Mergers and acquisitions expected to continue at high level

With merger and acquisition (M&A) activity near recent highs, the Institute of Directors (IoD) and the Takeovers Panel are urging directors to refresh their understanding of takeovers regulation.

There were 119 mergers or acquisitions in 2018, following 127 in 2017. MinterEllisonRuddWatts M&A Forecast for 2019 notes that "cashed up investors continue to bolster the market with many still on the search for the top quality assets". The law firm predicts activity will remain high through the first half of 2019.

IoD Chief Executive Kirsten Patterson says directors must take a company-first stance as shareholders may have different – even competing – interests during a takeover.

"It's important that directors maintain their focus on what is best for the company. For example, directors may recommend shareholders either approve or reject the transaction, should it be subject to a shareholder vote," Kirsten Patterson says.

The IoD and Takeovers Panel have released updated guidance on how changes in ownership of Takeovers Code companies should be managed. The Takeovers Code: a Quick Guide for Directors can help boards recognise when Takeovers Code regulations are relevant to a transaction and how to apply them.

"The guide outlines key director obligations during a transaction including setting up an independent committee, appointing an independent adviser, communicating with shareholders and preparing a target company statement," Kirsten Patterson says.

"They also have a responsibility to ensure that all shareholders have access to independent and timely information."

See also Takeovers code – a quick guide for directors

More detailed information for directors and shareholders is available at takeovers.govt.nz

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