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When can a bidder who makes a no increase statement come back with another bid or propose a scheme with increased consideration? The Takeovers Panel released a consultation paper on 14 March 2018 on its Guidance Note 1: Unacceptable Circumstances (GN1), which proposes that unacceptable circumstances are likely to arise if, after making a no increase statement, a bidder makes another bid within four months of the initial bid closing and offers increased consideration.

Submissions on the draft revised GN1 are due by 20 April 2018.

Background

A market participant that attempts to depart from, or act inconsistently with, a last and final statement, runs the risk of ASIC:

  • taking regulatory action against the market participant for misleading or deceptive conduct, or
  • making an application to the Takeovers Panel for a declaration of unacceptable circumstances.

A last and final statement is a statement made by a market participant that they will do, or will not do, something in the context of a bid. The most common example is where a bidder makes a no increase or final price statement on the consideration offered under a bid. ASIC will seek to hold the bidder to the statement, unless it has clearly reserved its right to depart from that statement.

In this context, there has been some uncertainty as to how long a bidder must wait after declaring an offer price final, before it can make a revised bid or propose a scheme at an increased consideration. Market consensus is that a period of between four to six months is appropriate, however, there has been some uncertainty around this in the absence of any formal guidance from ASIC or the Takeovers Panel.

Certainty on the horizon

The Takeovers Panel has sought to remove some of the uncertainty concerning the waiting period by proposing to amend the GN1. The proposed amendments provide that "unacceptable circumstances" will  likely arise if, after making a no increase statement, a bidder or an associate makes another bid or proposes a scheme within four months after the bid closes and offers increased consideration (unless the no increase statement clearly reserves the right of the bidder to depart from it).

Further certainty in this area would be welcomed by many in the market, however, the proposed guidance is brief and does not refer to any of the factors the Panel might take into account when determining whether a new bid within the four month period might be acceptable. This may be addressed in the submissions.

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