M&A Trends article on hostile takeovers, by John Emanoilidis, Mile Kurta and Sophia Tolias, quoted in Financial Post

‘Say Slow’ the New ‘Say No’ for Canadian Companies Fending Off Hostile Takeovers

January 09, 2013

The boards of Canadian public companies have long wished for the right to "just say no" to hostile takeover bids. That may change in 2013 if Canadian takeover rules shift in a direction that gives rise to a new catchphrase: "just say slow."

Canadian merger and acquisition lawyers have been carefully examining the public statements by officials with Canada's largest securities regulator, the Ontario Securities Commission. The OSC has yet to produce an official document that outlines a change to corporate takeover rules. But Canadian lawyers believe the commission could this year release a proposal that addresses key differences in the takeover rules that govern public companies in Canada and the U.S.

Corporate directors in the U.S. have the right to refuse a hostile bid without having to put the offer to shareholders. Canadian directors lack this ability to "just say no" to an unsolicited bid, which many on Bay Street have complained leaves Canadian companies sitting ducks for hostile suitors.

Canadian lawyers aren't expecting the OSC to bring the "just say no" defence to Canada. But they are expecting what might be the next-best thing - more time to challenge hostile bids.

The OSC is expected to lengthen the time a target company's board would have to respond to a hostile bid. There could also be some procedural changes that would complicate and delay a bidder's ability to challenge a target board's primary defensive tool, the shareholder rights plan, more commonly known as a poison pill.

This new regime would enable target boards to delay their response to hostile bids, John Emanoilidis, Mile Kurta and Sophia Tolias of Torys say in a report on M&A Trends for 2013.

"We expect that Canadian boards may become more bold in their defensive tactics," conclude the lawyers, who came up with the phrase "just say slow."

Read the full article here.

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