So why so many bids?

A reader kindly brought to my attention that the Takeover Panel issued a new guidance note in early March (Takeover Panel Practice Statement 20). The key section is #3 which defines the definition of an “approach” which is now being interpreted much broader than in the past by the Panel.

The question the reader raised was whether this was behind the new flurry of bid announcements.

I doubt it but the answer is that it is too early to say. If we now see a significant number of the current bids failing to be consummated, then it is a fair bet that the changed rules will have played a some part.

What I can say is that:

- there were more 'public to privates' in year to 31st Mar 08 than ever
- there was the highest nett decrease in quoted UK SITS companies (only one IPO!)
- M&A activity (by number) continued to be strong in Q1 2008
- some people had expected changes in CGT to affect M&A by bringing fwd deals but I now doubt it had much affect.

I know some of the current deals from the 'inside'. They are clearly ‘serious’ and I can't see that they are that they are anymore likely to get aborted than any deals announced before the new rules came into effect.

Private equity sees the current ‘weakness’ as a buying opportunity and they still have loads of dosh. Several 'cash rich' trading companies see opportunities too. My expectation would be that the current run would be continued and most of the current bids consummated.

Only limiting factor is that we will soon run out of quoted candidates to be acquired!