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Public M&A 2022 Highlights - An Uncertain Market

Only two transactions, relating to companies under the supervision of the Irish Takeover Panel, were announced in the Irish public M&A market in 2022, down from seven in 2021. The UK market was more active but still much reduced, with only 46 firm offers announced. Looking at the Irish and UK markets together, certain trends towards shareholder activism and a preference for cash become apparent.

Two Irish takeovers

Takeover of Horizon Therapeutics plc

On 29 November 2022, Amgen Inc announced it was making a cash offer for disease specialist Horizon Therapeutics plc, through a recommended scheme of arrangement. Amgen and Horizon eventually agreed to $116.50 per share, a premium of 47.9% over the market price on the day before the takeover plans were revealed. Horizon shareholders approved the acquisition at an EGM on 24 February 2023, but the Horizon board faces a shareholder suit filed in New York requesting that the deal be halted. The applicant shareholder alleges that the board failed to disclose certain key information to shareholders when recommending they vote in favour of the deal.

MHC acted for Citibank N.A and Bank of America N.A in their roles as joint lead arrangers and bookrunners in connection with the $28.5 billion senior unsecured bridge loan facility secured by Amgen to fund its offer for Horizon Therapeutics plc.

Takeover of Hibernia REIT plc

On 17 June 2022, Brookfield Asset Management completed its takeover of Hibernia for over €1 billion in cash. Brookfield paid £1.63 per share, a 33.9% premium on the weighted average share price over the 3 months prior to completion.

MHC acted for Eastdil Secured, Credit Suisse, JP Morgan Securities plc and Société Général, financial advisors to Brookfield in respect of the acquisition of Hibernia.

Three key trends

1. Schemes, not offers

Both of the Irish transactions involved schemes of arrangement rather than offers. A similar preference for schemes of arrangement can be seen in the UK, with 83% of offers structured as schemes, including all those with a deal value over £1 billion. Schemes of arrangement achieve greater certainty for the acquirer as once a scheme is approved, it will apply to all of the class of shareholders involved.

2. Shareholder activism

Shareholder activism continues to play an important role in public M&A. In the UK, shareholder willingness to block bids has only increased in previous years. For example, when Tenaz Energy Corp made a recommended offer to combine with SDX Energy plc, a group of SDX shareholders, owning an aggregate 25.65% of the share capital, successfully blocked the deal. The repeated approaches to Irish incorporated Bank of Cyprus plc by private equity firm Lone Star received significant board and stakeholder opposition and the approach was withdrawn before a firm intention announcement.

3. Cash-only consideration

Cash was the dominant form of consideration for takeover offers. Both offers made in Ireland were for cash-only consideration. In the UK, 65% of firm offers were cash only.

Predictions for 2023

Takeover Panel Rules

The Irish Takeover Rules were substantively overhauled in 2022. The new rules aligned the Irish rules to the UK City Code. We believe they will help streamline public M&A activity in the year ahead.

Investment Screening Bill

The Investment Screening Bill of 2020 is likely to be enacted this year. If enacted, it would empower the Minister for Enterprise, Trade and Employment to investigate and prohibit or place conditions on investments from outside the EU in the interests of national security or public order. We expect this to result in further conditions being added to offers.

Key takeaways

Other than the general slowdown in activity, it is difficult to discern overarching trends but shareholder activism remains an important consideration and the continued use of Schemes of Arrangement reflects this, with parties seeking the additional certainty of a court-approved scheme.

Looking forward, the new Takeover Panel Rules will align our public takeover regime more with the UK’s City Code as activity returns to more normal levels throughout 2023.

For more information, please contact a member of our Corporate team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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