Changes to the definition of acting in concert, and who is presumed to be acting in concert, under the UK Takeover Code are now in force. The changes (set out in RS 2022/2) centre on the Panel's approach to groups of companies and investment entities.

Whilst many of the changes codify the Panel's existing practice, there are some areas where its approach has changed. The key changes include:

  • Groups of companies - The threshold at which entities within a group are presumed to be acting in concert has been raised from 20% to 30%.
  • Interests that are taken into account - The Panel will look at both voting rights and equity interests/economic rights, and there is new guidance on how indirect interests should be calculated and when interests need to be aggregated. Long derivative/option positions will also be taken into account in determining whether the thresholds have been met.
  • Types of entity that the rules apply to - As well as companies, the presumptions will apply to interests held by other undertakings (including partnerships or trusts) or any legal or natural person. An interest in a limited partnership will be treated as analogous to equity share capital.
  • How the rules apply to different entities - The Panel's treatment of private equity portfolio companies has changed, and the previous practice of accepting comfort letters about wider portfolio companies has been discontinued. There are also specific provisions and guidance on how the rules apply in the context of a consortium offer, to joint ventures and to sovereign wealth funds.

It is important to understand how the new definition applies to a group of companies or investment entity, regardless of whether they intend to be a party to a public M&A transaction, because:

  • the Panel treats persons who are acting in concert as a single person and so, if one of them deals in shares without properly aggregating the interests of the wider group, it could trigger a requirement to make a mandatory offer under Rule 9 of the Code or set a floor level price for any future bid; and
  • it may impact the disclosures that an investor is required to make if a bid is announced for a company in which it holds shares.

The changes are discussed in more detail in our briefing here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.