The increased use of schemes of arrangement to effect takeovers has been a dominant feature of the UK public company takeover world over the past few years. One only needs to point to recent examples including Gallaher, Corus, Scottish Power, RHM and Countrywide to demonstrate the increased appetite.
No longer regarded as protracted court processes, the usefulness of schemes is now widely accepted. Indeed, they are now often thought of as the default position on many larger deals or on deals with a leveraged element. So, as the size of highly-leveraged deals in the market has grown, the schemes have followed suit. Recently, however, the market has been reminded that schemes’ structural limitations have by no means disappeared. With the takeover panel proposing to consult in the autumn on how the rules apply to takeovers by way of schemes, M&A professionals are beginning to query whether the glory days are numbered.
