372 10 Exit of Shareholders
A third proposal was made to Scottish & Newcastle on 9 January 2008 and re-
jected on the following day.^192 Some progress was nevertheless made. Scottish &
Newcastle notified that its board was now prepared to engage with the Consor-
tium, but “only when a firm proposal of at least 800 pence per share had been
made and when Carlsberg has agreed to the publication of proper information
about BBH prospects”.
On 17 January 2008, the parties confirmed that they had entered into discus-
sions in relation to a possible recommended offer for Scottish & Newcastle at 800
pence per share. As no formal offer had been made at this stage, the parties ap-
proached the Takeover Panel to request a short extension to the Put up or Shut up
deadline to enable the Consortium to complete its due diligence,^193 and a further
short extension.^194
On 25 January 2008, the boards of Sunrise Acquisitions Limited (“BidCo”) and
Scottish & Newcastle plc finally announced that they had reached agreement on
the terms of a recommended cash offer to be made by BidCo, a newly incorpo-
rated company jointly owned by Carlsberg and Heineken, for the entire issued and
to be issued share capital of Scottish & Newcastle. Under the terms of the offer,
shareholders would receive 800 pence in cash for each Scottish & Newcastle
share.^195 The participating companies agreed on what can be called a dual-track
merger, that is, a merger track and an option to make a takeover offer.
The first track was thus the merger track. The offer was to be implemented by
way of a court-sanctioned scheme of arrangement under section 425 of the Com-
panies Act 2006. The procedure involved an application by Scottish & Newcastle
to the court to sanction the scheme. Before the final court order could be sought,
the scheme required the consent of shareholders at general meeting. Scottish law
required a majority of not less than three-fourths of votes in favour of the scheme.
The scheme would become effective upon sanction by the court and registration of
the final court order by the registrar of companies. Upon the scheme becoming ef-
fective, it was binding on all scheme shareholders, irrespective of whether or not
they attended or voted at the court meeting or the extraordinary general meeting.
Just in case, the parties agreed that BidCo had an option to implement the offer
by way of a takeover offer on the same terms so far as applicable. After a takeover
offer, BidCo would have applied the provisions of sections 979 to 982 of the
Companies Act 2006 to acquire compulsorily any outstanding Scottish & Newcas-
tle shares. Agreement on the second track was subject to the consent of the Panel
on Takeovers and Mergers.
Directive on takeover bids. The case of Scottish & Newcastle shows that a
merger offer can be a functional equivalent to a takeover bid. However, it would
be difficult to apply the Directive on takeover bids to mergers.
The Third Company Law Directive lays down the disclosure obligations of the
participating companies’ boards and the powers of the general meeting to decide
(^192) Scottish & Newcastle plc, stock exchange release of 10 January 2008.
(^193) Scottish & Newcastle plc, stock exchange release of 17 January 2008.
(^194) Scottish & Newcastle plc, stock exchange release of 24 January 2008.
(^195) Scottish & Newcastle plc, stock exchange release of 25 January 2008.