More to gain from take-over rules, claims Unilever expert

Date: 24/01/02

By Peter Chapman

US CORPORATE raiders protected from European take-overs will not snap up vulnerable EU companies, one of the business leaders responsible for mooting new take-over rules said this week.

Unilever's company law advisor Jaap Winter said European companies have a far more voracious appetite for American firms than the other way around - and that EU industry has most to gain from the proposals if they become law.

His comments follow claims by MEPs that boards of US firms can use defensive measures to thwart hostile take-over bids - a right Winter wants to ban inside Europe. 'The whole concept that now Americans are going to buy Europe is not right,' Winter said. 'We are able to buy American companies regardless if we make the right economic case. I think the Americans will [in future] be able to buy European companies if they make the right case.' He said 1999 figures showed that European companies had bought US firms worth €194 billion, whilst American companies had bought €78 billion worth of EU firms.

Winter said getting rid of a raft of barriers to take-overs inside the EU would make it easier for new owners to restructure companies and make them more competitive - and ensure shareholders get a better deal: 'If we don't make European business strong we will never be able to compete with the Americans - that's why we have to do something.'

The goal, he said, of his panel of wise men was to propose a pan-EU system that would boost the chances for successful take-over bids - regardless of member states involved.

Under the system proposed by Winter and a team of European company law experts, shareholders would have to authorise boards to 'frustrate' a take-over bid. Also, minority shareholders holding special voting rights would not be able to block take-overs if bidders manage to buy 75 or more of the risk-bearing share capital of their targets.

In some countries certain minority shareholders can veto take-overs because they enjoy special voting rights.

Winter said this 75 'breakthrough' limit on special voting rights would also apply to member states with controversial 'golden-shares' in key industrial firms that allow them to veto take-over bids. The Commission asked for the report after MEPs blocked an earlier directive last year. The blueprint is expected to form the basis for a new draft directive scheduled for April.

US corporate raiders protected from European take-overs will not snap up vulnerable EU companies, according to Unilever's company law advisor Jaap Winter.