In its latest annual Market Cleanliness report published yesterday, the Financial Conduct Authority (FCA) has found that 38% of UK takeover targets in 2024 experienced an abnormal increase in their share price in the two days before the first announcement of a firm or possible offer. This is consistent with separate analysis undertaken by White & Case, which found that 40% of announcements of UK takeovers that commenced an offer period in 2024 were "forced announcements" triggered by press speculation and/or share price movements.
What obligations are there to maintain secrecy ahead of an announcement?
The UK Takeover Code (Code) stresses the vital importance of absolute secrecy before the announcement of an offer or possible offer. All persons privy to confidential information, and particularly price sensitive information, concerning an offer must treat that information as secret and take steps to minimise the chances of a leak. The UK Market Abuse Regulation (UK MAR) also makes it a civil or criminal offence to unlawfully disclose inside information. Financial advisers are expected to take a leading role in ensuring offer parties are made aware of these requirements and the UK Takeover Panel (Panel) and the FCA will investigate leaks of possible offers to identify the source of such a leak.
What can you do to minimise the risk of leaks?
Steps that the offer parties can take to minimise the risk of leaks include:
- Limiting disclosure of the potential offer, internally and externally, to a small number of people on a need-to-know basis
- Taking appropriate advice from brokers and lawyers and monitoring for leaks on an ongoing basis
- Listed issuers following inside information policies (e.g. disclosure committees, insider lists)
- Using procedures to minimise the risk of leaks (e.g., codenames, IT controls, information barriers)
- Making recipients aware of the need for secrecy, obtaining confidentiality undertakings and implementing wall-crossing procedures where appropriate
- Ensuring compliance with a policy for the secure storage and disposal of confidential information
- Ensuring compliance with protocols for engaging with the media (e.g., only permitting designated personnel to speak to media and following pre-approved scripts)
Why does this matter?
Strategic and inadvertent leaks can cause significant movements in a company's share price. From a bidder's perspective, this may have the undesired effect of reducing the "bid premium" that its indicative offer price bears to the target's share price before the offer is announced. At a time when shareholders are increasingly hawkish when scrutinising offer terms, this may make a bidder's offer price appear below market when benchmarked against comparable offers.
Where an offence under UK MAR is established, the FCA can impose unlimited fines, require the payment of restitution, issue prohibition orders and/or withdraw approvals of regulated firms and approved persons. The Panel also has wide-ranging enforcement powers for breaches of the Code.
This is clearly an area of focus for the FCA, which in March 2025 published a bulletin in which it raised concerns about the increase in instances where material information on live M&A transactions appeared to have been deliberately leaked to the media (apparently for strategic purposes). Offer parties and their advisers should be alert to these issues when engaged in takeover transactions.
Darius Lewington (White & Case, Senior Professional Support Lawyer, London) and Peter Wilson (White & Case, Professional Support Counsel, London) contributed to the development of this publication.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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