Use of UK share splitting raises questions

Author: IFLR Correspondent | Published: 26 May 2017

A recent contested takeover gave the UK High Court its first opportunity to rule on the validity of share splitting in the context of a takeover by way of scheme of arrangement. In short, it ruled that actions clearly seeking to manipulate the outcome of a scheme are objectionable and can lead to the rejection of the votes of those participating in such behaviour. The outcome of the judgment has, broadly, been met with relief by practitioners, given that any other outcome could have resulted in schemes of arrangement becoming less attractive for takeovers in the UK. As is discussed below, however, the wider implications of the decision are far from clear.

The judgment in Re Dee Valley Group plc (2017), given on the basis of some very singular facts, may have been greeted with a warmer welcome had it provided settled rules on the parameters for share splitting (ie...



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