UK regulator seeks review of takeover rules

The UK regulator is inviting proposals on how to change the rules governing mergers and acquisitions following US food giant Kraft Foods' takeover of iconic British brand Cadbury this year as lawmakers watched amidst widespread criticism.

The UK Takeover Panel said yesterday that it is breaking away from its normal practice and inviting proposals for possible amendments to the Takeover Code and other aspects of takeover laws.

Some of the main issues that the regulator is looking to review are whether the ''50 per cent plus one'' minimum acceptance condition for a takeover offer should be raised.

It is also seeking to review whether the voting rights should be withheld from shares bought by the acquiring company during the course of the proposed acquisition and whether to reduce the 1 per cent trigger threshold for the disclosure of dealings and positions in relevant securities.

The panel will also examine whether safeguards should be reintroduced in relation to substantial acquisitions of shares as also restricting the fees paid to investment bankers.

The takeover of Cadbury by Kraft, which lasted five months, became one of the most acrimonious in the UK's corporate history. (See: Shareholders approve Kraft's acquisition of Cadbury).

Former Cadbury chairman Roger Carr had urged the UK government to overhaul rules on mergers and acquisitions as the current rules were not in the long-term interests of British business.

Speaking at the Said Business School in Oxford, England, after the takeover of Cadbury, Carr had said that the UK takeover rules should be changed to 60 per cent of shareholders approving a takeover, rather than the present 50.1 per cent in order to reduce the power of hedge funds, which buy a company's stock after a bid has been made.