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In its pursuit of its quarry, Pfizer will have to negotiate UK takeover rules that have become trickier to navigate since the start of the decade.
The political controversy over Kraft’s takeover of Cadbury, the confectioner, in 2010, and a subsequent speech by the UK company’s former chairman Sir Roger Carr, led to revisions of the Takeover Code in 2011 to strengthen the position of target companies and force bidders to put more information into the public domain.
Among the most significant changes to the rules, which are administered by the Takeover Panel, was a tight timeframe aimed at preventing bidders from stalking companies for lengthy periods of time without tabling a formal offer.
Now Pfizer faces a May 26 deadline to “put up or shut up” as to whether it will make a formal offer for AstraZeneca – unless the target’s board requests an extension. If it fails to put a formal bid on the table, Pfizer will have to wait for six months before returning.
In addition, bidders must now publish more information on what they intend to do about jobs and major assets such as factories and – in AstraZeneca’s case – research facilities. Target companies’ employee representatives have a greater ability to make their views on the deal known.
Break fees, which the target agrees to pay the bidder if a deal is not completed, are now banned in the UK – in contrast with the US.
One senior corporate lawyer said the UK regime had become more “friendly” to target companies, but that AstraZeneca might still come under pressure not to insist on the initial “put up or shut up” deadline.
“If there is a body of shareholder support to engage in dialogue with Pfizer, AstraZeneca will be under pressure to go to the Panel and say we would be content to extend by another four weeks – or whatever the period may be,” he said.
The current obstacles Pfizer faces are relatively modest when compared with suggestions from the Labour leader Ed Miliband for future reform.
Mr Miliband has written to prime minister David Cameron calling for a stronger “public interest test” to apply to takeovers, taking into account strategic elements of the UK’s science base.