Public takeovers

Public takeovers

When a company wishes to acquire another company (‘target’) whose shares are admitted to trading on a regulated market or multilateral trading facility in the UK (eg the Main Market of the London Stock Exchange or AIM, respectively), the acquisition is typically described as a public takeover.

Typical takeover structures

The tax consequences of a public takeover will depend on how the takeover is structured, and in particular whether:

•
the consideration offered to target shareholders for their shares is:
1. ◦
  cash
2. ◦
  shares
3. ◦
  loan notes, or
4. ◦
  a combination of the above
•
the offer is structured as:
1. ◦
  a contractual takeover offer—this is where the offeror company (‘bidder’) makes an offer to the target shareholders to acquire their shares in target in return for consideration (ie cash, shares and/or loan notes), or
2. ◦
  a transfer scheme of arrangement—this is where target enters into a court scheme to sanction:
  1. ‣
    the target shareholders transferring their shares to the bidder, and
  2. ‣
    the bidder paying the target shareholders the consideration that has been offered in exchange (ie cash, shares and/or

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