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In October 2023, there were ten Rule 2.7 announcements made across the UK public M&A market and four further possible offers announced.

Firm Offers announced this month:

  • Recommended cash offer by PEXA Group Limited for Smoove plc - £30.8 million
  • Recommended cash offer by Ellucian Company L.P. for Tribal Group plc - £159.5 million – public to private
  • Recommended cash offer by PSF Capital Reserve L.P. for STM Group plc – up to £39.8 million – cash and CVRs – public to private
  • Recommended cash offer by Apollo Global Management, Inc. for The Restaurant Group plc - £506 million – public to private
  • Unconditional mandatory offer by ZQ Capital Management Limited for Allergy Therapeutics plc - £47.91 million
  • Recommended cash offer by Apax Partners LLP for Kin and Carta plc - £203 million – public to private
  • Recommended cash offer by CoStar Group, Inc. for OnTheMarket plc - £99 million
  • Recommended cash offer by Poltronesofà S.p.A. for ScS Group plc - £99.39 million
  • Recommended cash offer by Siterwell Electronics Co., Ltd for FireAngel Safety Technology Group plc - £27.68 million
  • Recommended share offer by Belluscura plc for TMT Acquisition plc - £5.78 million

Possible Offer announced this month:

  • Possible offer by Belluscura plc for TMT Acquisition plc - £5.57 million – share consideration (subsequently announced a firm offer)
  • Possible offer by SEC Capital for Upland Resources Limited (withdrawn)
  • Possible offer by Wheel Topco Limited for The Restaurant Group plc (withdrawn)
  • Possible offer by Wellspring Worldwide Inc. for Sopheon plc - £114.9 million – cash consideration

Firm Offers breakdown this month:



October 2023 Updates:

Notification obligations under EU Foreign Subsidies Regulation in force

The obligation to notify M&A and similar transactions under the EU Foreign Subsidies Regulation (FSR) applies from 12 October 2023.

The FSR aims to level the playing field between EU entities and competitors from non-EU Member States that are not subject to the same kind of strict rules against state subsidies as EU entities are under the EU State Aid rules. Consequently, the FSR impacts non-EU entities, including UK entities. The obligation to notify is not solely triggered where an entity involved in a transaction has received state subsidies.

Although the aim of the FSR is to address foreign subsidies that distort competition, the notification obligations are triggered where undertakings have received foreign “financial contributions”, a much wider concept. A foreign financial contribution could, for example, include payment by a non-EU government or public authority for goods and services, even where those payments were made on arm’s length market terms (so there is no subsidy).

M&A transactions and joint ventures will have to be notified to the European Commission, and clearance obtained prior to completion, if:

  • the undertaking to be acquired, one of the merging undertakings or the joint venture is established in the EU and has aggregate EU turnover of €500 million or more (including via one or more subsidiaries); and
  • the aggregate amount of the foreign financial contributions received by the undertakings concerned is more than €50 million over the three years prior to notification.

Failure to notify when required could result in significant fines being imposed on companies by the European Commission, as well as a risk that the transaction could subsequently be investigated and ultimately unwound if the Commission concludes that it distorts the EU internal market.

Read more about the new EU foreign subsidies regime on our competition team’s blog here.

Changes to the Takeover Code and revised Practice Statement on invoking conditions

The Takeover Panel has published a response statement (RS 2023/1) setting out changes to the rule on frustrating action in the Takeover Code. It has also published a revised Practice Statement No. 5 on invoking conditions to an offer. 

Response Statement 2023/1

The Response Statement, which followed PCP 2023/1 published in May this year, mainly focuses on Rule 21 on frustrating action, but also contains some other miscellaneous changes including to the rules on the sharing of information under Rules 21.3 and 21.4.

The amendments will take effect on Monday, 11 December 2023 and will apply to all companies and transactions, including on-going transactions, from that date. The key changes are:

  • Rule 21.1 on frustrating action – Rule 21.1 restricts the board of a target company from taking any action which may result in an offer or bona fide possible offer being frustrated, unless the company obtains shareholder approval or the consent of the Panel. The rule changes are intended to provide increased flexibility for targets and greater clarity as to the actions that are and are not restricted. In particular, a target board will not be restricted from taking action that either is not material or is in the ordinary course of business. A target must still consult the Panel about any proposed action that may be restricted by the Rule.
  • Rule 21.3 (equality of information to competing offerors) and Rule 21.4 (information to independent directors in buy-outs) – The Panel has made a number of amendments to Rules 21.3 and 21.4 to ensure that an offeror or bona fide potential offeror is not denied access to the target company’s information on a technicality and to reduce the administrative burden on the parties to an offer where information is requested.

Updated Practice Statement No. 5

The Takeover Panel has updated its Practice Statement No. 5 on invoking conditions to an offer to reflect the Panel Executive’s approach in practice. It has also published an explanation of the changes it has made to the Practice Statement.

Under Rule 13.5(a), a bidder may only invoke a condition to an offer with the Panel’s consent, and consent will normally only be given if the circumstances which give rise to the right to invoke the condition are of material significance to the offeror in the context of the offer.

The Practice Statement discusses the factors the Panel will take into account in considering whether the material significance requirement has been satisfied. The changes to the Practice Statement do not signify a change in the Panel’s approach, but discuss in more detail what the Panel will look at in practice. It also discusses the Panel’s approach to conditions relating to there being no “Phase 2” reference by the Competition and Markets Authority or other equivalent regulators.

October 2023 Insights:

The number of firm offers made this October marks the highest number made in the last five years, with 10 firm offers announced. A further four possible offers were announced, which is more consistent with the volume of possible offers seen in previous years. This level of deal activity, combined with the volume of firm and possible offers seen in September, shows that the appetite for public M&A deals is on the rise again a year after its decline. In part, this may be driven by the perception that many UK companies are currently undervalued.

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October has seen a lot of interest in The Restaurant Group plc (TRG) resulting in potential competing bidders – Apollo Global Management, Inc. made a firm offer for TRG on 12 October and Wheel Topco Limited made a possible offer for TRG on 26 October (although that has since been withdrawn due to market conditions). Apollo has now received irrevocable undertakings from activist shareholders that they will vote in favour of the scheme. Given current valuations, we may see more competitive situations. Another recent competitive situation was seen on the possible offers for Pendragon PLC – however in that case, neither of the possible offers proceeded and instead the company pursued a private disposal and strategic partnership. As public M&A deal activity starts to pick up, it will be interesting to see if the number of competitive situations increases.

Key contacts

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Mark Bardell

Partner, London

Mark Bardell
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Antonia Kirkby

Professional Support Consultant, London

Antonia Kirkby
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Robert Moore

Partner, London

Robert Moore
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Stephen Wilkinson

Partner, London

Stephen Wilkinson

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