UK tables offer to unblock take-overs law

Date: 16/09/1999

By Peter Chapman

THE UK government has offered Spain a potentially face-saving compromise to prevent the duo's arguments over Gibraltar from scuppering adoption of the Union's long-awaited legislation on company take-overs.

Madrid refused to rubber stamp an informal agreement on the proposed take-over rules which was reached by ministers in June because of fears that it could lead to the Rock setting up its own officially recognised take-over panel.

Spain is adamantly opposed to any move which could allow Gibraltar to set up its own independent authorities because of its long-running battle with the UK over the Rock's sovereignty.

But EU sources say London has now tabled a formula which would save the Spanish authorities from having to deal directly with counterparts on any Gibraltar take-over panel in cases involving companies with interests in both markets.

This would involve the creation of a 'central post box' which would allow the Rock to rule on take-overs affecting Spanish companies via London.

The system would be directly tailored to addressing the problems caused by the Gibraltar-Spain situation, but would also be available to other member states and 'decentralised regions'.

"If Gibraltar is about to take a decision that concerns another member state - such as Spain - it would notify it via a post box. It would be just a channel," explained one insider. In this case, he added, decisions in the 'box' would be collected by London and sent to Spain from there. "That way the Gibraltar authorities would not be in direct contact with the Spaniards."

However, he admitted that the proposal might fail to satisfy Madrid because it would acknowledge the existence of an authority in Gibraltar.

"It would call the shots. All London would do is receive a fax and resend it," he said.

The Spanish foreign ministry said this week that it was still studying the proposal. Diplomats are due to discuss the issue later this week. If they believe the proposal stands a serious chance of breaking the deadlock over the take-over rules, which have been on the table for a decade and which both member states support, the Finns may push for a deal to be clinched by EU ambassadors as early as next week.

Under the terms of the proposed directive, a company taking control of a target firm should make a bid to all shareholders for their combined holdings, at an equitable price. The bidder would also be forced to make an alternative cash offer if its original offer was not made in liquid assets which were freely tradable in at least one EU market. This system would be overseen by a take-over panel in each member state which could outlaw take-over bids which failed to meet these requirements.

The UK government has offered Spain a potentially face-saving compromise to prevent the duo's arguments over Gibraltar from scuppering adoption of the Union's long-awaited legislation on company take-overs.