On 19 September, a number of changes to the City Code on Takeovers and Mergers (the City Code), the regime that governs public company takeovers and similar transactions affecting the control of public companies in the United Kingdom (takeover transactions), came into effect. The changes, which are being introduced following a series of public consultations, are designed to address a perceived imbalance in certain aspects of the existing regime in favour of potential bidders, and are likely to have a significant effect on the way public company takeovers are approached in the UK. In particular, they are likely to impact the tactics adopted by potential bidders at the outset of any proposed takeover transaction. The changes will affect a number of areas of bid practice.

Virtual Bids

In recent years, an increasingly common tactic has been the use of the "virtual bid," under which a potential bidder announces that it is considering making an offer (thereby placing the target in an "offer period"), but does not commit itself to do so. The Takeover Panel (the Panel) has expressed concern that such virtual bids have been used to keep potential targets under market pressure for prolonged periods, with little attendant pressure on the potential bidder. Under the new regime, the following will occur:

• Where an announcement is made about a possible bid, the target will be obliged to name all of the potential bidders with which the target is then in talks. However, if a further bidder subsequently enters into talks, there is no obligation for its name to be disclosed (unless it is the subject of rumour/speculation).