524 19 A Listed Company as the Target
Table 19.1 Regulation of the Management of Information in the Contect of Takeovers
Potential acquirer
(listed)Potential vendor
(listed)Target (listed)Stage of decisions
on holdingsActual size of hold-
ings.
Making plans to
buy.
Actual decision to
buy.
Changes in hold-
ings.Actual size of hold-
ings.
Making plans to
sell.
Actual decision to
sell.
Changes in hold-
ings.Actual size of
shareholders’ hold-
ings.
Knowledge of
other parties’ plans
or actual decisions.
Changes in hold-
ings.
Stage of contract-
ingNegotations.
Contracts.Negotiations.
Contracts.Negotiations or
contracts.
Knowledge of
other parties’ nego-
tiations or con-
tracts.
Disclosure, use Selective disclosure.
Use of information
disclosed selec-
tively.Selective disclosure.
Use of information
disclosed selec-
tively.Selective disclo-
sure.
Use of information
disclosed selec-
tively.
Public offer Planning a public
offer.
Decision to make a
public offer.
Terms of the public
offer.
Various stages of
the public offer.Reaction to the
public offer.
The use of take-
over defences.
Various stages of
the public offer.As can be seen, there is no room to discuss all situations and all information rela-
tionships in this book. However, five common situations can be discussed from
the perspective of a potential acquirer which is a listed company itself: (a) using a
toehold strategy; (b) delaying the disclosure of its plans; (c) ensuring selective ex-
change of information; (d) acting in a certain capacity (acting in concert); and (e)
making a public takeover bid.
19.3 Toehold, Creeping Takeover, Major Holdings
In principle, the prospective acquirer could benefit from acquiring a major holding
of shares (“toehold”) before making its intentions known. Information about a
threatening takeover could cause the target to employ takeover defences. In addi-
tion, the valuation of the shares could change, as investors price the shares on the
basis of how much the acquirer would be prepared to pay in the light of the private