Split over changes to take-over procedures

Date: 05/06/1997

MEMBER state governments and MEPs are taking a mixed approach to European Commission attempts to breathe new life into an EU framework for take-over procedures.

MEPs have given the proposed framework directive on take-over bids fast-lane treatment and look likely to vote heavily in favour of the proposal when it comes up for debate at their plenary session later this month.

National ministers appear less enthusiastic and their Brussels experts have yet to schedule a meeting to take even an initial stand on the issue.

The Commission has proposed a tame set of procedures which bidders and targeted companies would have to follow throughout the Union when a take-over was launched. The proposal is aimed at protecting minority shareholders and providing a minimum level of European harmonisation.

It steps back from earlier proposals designed to make take-overs easier by abolishing obstacles such as voting rights held only by some shareholders and the possibility for a board to take unilateral defensive measures against hostile bids. These aroused vociferous opposition from the Netherlands and, to a lesser extent, Germany.

The European Parliament's legal affairs committee supported the Commission proposal almost unanimously with minor amendments. But some experts fear some of these changes could make it less acceptable to national governments, citing as an example the committee's demand that the board of the take-over targeted company must act in favour of the whole company and attempt to protect jobs.

“This sort of thing could only make it more difficult to make headway,” said one expert.

The new UK government was expected to take a stand on the issue this week so that it will be able to lobby MEPs ahead of this month's vote. But no one in London seems to be betting on a radical shift from the previous government's outright opposition to the plan.

The UK's attack on the proposals marked it out as the Commission's main opponent, although London claimed a handful of other countries were in sympathy with its views.

The British argument has been that the Commission proposal would wreak havoc on its flexible rules for handling take-overs by putting a regulatory straitjacket on the take-over panel, and spark an outbreak of litigation where previously there was none.

Commission officials contend the UK is overstating the threat and that it has specifically opted for a framework directive which will allow individual member states to fill in a lot of the details.