i'm going to give you an overview of company takeovers in australia at the outset i should say that australia has a very well established m a market there are sophisticated players and very well established rules which seek to balance the interests of bidders and shareholders i'm going to focus on the corporate law aspects of company takeovers but there are other rules here of course and the two important ones would be rules relating to the acquisition of interest by foreign bidders in general a foreign bidder needs to get government approval and secondly there are anti-trust laws which regulate anti-competitive takeovers and in that instance a clearance would normally be sought from the abc or possibly if there's a problem the bidder will need to divest some assets to make sure that the anti-competitive elements are removed from the transaction australia's takeover's laws a little bit similar to the laws you find in the uk both rules emphasize there needs to be a fair and informed market both rules emphasize that directors of target companies cannot entrench themselves both rules emphasize that shareholders should be treated equally and in both jurisdictions there's a takeovers panel which provides an oversight and tries to regulate some of the aspects of company takeovers one area where the australian rules differ from the uk rules is in the takeover threshold in the uk there's a 30 threshold but in australia we have a 20 rule and that means that you cannot buy shares in the company more than 20 percent unless you make a takeover bid or you can rely on some other exception there are essentially two different types of transaction to affect the acquisition of a public company in australia a takeover bid and a scheme of arrangement a takeover bid is where the bidder makes a series of offers to shareholders offering to buy their shares for a certain price the shareholders then accept the bid and then and once the once enough acceptances have been received then the bidder will have control of the company a scheme of arrangement on the other hand is a transaction which involves shareholders meeting and voting on the acquisition and once a certain threshold has been approved that will be effective provided it's also then approved by the court the fact that there are two different styles of transaction means that one of the first things a bidder has to do is decide whether to go by over takeover bid or a scammer arrangement the choices is tricky but usually comes down to a couple of factors firstly you can only do a scan of arrangement if it's a friendly transaction it requires the target company to be involved and supportive on the other hand a takeover bid can be done on a hostile or unsolicited basis because the bidder is essentially appealing directly to the shareholders so if you if you want to undertake a transaction on a hostile basis you have to use a takeover bid the other important difference relates to the approval thresholds in a takeover bid to reach 100 ownership the bidder has to receive 90 acceptances it can then compulsory acquire the minorities whereas in the scheme of arrangement once you've got 75 support in a shareholder meeting then the transaction will go through and you can acquire the minorities the trend in recent years has been that more and more bidders undertake schemes of arrangement and i think that's because they're less risk-averse than they used to be they want to conduct due diligence which means they need to do a friendly transaction and of course that lends itself far better to doing a scheme of arrangement i'll describe for you how a takeover bit operates and after that i'll describe how a scheme of arrangement operates also so you can see the differences a takeover bid would normally start with announcement being made to the stock exchange after that the bidder will prepare and serve its bidder statement that's the formal offer document and it sets out the bidder's intentions the terms of the offer how it's going to finance the bid and a lot of information it's a very important document that's given to the stock exchange and to the target company there's a statutory procedure that requires the bidder to then pause and wait for about two weeks before it can send it out to shareholders after that period is gone the document is then sent out to all the shareholders and and the offer is then open usually for an initial period of one month about two weeks after the offer has been sent out the target company is required to respond with its document which is called the target statement that document contains the recommendation of directors and other information the target company directors think is important it's a very critical document in the process and it'll give a lot of information to the bidder as to whether or not it should be improving its offer or changing any of its terms so after that the game's really on in a takeover bid and it's up to the bitter then to then amended speed uh by increasing the price by dropping conditions or perhaps extending the offer in order to make it appeal more to the shareholders and that might go on for several weeks or perhaps several months particularly if there's a rival bidder assuming the bidder has gone through that and it started to receive acceptances it will then normally keep the bid open until it's received 90 acceptances so it can compulse require the minorities at that point it closes the bid and starts the compulsory acquisition procedure which normally takes another six weeks all up a takeover bid will normally take three to four months that's how a takeover bit operates i'll now describe how a scheme of arrangement is conducted it would typically start with a formal agreement between the target and the bidder the agreement will set out the price to be paid the conditions and will set out in detail the steps that each of the parties will carry out in order to make sure that they've complied with the statutory requirements once the agreement's been signed it will be announced to the stock exchange so so that the market can start reacting to the proposal the next step is for the parties to prepare a scheme booklet this is a disclosure document which will set out the terms of the proposal and a lot of information about the bidder and the target the financing the conditions and we'll also include a report from an independent expert stating whether or not in the experts opinion the proposal is in the best interest of shareholders of the company once the booklet's been completed you then have to give it to asic asic has a two-week review period and they will go through the booklet and make various comments on it and normally the parties will amend their booklet in response to asic's comments after that the booklet then has to go before a court and a judge will read the booklet and make sure that the judge thinks it's okay and appropriate to go to shareholders and at that point the meaning will be conveyed by dispatching the notice of meeting with the booklet to shareholders convening the meeting on 28 days notice when the meeting is actually held the shareholders have to approve the scheme by a special majority majority required is 75 of the shares voted at the meeting and there's a head count test as well more than 50 percent of the shareholders represented at the meeting must also be in favor of them of the proposal so there's two aspects to satisfying that test if you get through the meeting okay then you go back to court the court then has to be satisfied that all the statutory procedures have been satisfied and that it's fair to make the scheme binding on shareholders and at that point the court will give its order and the scheme will become effective and it's normally be implemented about a week later all up the scheme of arrangement procedure will take three to four months which is about the same as the takeover bid so that's an overview of company takeovers in australia i've tried to summarize the main rules but of course there are a lot of rules and some of them are very complicated if you'd like some more information about anything i've covered in this talk or you'd like to ask any other question about company takeovers or schemes of arrangement please feel free to send me an email you'll find my contact details at herbertsmithfreehills.com we also have some guidebooks that i could send to you there's one on company takeovers and one on schemes of arrangement thanks for listening to me today you