Takeover Panel outs M&A rule breakers

The naming and shaming of advisers who flout merger and acquisition rules
will be the main weapon in the Takeover Panel’s arsenal, as it moves to clamp
down on companies using takeover rules as an excuse to hide details from
investors.

The head of the panel, Richard Murley, criticised companies and advisers for
citing takeover rules as a reason for not disclosing information to
shareholders.

Murley indicated that companies could be using walls of silence to conceal
insider trading, and added that shareholders should not allow groups to hide
behind takeover rules.

The comments came as a number of companies, including Rentokil Initial, Exel,
Scottish Power and BPB, were involved in merger speculation.

The Takeover Panel has not mentioned specific offenders, but hedge funds are
believed to be among the biggest beneficiaries of opaque disclosures. Hedge
funds have close relationships with City advisers, and have been proficient at
placing themselves to cash in on bid developments.

Vera Sabeva, head of the corporate finance faculty at the ICAEW, said the
panel’s power to name rule breakers would be the most important tool in its
attempts to ensure companies disclosed the required information.

Sabeva said being singled out as a rule breaker by the panel would be
incredibly damaging.

‘When you are working on deals in the City, your reputation as an adviser is
everything,’ she said. ‘If the Takeover Panel announces that you are breaching
rules, your bonus at the end of the year is not going to be as big as it would
have been.’