Saturday, May 26, 2007

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.

11 Comments:

At 5:17 pm, Anonymous Anonymous said...

If you haven't got anything new to add to the debate, why bother?

 
At 6:52 pm, Blogger Manchester City Supporters' Trust said...

Our intention was to point out the facts. Far too many people seem to be under the impression that the takeover of the club could be a done deal and that we would have a new manager by the end of next week.

 
At 10:54 pm, Anonymous Wigan Blue said...

Well it seems to me that with the departure of Sylvain Distin (and possibly Michael Ball) we are being put into a situation where we cannot survive another season in the Premiership - even if the takeover eventually goes ahead. There will be no meaningful pre-season preparations, any new manager will have to take charge of unknown players, and devise strategies and tactics with the available players on the hoof. There will be no opportunities for new players to come in before the start of the season, and we all know from bitter experience what is available in the January window.

We have heard repeated announcements from the board that the well-being of the club will be paramount. Personally, I have made my own contribution by renewing my season ticket before the cut-off date (alhough I believe that conditions at the club have deteriorated so much since then that I would have a valid claim for a refund should I choose to take that route).

The only possible route that the board can take now is to appoint a manager, finalise the outstanding contract negotiations, and bring in new players. There is no choice. Nobody is going to go ahead with the purchase of a club doomed to relegation. The share-holders will just have to take the up-front expenses on the chin. If and when the takeover takes place, no doubt the offer price will be adjusted accordingly.

 
At 2:56 pm, Anonymous Anonymous said...

Oh aren't we a bunch of happy chappies, why look on the bright side when you can spread a bit more doom and gloom. Because no one involved in the take over or at the club would have thought about something so obvious as pre-season!

I personally did not renew until Pearce had been shown the door, but it amazes me how many doom and gloom merchants have attached themselves to our club, and god for bid something positive comes out of this take over. I personally could not go to the match with anything but a positive attitude. But what will the doom and gloom merchants do if we do get a class manager and class players? Probably go back into their shells praying for it all to go tits up. Do us a favour wait until we get some kind of outcome and leave the moaning to the MUEN. After all they can sh*t stir better than the lot of us put together.

 
At 3:46 pm, Anonymous Wigan Blue said...

Anonymous

So you want them to sit back and do nothing? I suppose you're right - it's what they've always done. Why should they try to save the club from relegation - they probably consider that they'll be long gone by then. Yes, yours is the only sensible attitude in the circumstances.... It'll all work itself out in the end.

 
At 5:21 pm, Anonymous Anonymous said...

Who said anything about doing nothing, what I said was I have enough confidence in those involved in the club that they would be taking care of the day to day stuff. But I'm an optimist, and I believe that whatever the outcome Wardle and Makin will ensure that it is in the best interests of the club. If I am proved wrong then fair enough, but I am not going to spend my time moping around, spreading doom and gloom. But what do I know, answer probably about as much as any normal fan. But I am not looking for every little thing that can go wrong with this, or any other, deal, because, especially with our club, it would send me insane. So my attitude is not to do nothing, but don't fret about something that you can have no influence over.

So cheer up for godsake.

 
At 8:03 pm, Anonymous Anonymous said...

Anonymous - I don't see any doom and gloom being spread about here. All I see are genuine fans asking questions, the answers to which will go along way to reassuring the faithful that (a) something is happening, (b) if there is something happening it's in the best interests of the club and (c) if it doesn't come off, then we have an ace up the sleeve so that all is not lost.

I also see a group of people trying to explain to everyone that a takeover isn't something that is normally concluded in 5 minutes.

Isn't this all really what you have intimated at? So how can you have a go at these people when they seem to be saying the same as you, only slightly more pragmatically?

 
At 12:19 am, Anonymous Anonymous said...

while the takeover may take months, the search for a new manager must be resolved in a few days. City fan's need to accept that the club have to go to a plan B. The A plan is out of the window (a big name manager) until the takeover is done. Expect to see a lower class manager in a few days. Any manager is better than none !
Brace yourselves for Jewell or Simpson or maybe Sevn ?

 
At 2:13 pm, Blogger St Petersburg Blue said...

the way this lot are dithering, don't you mean it might take years....?

 
At 5:10 pm, Anonymous Anonymous said...

HAving managed public takeovers before, what you are saying is only half true. If the buyer gets irrevocable undertakings from the major shareholders pre-offer period (which is very likely in this case) he could already be over 50%. It could take a couple of months for the loose ends to be tied up but Thaksin could start making operational decisions straightaway (via Wardle if necessary). By the middle of next week he could be the de facto, if not de jure owner of MCFC

 
At 10:25 pm, Anonymous Anonymous said...

We shouldn't be holding our breath on this takeover and daydreaming about $ms. Typical City, all huff and puff to get the attention then it goes quiet as the Thai has probably wondered just where the black hole is that all our money is disappearing into.

 

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