UK Takeover Panel “Toughens Up” UK Takeover Regime: The UK Panel on Takeovers and Mergers Has Announced New Rules to “Toughen Up” the UK Takeover Regime Following Criticism in the Wake of the Takeover of Cadbury PLC by Kraft Foods Inc.

Sullivan & Cromwell LLP - October 22, 2010

On October 21, 2010, the UK Takeover Panel published the results of a consultation commenced in June 2010 to review certain aspects of the UK Takeover Code. This was a politically inspired response to widespread controversy and public debate on various aspects of the regulation of takeovers following Kraft’s takeover of Cadbury, a flagship UK company.

In its original Consultation Paper, the Takeover Panel referred to public concern that it has become “too easy” for a hostile offeror to obtain control of more than 50% of the voting rights of a target company and that the outcomes of hostile takeover bids could be unduly influenced by the actions of “short term” investors such as hedge funds who acquire long derivative positions (often hedged) in target company shares after an announcement that the target may be subject to an offer.

The consultation period ended on July 27, 2010 and the Takeover Panel’s Code Committee has now published a Response Statement containing the results of the consultation and proposals to amend the Code.