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Bell Gully responds to Takeovers Panel on upstream takeovers
Bell Gully has responded to the Takeovers Panel's consultation paper titled 'Upstream Takeovers' released by the Takeovers Panel in April 2009.
Bell Gully supports the Panel's proposal to achieve certainty in relation to upstream takeovers that result in changes in control of downstream Code companies. The status quo leaves the Panel to consider exemptions on a case by case basis, as was done in respect of BG Group / Origin / Contact Energy.
Bell Gully supports options for reform that create a certain set of rules (complemented in appropriate circumstances by the Panel's general power to grant exemptions) which are sufficiently transparent for potential acquirers and their advisers to predict its application to a proposed upstream acquisition, including, if applicable, the method of valuation of any follow on offer.
The Australian approach, which provides the Australian Panel with the power to declare "unacceptable circumstances" is, in our view, not consistent with the general scheme of the Code which sets out detailed (and certain) rules rather than giving the Panel broad discretionary powers (other than to grant exemptions), and may not create certainty in this area.
In our view, the United Kingdom approach would be suitable for adoption in New Zealand as it provides a class exemption from the Code for an upstream acquisition unless either:
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control of the downstream Code company is a main purpose of the upstream acquisition; or
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the shareholding in the downstream company is significant in relation to the upstream company.
To read Bell Gully's full submission on the Panel's consultation paper, Upstream Takeovers, click here.
For more information please contact:
Gavin Macdonald
Partner
David Cooper
Partner
