UK Takeover Panel: code game
M&A supervisor is secretive, anachronistic and effective
Bidder and target issue clarifications; opacity increases. This week’s statements from Pfizer and AstraZeneca should have damped expectations of a higher offer; they have had the opposite effect. The confusion raises familiar questions about the UK Takeover Panel.
Critics see the UK’s gentlemanly M&A supervisor as an anachronism, a self-regulatory body in an industry crowded with statutory bodies. A publicity-shy staff of mostly ex-bankers and secondees from investment banks dispense in-game advice. Their Bible is the Takeover Code, whose every rule appears to have Jesuitical exceptions.
Complexity was the root cause of the bewilderment sown by Pfizer and AstraZeneca, whose statements were probably prompted by the panel. On Sunday night, the US drugs group announced a “final proposal” to buy AstraZeneca at £55 per share. It was rejected as too low the next morning. Get-out clauses appeared to leave the door ajar for a higher “firm offer”.
Another wordy missive from Pfizer on Tuesday strengthened hopes that a loophole remained open. A blunt riposte from AstraZeneca quashed them. Many investors had believed what they wanted to: that a deal could be cut between £55 and the £59 mentioned by AstraZeneca. Instead, the code precludes – with caveats – a higher offer before the autumn.
Surely muddles are inevitable when clubbable City bankers supervise their peers? Wrong. UK takeovers tend to run smoothly. The code is complex but its principles are simple: fairness to investors and the keeping of promises. The panel saves businesses fortunes by preventing disputes ending in court, as they often do in the US.
But if the panel is going to use bid participants as mouthpieces, it must ensure their “clarifications” merit that name. Otherwise, it will have to intervene under full public scrutiny. And that would be most unBritish.