As you might expect, the UK business secretary Lord Mandelson’s proposals for changes to the rules for takeovers last week were light on detail, heavy on sentiment. What was more odd was that they contradicted everything the government has tried to emphasise about shareholder responsibility.
The proposals, made in reaction to the takeover of Cadbury by Kraft, include raising the voting threshold for a change of ownership from 50.1% to two thirds. This would, of course, require changing a raft of other rules, such as the threshold for an ordinary resolution under the Companies Act. Otherwise, as a resolution requires 50% an acquirer could change the management of a target even if it couldn’t acquire ownership, effectively disenfranchising shareholders by not giving them a chance to sell their stock. The relationship with a mandatory takeover bid would also have to be altered.
But a change...