Roundtable criticises takeover approach

By Mike Ross

Friday 28th July 2000

Small shareholders would naturally like to see takeover rules changed in their favour - as they see it - as long as the costs fall on others, the Business Roundtable says in its submission on the latest draft takeovers code.

Long a critic of any takeover code requiring mandatory offers at the same price to all shareholders, the Business Roundtable sees public agitation for an equal price rule as clearly driven by envy and greed.

It points out there are serious economic consequences for an equal price rule. Incompetent management and weak boards are sheltered from hostile takeovers.

Takeover activity will be discouraged, to the detriment of all shareholders.

Frustrated by a lack of any sound public policy rationale for the latest draft takeovers code, the Business Roundtable has criticised the political response to those lobbyists who are calling for an equal price rule.

The roundtable argues investors should be allowed to set their own rules, as they presently do, by choosing one of the three standard takeover options required for companies listed with the Stock Exchange.

At the very least, it says, companies should be allowed to opt out of a takeovers code by shareholder vote, either before or after listing.

The Business Roundtable dismisses as absurd the argument that a one-size-fits-all code will lift share prices.

It criticises the Takeovers Panel for its unwillingness to engage in principled analysis and debate and its refusal to have regard to evidence of economic harm following a mandatory-bid equal-price rule.

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