll over their shares into shares of the bidder then either (i) all target shareholders must be offered the same opportunity to take equity in the bidder (which may result in the financial sponsor having to accommodate unwanted minority shareholders in the bidder) or (ii) independent shareholder approval must be obtained to management being treated differently. The other structural alternative is for the Takeover Panel to agree that those "rolling over" can be treated as joint offerors with the financial sponsor – this is not an easy test to satisfy. For these reasons great care needs to be taken before any discussions take place around management's future interests in the bidder.

It is worth noting that if management own a material interest in the target, a financial sponsor may be able to secure significant deal certainty by negotiating with management either a hard irrevocable undertaking to accept the offer or a hurdle irrevocable (under which management can only accept an alternative offer if the second offer is circa 15% higher than the initial offer).

4. No financing condition and no MAC

It must be remembered that in the UK a formal offer can only be made when there are "certain funds" in place to satisfy the cash consideration. Financing conditions are not permitted and, for all practical purposes, there can be no MAC condition either. The only substantive conditions that are permitted are regulatory and the requirement for acceptances of up to 90% which can be waived down 50% plus one. This means that all financing needs to be in place on an unconditional basis at the time the offer is announced.

5. Finally: "It's good to Talk" – Should we consult the Panel?

The UK Panel on Takeovers and Mergers is responsible for administering the Takeover Code which govern takeovers of UK companies. The Panel Executive (the Panel), which is primarily staffed by current or former corporate finance practitioners, regulates bids on a day-to-day basis.

The UK system of takeover regulation is principles-based. The Panel will seek to ensure that the six General Principles (here) which form the cornerstone of the Code are respected in all cases, and an understanding of the principles is essential to deftly navigate the regime.

Consultation with regulators on takeover bids is not typical nor always helpful under many regulatory regimes. In the UK by contrast, consultation often will prove to be helpful. Derogations, dispensations and waivers are possible from many Code rules subject to consultation with the Panel. The Panel responds on a timely basis to queries and is available for consultation on an “out of office hours” emergency basis.

PS The Political Environment

It is also clear that the growth in take privates will bring private equity more into the public eye. Government and the wider political community are increasingly focusing their attention on private equity. While policy thinking is incomplete, it would not be surprising if at some point private equity hits the front pages again and the old chestnuts of leverage, thin capitalisation and carried interest attract the attention of legislators.

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
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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