Hong Kong Takeovers and Mergers Panel decision: Preliminary offer announcement must expressly allow offeror to deduct a final dividend from the offer price
- Although the Note may indicate that a dividend may be deducted in certain circumstances when determining an offer price, it does not give an offeror any general right to deduct a dividend from its offer price and it certainly does not permit such a deduction without prior consultation with the Takeovers Executive. Broadford could not, therefore, rely on the provisions of the Note to justify the reduction of its stated offer price by deducting from it the Company’s final dividend payment.
- In the Rule 3.5 Announcement, there was no reference to the Company’s final dividend or the possibility that the Offer Price might be subject to reduction to reflect the payment of the final dividend. The Panel views that it is difficult to see how shareholders and potential investors could have understood the Relevant Statement to mean that the offeror is permitted to reduce the Offer Price by the amount of the final dividend.
- In the Rule 3.5 Announcement, prominence is given to the Offer Price in the summary section and in a number of places in the full text. The expectation of anyone reading the Rule 3.5 Announcement would have been that shareholders will be offered HK$1.0127 per H Share irrespective of what is stated in the Relevant Statement and when payment of the final dividend was made.
- Given the requirement of the Takeovers Code that all statements made during the course of an offer must satisfy the highest standards of accuracy, shareholders and potential investors in normal circumstances should be confident that the offer price stated in an announcement made in accordance with the provisions of Rule 3.5 should not be reduced unless there is an explicit statement to the contrary.