Deals and Developments

This newsletter is intended to highlight deals and developments within

the field of M&A and corporate finance. In this issue we focus on a number

of developments, including the new launch of the EU Takeover Directive,

the implications of the recent Sarbanes-Oxley Act of 2002, and the

increasing trend of the UK's top companies towards M&A litigation.

Another Launch For The EU Takeover Directive

The endless saga of the EU Takeover Directive continues. Seventeen years after the proposal was first put forward, and after what most commentators thought at the time was a fatal blow in 2001, when the European Parliament failed (on a tied vote) to endorse a compromise deal, the Commission has now published yet another draft version of the Directive.

The new draft follows on from the report of the EU group of "Company Law Experts" in January this year. The most recent controversial proposal put forward by that group was the "break-though" rule, which would allow bidders who achieved a 75% economic interest in the target company to override special share rights. Although the Commission has decided not to include the break-through rule, it has nevertheless included new proposals in relation to frustrating action and special share rights could prove to be just as controversial.

The key features of the new proposal are:

Companies and securities to which the Directive applies

• Member States must make rules relating to takeovers of companies whose securities are admitted to trading on a regulated market. Only offers for transferable securities with voting rights are caught by the regime.

Supervising authority

• The Member State in which the target securities are admitted to trading will have jurisdiction over the bid (or, if the securities are admitted to trading in more than one market, where its registered office is or where its securities were first admitted to trading).

• In any event, however, the Member State where the target's registered office is will have jurisdiction over issues relating to employees and company law, including the control level that triggers a mandatory bid, and the conditions under which the target board may take frustrating action.

Litigation

• Member ...

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