* Proposed changes introduced after Kraft-Cadbury outcry
* Panel gives respondents until May 27 for final replies
By Quentin Webb
LONDON, March 21 Britain's Takeover Panel moved
closer to adopting tougher merger rules, despite opposition from
private equity firms and others who argue the watchdog's new
regime throws up too many obstacles to takeovers.
The panel's proposals, first outlined in October, are meant
to give hostile bidders less sway and to allow boards to give
more weight to the views of employees and other stakeholders.
Private equity firms wanted the panel to water down key
measures such as a near-banning of "break fees", a four-week
deadline to "put up or shut up" once a bid approach emerges, and
the need to reveal how a bid is financed.
The 28-day deadline is supposed to stop target companies
enduring months "under siege" from a would-be bidder, but
represents a tough timetable for buyout firms dependent on
complex financing packages.
On Monday the panel published a 172-page consultation paper
outlining detailed changes to Britain's Takeover Code and set a
May 27 deadline for responses. Lawyers said, however, little had
changed since its earlier proposals, and it looked likely that
most of the rules would be adopted.
"It doesn't look like much has changed, despite three months
of intense lobbying by private equity and others," said Jonny
Myers, a lawyer at Clifford Chance.
"For our corporate clients it's excellent if they are
targets -- it strengthens their position immensely -- but I
think it's bad news for private equity, and bad news for
long-term shareholders too if this deters bidders."
The panel devised the changes after Kraft Foods Inc's
KFT.N takeover of Cadbury Plc sparked political and public
outcry, although it rejected the most radical proposals put
forward by former Cadbury Chairman Roger Carr and others.
Other changes will include publishing fees paid to lawyers,
bankers and public relations officials.
Herbert Smith, another law firm, said while Monday's
document included tweaks such as allowing a "white knight"
counterbidder to remain secret or to negotiate a break fee, in
general the panel had "held firm with the key principles set out
in its response paper ... despite the lobbying efforts of the
private equity industry and others since then."
"A few new carve-outs have been introduced but in other
areas there is a toughening up of the stance," Herbert Smith
added in an email.
The full consultation paper is available on the panel's
For a DealTalk on increased fee disclosure, "Lawyers, PRs
join bankers in UK M&A fees spotlight", click [ID:nLDE6A812K]
(Reporting by Quentin Webb; editing by David Cowell)