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ACCA Strategic Professional · Advanced Financial Management · Regulatory framework and processes

In the context of a takeover of a listed company under a typical regulatory regime such as the UK City Code, a bidder acquires 31% of the target's voting shares through market purchases. Which consequence normally follows?

Acquiring 30% or more of voting rights normally triggers a mandatory offer to all remaining shareholders, priced at no less than the highest price the bidder paid in the previous 12 months, to protect minority shareholders from being left behind.

  1. AA mandatory offer must be made to all remaining shareholders at not less than the highest price paid in the preceding 12 monthsCorrect
  2. BNo action is needed until the holding reaches 75%
  3. CThe bidder must make a voluntary offer at a premium of at least 30%
  4. DThe target board must automatically recommend acceptance

Explanation

Crossing the 30% control threshold triggers a mandatory bid to all shareholders. The price must be at least the highest paid by the bidder in the previous 12 months. The 75% level relates to special resolution control, not the mandatory bid trigger.

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