The Takeover Panel Code Committee has outlined proposed amendments to the Takeover Code in relation to the treatment of dividends paid by an offeree company to its shareholders. The proposed amendments relate to:

  • Reserving the right to reduce the offer consideration if a dividend is paid. It is proposed that if the offeror reserves that right in each of any statement in relation to the terms of the possible offer (if made), its firm offer announcement and the offer document, then it can reduce the offer consideration. However, if it does not reserve that right, it will not normally be allowed to reduce the offer consideration by all or part of a dividend which is subsequently paid by the offeree company.
  • The effect of a dividend where the offeror has made a “no increase statement”. It is proposed that if an offeror has made a “no increase statement” it must reduce the value of its offer by the amount of any dividend subsequently paid by the offeree company, unless a specific reservation was included in the “no increase statement” which provided that the offeree shareholders would be entitled to receive the dividend.
  • The impact of dividends on a minimum offer price established by share purchases in the offeree company by an offeror or any person acting in concert with it. The Takeover Panel proposes to replace certain Notes to clarify how dividends are treated in such circumstances.

The deadline for responding to the proposed amendments is 12 June 2015.

A copy of the Consultation Paper can be viewed on the Takeover Panel’s website. (PDF)

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