The Takeovers Panel is taking a much harder line as it copes with increasingly creative deals, says a top commercial lawyer.
Mike Brooker, a Phillips Fox takeovers lawyer, said: "The panel is faced with more issues to ... work out whether the rules of equal treatment are being applied. It
is probably finding that more challenging."
Brooker was commenting on the fall-out from the panel's rejection of Auckland powerlines company Vector's bid to offer NGC shareholders special rights in its pending share float. He said offers in the past tended to be either cash or scrip [shares] but Vector was offering NGC shareholders preferential rights in a separate transaction - its own planned share offer next year.
Vector management was yesterday still planning the next move in its increasingly difficult takeover, which has received two panel rebuffs. Vector has committed to floating 24.9 per cent of the trust-owned company within 12 months, and the latest rejection will delay the takeover further, coming closer to the holiday break. Vector is offering $2.91 for all NGC shares, which yesterday fell 2c to $3.12.
It is not happy at being told it cannot offer NGC shareholders the 5 per cent discount for the initial public offering (IPO) due next year.
Australian Gas Light (AGL), which has sold its 66 per cent stake in the gas transmission company to Vector, had said it did not require this preference but that had no weight with the panel, which said all shareholders had to be offered IPO preferential rights, regardless of size or any side deals.
Another takeovers legal specialist said Vector could ask NGC shareholders to approve a different offer for AGL, which would require at least 50 per cent approval at a special meeting. A way around the problem would be to ask shareholders to "tick the box" if they wanted the preferential rights, hoping AGL declined.
An exemption in the Prime Infrastructure takeover of New Plymouth powerlines company Powerco is thought to be behind the tougher approach. It allowed foreign shareholders to be paid in cash, while those in New Zealand were paid partly in bonds. This set off a flood of shareholders moving their stake to foreign addresses.
