Hello, my name is Julian Stanier, and I am a partner in our corporate finance department in London.
As you will be aware, the volume of M&A activity in the UK increased in 2010 when compared to 2009. One of the consequences is that there have been more reverse takeovers in the UK during the past twelve months. Notable deals included Resolution’s acquisition of the majority of AXA’s UK life assurance business, International Power’s assets deal with GDF Suez and the merger of PartyGaming and bwin Interactive Entertainment.
Consequently, last month, as part of our series of ECM breakfast briefings, we gave a presentation entitled ‘Reverse Takeovers: The Listing Regimes’. The presentation covered some of the key issues under the Listing Rules and the AIM Rules which arise in the context of reverse takeovers.
I will now summarise the key areas that we cover in the briefing.
Firstly we look at the test for reverse takeovers under the Listing Rules and the AIM Rules, and the range of transactions that can be caught. We also discuss the way in which the reverse takeover test under the Listing Rules and the AIM Rules differs from that under the Takeover Code.
We consider in detail the circumstances in which a reverse takeover may be re-classified as a Class 1 acquisition under the Listing Rules, even if certain of the class tests exceed 100 per cent. For example listed to listed transactions.
We examine the consequences of an acquisition being classified as a reverse takeover, most notably the risk of suspension and the requirement for the enlarged group to re-apply for admission to listing or trading as a new applicant. We also discuss the ways in which a suspension may be avoided in certain circumstances.
As you will be aware, a significant amount of information on the target is required for inclusion in the public documentation on a reverse takeover. In our experience, the compilation of the necessary financial information on the target can be a complex and time consuming process. In the briefing we consider the key information required. We look at issues such as the need for consistency of accounting policies and the compilation of historic financial information in the context of the acquisition of a business. We also consider the prior acquisitions rule set out in Chapter 13 of the Listing Rules which can, in certain circumstances, result in a requirement to include pre-acquisition financial information on companies or businesses acquired by the target prior to its acquisition by the listed issuer.
Finally, we look at the due diligence process from a practical perspective, the underwriting agreement and, in particular, the inter-conditionality with the acquisition and the circumstances in which a Rule 9 whitewash may be required under the Takeover Code.
If you think that this is something that would be of interest to you, please contact us to let us know. We would be happy to come to your offices to present the briefing in full.
Back to top