Public takeovers

Public takeovers

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

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

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