Takeovers, Mergers and Substantial Shareholding Disclosure
What this domain tests
This domain tests stake disclosure, mandatory tender offers, merger approvals and the conduct of offerors and target boards. It focuses on equality of treatment and avoiding creeping control.
Core rules and concepts
- Investors must disclose substantial shareholdings and subsequent changes at the thresholds set in the CMA rules. The key threshold to remember is 5% of voting rights, with further disclosure obligations as holdings change.
- A mandatory tender offer is generally triggered when a person, alone or with concert parties, reaches the control threshold, commonly 30% of voting rights. The offer must extend to all holders on equal terms.
- Offer documents must contain sufficient information for shareholders to decide, including the offeror, price, financing, conditions and intentions.
- Target boards must act in shareholders' interests, obtain independent advice where required and avoid frustrating action without shareholder approval.
- Mergers and acquisitions involving listed companies may require CMA approval, disclosure and shareholder approvals under company law.
Worked example
An investor buys 29% of a listed company and then acquires 2% more from a single shareholder. The acquisition crosses the 30% control threshold. A mandatory tender offer is likely required for the remaining shares, and the investor should have planned financing and disclosure before crossing. Buying just below 30% with concert parties can still trigger the rule.
Traps that cost marks
Do not ignore acting-in-concert holdings. Do not assume a private share purchase avoids takeover rules. Do not let a target board take frustrating action without the required approval.