July 20, 2016
Securities regulators in Ontario and British Columbia are holding joint hearings today to consider whether private placements can be used by companies as a defensive tactic against unsolicited takeover bids. The hearings pertain specifically to a proposed private placement offering by Vancouver-based junior miner Dolly Varden Silver Corp. which recently became the target of an unsolicited takeover bid by Idaho-based Hecla Mining Co. The rulings will be the first since changes to Canadian takeover rules in May that require unsolicited bids to stay open for at least 105 days.
Partner and co-head of Torys M&A practice John Emanoilidis was asked for his insight by the Financial Post. Below are excerpts from the article.
M&A lawyers across the country are watching the Hecla challenge closely to see if private placements can emerge as an effective defensive tactic, says John Emanoilidis, co-head of the M&A practice at Torys LLP in Toronto.
“Boards haven’t had to use private placements as a possible defensive tactic because they had poison pills available to them,” Emanoilidis said. “It will be useful to have the commissions articulate a policy on the appropriate use of private placements in the context of a hostile bid.”
“The regulators knew when they reformulated the takeover regime that they would have to clarify their position on defensive tactics,” Emanoilidis said. “They didn’t update the defensive tactics policy at the time they put out the new rule.”
To read the full article in the Financial Post, click here.
For further insight on Canada’s new takeover bid regime, see our bulletin of February 25, 2016.