defending your corner · 2017-04-07 · investor relations maintain communication with key...
TRANSCRIPT
Defending your cornerA BID DEFENCE GUIDE
2 DEFENCE BOOK
ContentsIntroduction 3
Preparatory steps – pre-approach 4Defence team 5Marshalling the defences 6
Contacts 7
IntroductionThis Defence Book is intended to give you the information required to ensure that an immediate and effective response may be made to any unwelcome approach or takeover offer by a hostile bidder and to provide you with an overview of how a defence strategy might be implemented.
In the event of a hostile offer, it is of paramount importance that a target company (the Company) reacts with speed and a sense of purpose, and this Defence Book outlines how the Company may prepare for and react to an approach.
It is impossible to predict with any accuracy the course of any takeover since the identity of the bidder, the timetable of the offer, the market’s reaction, the documentation and the intentions of regulatory authorities will all play a significant part.
This Defence Book is, therefore, broadly based and sets out general guidance and preparations to be made to ensure that both the Company and its advisers can be effectively mobilised. Crucially, it must be recognised that at the outset of a hostile offer it is the bidder who holds the initiative and has had the advantage of planning the offer and establishing its strategy. Although the amendments to the UK Takeover Code (the Code) implemented in September 2011 attempted to redress the balance of power in favour of the target in the event of a hostile offer, successfully defending an offer will depend upon the Company capturing the initiative, which can be achieved only if the Company has the logistics for a defence already in place so that effort can be immediately concentrated on its defence strategy and tactics.
If the Company is the subject of a bid or an approach relating to a bid (whether welcome or otherwise), it is imperative that advice is sought immediately. Please speak to your usual Ashurst contact, or any of the partners listed at the end of this Defence Book.
3
4 DEFENCE BOOK
Defence book1. Preparatory steps – pre-approachThis section sets out the key issues which should be considered and actions which should be taken from time to time, i.e. before an approach is received.
It should be remembered that preparation and organisation is key in any defence scenario.
Good housekeepingThe ability to mobilise a successful defence will be greatly improved through good housekeeping.
Key preparatory steps• Form a defence committee - this is typically the board
and its key advisers, but can be a subset of the board (if pre-approved).
• Ensure key personnel and, in particular, the defence committee have access to this Defence Book and are properly briefed.
• Know the whereabouts of key personnel and the members of the defence committee plus key advisers.
• Prepare to respond to an approach. In doing so, the following key questions should be asked:
– Do you know who your likely predators are? – Can a valuation be produced quickly? – Can a profit forecast be produced quickly? – Is robust supporting data available? – Who are your potential white knights?
Be proactive and maintain a lookout• Monitor share price for untoward movements.• Scrutinise share register and make use of section 793
notices to identify underlying holders.• Maintain relationships and understand the sentiments of
your investors.• Monitor market/analyst sentiment towards the Company.• Ensure the market is aware of your key messages.
Most importantly and if you’ve not done so already, establish a defence team/committee…
5
Key Board Members and Company Secretary/General Counsel
FINANCIAL ADVISER LAWYERS BROKERS ACCOUNTANTS PR ADVISERS
Advise on conduct and tactics of the defence
Provide valuation advice to the target board
Negotiate with bidder(s)
financial adviser
Assess bidder(s)
Advise on possible white knights
Provide advice on Code issues
First point of contact with the Panel and
the FCA/UKLA
Advise, together with the financial adviser, on the conduct and
tactics of the defence
Provide legal advice on all stages
of defence
Draft defence and offer-related documentation
Draft/provide input into regulatory/anti-
trust submissions
Negotiate with bidder(s) lawyers
Provide advice on Code issues
Manage investor relations
Maintain communication with
key shareholders
Monitor market developments
Advise on market reaction
Provide updates on share dealings
Prepare profit forecast and asset
valuation
Confirm accuracy of financial information and material change
statement
Analyse bidder’s accounts and policies
Liaise with journalists and analysts
Assist with shareholder
communication
Provide updates on press coverage
Work with brokers to identify influential
stakeholders
Defence team
6 DEFENCE BOOK
Marshalling the defences
Value strategy before an approachShort term: Communicate value strategy• Develop a clear strategy so that the market has a strong
and sustainable perception of the Company’s value.• Communicate strategy to the market through easy-to-
understand messages which highlight the Company’s key strengths and opportunities.
• A company will always be vulnerable if there is a gap between its market value and fundamental value.
• Ensure that stakeholder support is in place before a bid is made rather than attempt to win over shareholders/the market during the defence of a bid.
Medium term: Raise the bar• Maintain strong operating performance.• Develop ongoing messages around value; communicate
these effectively.• Deliver on strategy.• Publicise successes and maintain communication with
institutional shareholders and key analysts.
If the foundations are strong, an approach is less likely…
7
Robert Ogilvy WatsonPartner, Global Co-head of Corporate T +44 (0)20 7859 1960M +44 (0)7831 346 [email protected]
Adrian Clark PartnerT +44 (0)20 7859 1767M +44 (0)7831 818 245 [email protected]
Tom MercerPartnerT +44 (0)20 7859 2988M +44 (0)7917 064 [email protected]
Karen DaviesPartnerT +44 (0)20 7859 3667M +44 (0)7801 782 031 [email protected]
Contacts
Dominic RossPartnerT +44 (0)20 7859 1043M +44 (0)7767 613 [email protected]
This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. The position stated is as at September 2016. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions. For more information please contact us at Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA T: +44 (0)20 7638 1111 F: +44 (0)20 7638 1112 www.ashurst.com
Ashurst LLP and its affiliates operate under the name Ashurst. Ashurst LLP is a limited liability partnership registered in England and Wales under number OC330252. It is a law firm authorised and regulated by the Solicitors Regulation Authority of England and Wales under number 468653. The term “partner” is used to refer to a member of Ashurst LLP or to an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Ashurst LLP’s affiliates. Further details about Ashurst can be found at www.ashurst.com. © Ashurst LLP 2016 Ref D/5932
www.ashurst.com