City Takeover Could Take Months Not Days
There are various rules to observe in a takeover of a quoted company and these set out various steps to be followed and the possible timelines associated with each step.
The first stage will be the formal offer to the board of the offeree company (the one being taken over) by the offeror (the one doing the takeover). This will be publicised via an announcement to the relevant stock exchange.
The next stage involves the production and sending out of the formal offer document to all shareholders. This is a comprehensive document covering all aspects of the offer for the target company. The requirement is that this must be sent out within 28 days of the formal offer.
The offer document will set out various things but these will usually include two key things;
1) The length of time that the shareholders have to respond. This has to be a minimum of 21 days.
2) The criteria for the bid to succeed. Generally this will be conditional on acceptance by either 50.1% or 75% of shareholders. If this level isn’t met then the offeror can walk away from the deal.
So after the minimum 21 days, the offeror will know what proportion of the shareholding they have received acceptances for. If they haven’t reached their target then they can extend the offer period by making an improved offer. They are allowed to extend the original offer period up to 60 (or possibly 70) days but can extend it further with Takeover Panel approval.
At the end of the period, they will count up the acceptances and, if they’ve reached their target, will declare the offer “unconditional”. Any remaining undecided shareholders will then have 14 days to accept or reject the offer. If they haven’t reached the required threshold then the deal is off.
So it’s entirely possible that the whole proceedings could take two months or even longer, from offer to finalisation. If all timescales run to the maximum allowable then it could be close to four months.
However, someone else could also bid and, in this case, the timeline is set back to day 1. So the rival bidder then has to make an announcement and the same considerations apply. So the whole thing could actually drag on for quite some time.
If the deal is for the 29.95% held by John Wardle & David Makin, then this can be done quickly as it is a simple sale of shares and doesn’t trigger a mandatory offer, although there is nothing to stop a bidder from making a wider offer, as described above. However only buying this shareholding will not make anyone owner of the club, merely the largest shareholder.
So the idea that a deal to buy the club could be done quickly is unfortunately somewhat wide of the mark.