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Lessons From a Failed Investment

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2 Comments
  1. Mike Dennis says:

    Fascinating story Mark but I beg to differ with your final comment. Surely this is just an example of the cut and thrust of the capital markets. Provided this hasn’t created a monopoly position (in which case someone should seek the involvement of the CMA) then its up to the shareholders and the majority of them voted for the situation in which they now find themselves.

    • Mark Bentley says:

      Hi Mike,

      The key point is this: what is the purpose of the City Code? It exists to prevent one shareholder (or a concert party) from taking control of a company, without making an offer to other shareholders. Without the City Code, the controlling party could exercise control in their own interests, to the detriment of other shareholders, but the City Code is supposed to ensure that they can only do so if they give other shareholders the opportunity to exit at an agreed price.

      The GMS (and POG) cases illustrate what appears to be a loophole in the City Code. That loophole being that a party subject to the code can make an initial offer, withdraw it and then be free to act in a manner that allows it to exercise control.

      If possible, we should discuss this with the takeover panel.

      Best,
      Mark

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