Corporate Actions - A Concise Guide. Francis Groves

the trade associations of the UK’s institutional investors allow small issues of shares to be made that don’t take account of shareholders’ pre-emptive rights. Appendix lll looks at the subject of pre-emptive rights and non-rights issues in more detail. [return to text]

      22 This does not have to be an ‘all or nothing’ decision; shareholders are perfectly entitled to take up some of their rights but not all of them. [return to text]

      23 See Appendix lll for more detail on pre-emption and alternatives for issuers. See also the phrase “excess application” in the Glossary of terms. [return to text]

      24 Of course, there may be other arguments in favour of a takeover that don’t reflect badly on the current management, for example, economies of scale or the desire of the acquiring company to gain access to the distribution channels of the target company. The subject of the long-term outcomes for mergers has been much researched and the view that only a minority are truly successful seems on the way to becoming orthodox. [return to text]

      25 Once a takeover has been successful a shareholder who did not accept the offer at the time has ‘sell out’ rights, the right to have their stake bought out by the new parent company. However, the acquirer will have “squeeze out” rights if their shareholding rises above a certain proportion (normally around 90% - EU law stipulates 90-95% but devolves the precise level to the decision of individual member states). [return to text]

      26 See Chapter 3. [return to text]

      27 See Chapter 7. [return to text]

      28 Another form of de-merger would be a management buyout. [return to text]