Takeover bids 

In the case of takeover bids, the offerors may often themselves decide, for example, on the amount and kind of consideration offered. Conditions may be set for the exercise of the offer but the shareholders of the target company must be able to reasonably assess whether the conditions are likely to be met. The bid period is usually a minimum of 3 and a maximum of 10 weeks.

Takeover bids may be restricted to a certain kind of security but all holders of the same kind of security must be offered equal consideration. Considerations for securities of different kinds (for example A or B shares, or shares and warrants) may differ but have to be in a reasonable and fair proportion to each other.

The offeror is obliged to increase the bid or pay compensation to the accepter if the offeror, or someone acting with the offeror, acquires securities in the target company on better terms than those of the takeover bid, during the bid period or within 9 months from the end of the period.

It must be pointed out that acceptance of a takeover bid is voluntary for shareholders. Unless shareholders accept the offer, they do not have to respond in any way, nor does refusal of the offer change their shareholder status.

2 February 2010