June 15, 2016
Canada’s new takeover bid regime was put into effect by The Canadian Securities Administrators on May 9, 2016; among other changes, the new rules increase the minimum bid period for takeover bids from 35 to 105 days. Partner and co-head of our M&A Practice John Emanoilidis was asked by National magazine, the official periodical of the Canadian Bar Association, for his insight on how the new rules may impact certain aspects of the Canadian M&A landscape—including deal activity and tactics employed by both bidders and target boards. Below is an excerpt from the article.
Lengthening the statutory 35-day period often created uncertainty but parties should now expect a maximum 105-day bid period. “In addition to providing more time, it also provides a target board with more leverage in negotiating with the hostile bidder because another feature of the rule change is that the board will have the ability to abridge that 105-day period back down to 35 days,” says Emanoilidis.
He predicts that a bidder will see the benefit of more engagement with a target board and will try to negotiate a friendly deal because that will give the bidder a shorter time period. “Obviously with a longer time period, there is increased deal uncertainty because that will expose a hostile bidder to an interloper for an extended period of time,” he said. It used to be “relatively easy for a bidder to bypass the board and simply ask the regulators to terminate the pill.” There are also increased financing costs that may arise as a result of an extended time period.
To read the full article in National magazine, click here.
For further insight on Canada’s new takeover bid regime, see our bulletin of February 25, 2016.