Australian regulator say seeks to end takeovers by stealth
SYDNEY, July 11
SYDNEY, July 11 (Reuters) - Australia's corporate regulator is considering changing takeover laws to prevent investors from building significant stakes in a company without making a full offer.
Under the current laws, investors who have reached the 20 percent maximum shareholding allowed before launching a takeover offer can then increase their shareholding by 3 percent every six months.
David Medcraft, the chairman of the Australian Securities and Investments Commission, told ABC Radio on Wednesday the laws allowed predator investors to use what he called "creep" tactics to take over a company without paying a premium.
His comments follow controversial moves by billionaires Gina Rinehart and James Packer to increase their shareholdings and gain board representation in Fairfax Media Ltd and Echo Entertainment Group Ltd respectively.
An aborted $1.65 billion takeover offer for David Jones by little-known British-based company EB Private Equity that played havoc with the Australian retailer's share price has added to questions about current legislation.
"I think that the current creep provisions are an anachronism, it's basically allowing takeover by stealth which I think is inconsistent with takeover law," Medcraft said.
Medcraft said he was looking at Britain's "put up or shut up" provision, which allows targeted companies to ask the UK Takeover Panel to impose a deadline for a firm offer from a predator. If the potential bidder fails to meet the deadline, it must walk away for at least six months.
"The situation in the UK is that if you make an offer it has to be clear and it has to be committed. It can't be ambiguous or highly conditional," he said. "If it's not and you don't deliver on it there will be consequences."
ASIC must receive a formal request from the federal government to recommend changes to the laws, but its public comments put the issue firmly on the agenda.