Upcoming change in M&A transparency rules highlighted

Businesses that are covertly circling potential acquisition companies at the moment are being made aware that their interest in the target company could be revealed under new rules coming into effect in the next few weeks.

The rules governing bidding and acquisition processes are being changed on 19 September, after the UK Takeover Panel sought to tighten regulations in the wake of the takeover of Cadbury by US food giant, Kraft.

From that date, all companies that were in discussions with a target business at the start of an 'offer period' - or the time when the companies reveal they have been approached - will be named under the new regulations.

One British mergers and acquisitions (M&A) banker said that the new rules were a big change for the process, and companies currently involved in potential bids needed to be aware.

"The new rules will shift the balance of power in a bid situation much more to the offeree," the banker explained. "The likely result will be bidders having to take a more binary view - go hostile or go ultra friendly and pay up to get an early recommendation."

Two deals that are thought likely to be affected by the new rules are those of Alexon, the women's fashion retailer, and Arena Leisure, which operates UK racecourses, and are both currently in takeover talks. There are, apparently, a number of covert bidders involved in the processes for both companies who now have to consider whether to stop work or face being 'outed' in 10 days. If they are revealed, then they will face an automatic 28-day deadline for a bid to be tabled.

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