A Perspective from the Market for Corporate Control of the Post-Cadbury Takeover Reform

By some accounts, the UK has the most open market for corporate control in the world. This facilitative environment acts as a disciplinarian for the shirking and incompetent by allowing superior managers to acquire the full value of their improvement to undermanaged firms. Linked to the share price, this threat aligns the interests of shareholders and directors. Following Kraft’s 2011 acquisition of Cadbury, the Takeover Panel reviewed the Code on Takeovers and Mergers to address a perceived tactical imbalance between bidder and target. This reform, inter alia, automated the ‘put up or shut up’ regime and banned deal protection measures to strengthen the target company’s position. By restricting bids, this has incidentally weakened the market for corporate control’s operation as an external check on corporate governance.