EU Regulator Reviews Whether to Expand Corporate Hostile-Takeover Defenses
By Jim Brunsden and Aoife White – Aug 29, 2011 8:15 AM ET
The European Union may consider expanding options available to companies to block hostile takeovers as part of a review of legislation on corporate acquisitions.
The European Commission in Brussels is examining whether firms have too little power to use defensive measures such as share-transfer restrictions or multiple voting rights, to prevent a hostile takeover, according to a letter from the regulator obtained by Bloomberg News.
European Union regulators have struggled to clarify how far companies can go under existing law to protect themselves against unwanted takeovers. Hermes International (RMS) SCA, the maker of Birkin bags, won a waiver of French market rules to shield itself against a possible bid from LVMH Moet Hennessy Louis Vuitton SA (MC) earlier this year.
The commission will examine “control structures and barriers to takeovers,” according to the letter, sent to law firms and trade associations earlier this month. It will also examine how EU rules on issues such as treatment of minority shareholders during an acquisition compare with those in other regions.
The review is being carried out to satisfy a requirement that it assess how well a 2004 law on takeover bids, is working. Under the legislation, the commission has until this year to assess the rules and propose revisions, “if necessary,” the letter says.
The commission’s review will determine how existing EU law has achieved its aims of promoting “the integration of European capital markets,” the commission said. This should be achieved through “efficient takeover mechanisms and strong rights for shareholders,” it said.
Amadeu Altafaj, a spokesman for the European Commission, declined to immediately comment.
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