27 April 2015
The Editor,
The Business Times
We refer to your article “Lessons from the KepLand takeover” (The Business Times, 17 April 2015). The article suggested that future offerors, who want to adopt a two-tier offer, consider an “early bird” clause where only shareholders who accept the lower price within a specified time frame would be guaranteed the second, higher price. The article stated that there is no express exclusion of such arrangements in the Singapore Code on Takeovers and Mergers (the “Code”) or the June 23, 2006 Securities Industry Council Practice Statement on Two-Tier Offers but the wording is vague. This is incorrect.
The Code clearly provides that an “early bird” clause as contemplated by the article is not permitted. Such clauses are prohibited as they are contrary to the general principle that all shareholders of the same class must be treated equally to ensure fairness in a takeover. The “early bird” clause is also prohibited in the United States, the United Kingdom and Australia.
Yours Sincerely
Low Sze Gin
Secretary
Securities Industry Council