64 LEXPERT MAGAZINE
|
NOVEMBER/DECEMBER 2017
FEATURE
SOME 18 MONTHS
aer amendments by the Canadian Securities Ad-
ministrators to the takeover-bid rules, which came into effect in May 2016, predic-
tions that the changes would alter processes and strategies in the hostile M&A mar-
ket appear to have been borne out — at least in part.
e key changes mandated a 105-day minimum deposit period, a 50-per-cent
minimum tender requirement, and a compulsory 10-day extension of bids where
a bidder had received tenders of more than 50 per cent of outstanding securities.
e extended 105-day minimum deposit period, a significant uptick from the
original 35 days, has given targets 70 additional days to find a white knight bidder.
is has reduced the relevance and efficacy of shareholder rights plans (also known
as "poison pills"), the traditional defence of choice in response to unsolicited bids.
e new "just say slow" minimum bid period also gives other interested bidders a
longer period to intervene, creating uncertainty for initial bidders, especially hostile
ones — an uncertainty that could give boards more negotiating leverage. "Poison
pills are redundant now, because they amount to a tactic used to buy time, some-
thing the regulators have now provided," says John Emanoilidis, a partner in the
Toronto office of Torys LLP.
While the new regime contemplates exceptions to the 105-day regime, M&A
lawyers predicted that they would be hard to come by, granted only when the expiry
of the new bid period approached and then only in extraordinary circumstances. "If
someone tried to issue a poison pill on day 104, it might buy them a few days but it
would soon be struck down," says Chris Sunstrum of Goodmans LLP in Toronto.
Defensive
WITH AMENDMENTS RENDERING
THE 'POISON PILL' EFFECTIVELY INERT,
PRIVATE PLACEMENTS HAVE BECOME
THE DE FACTO M&A DEFENSIVE TACTIC.
BUT THERE ARE LIMITS TO THEIR
USEFULNESS
BY JULIUS MELNITZER
PHOTO:
SHUTTERSTOCK
Workaround
