Statement of reasons
This notice applies to acts or omissions occurring on or after 28 June 2007.
The trustees of the Mitchell Investment Trust (the Mitchell Trustees), a trust constituted by a deed of trust dated 28 January 1994, hold or control 54.5% of the shares in Kidicorp Group Limited (Kidicorp).
On or about 31 May 2007, the Mitchell Trustees entered into an undocumented arrangement with Positive Educare Limited (Positive Educare) to accept a takeover offer to be made by Positive Educare to acquire all of the voting securities in Kidicorp, in respect of all of the voting securities that the Mitchell Trustees held in Kidicorp.
The Mitchell Trustees hold 100% of the issued voting securities in Positive Educare.
The Takeovers Panel (the Panel) has exempted the Mitchell Trustees from compliance with rule 35 of the Takeovers Code (the Code).
Rule 35 prevents the offeror, and persons acting jointly or in concert with the offeror, from disposing of any target company securities during the offer period other than to a competing bidder. The exemption granted by the Panel enables the Mitchell Trustees to accept the offer that is to be made by Positive Educare.
Should Positive Educare's offer reach the threshold for compulsory acquisition, in order to ensure that the Code's compulsory acquisition price determination process in rules 56 and 57 works as intended, the Panel has exempted Positive Educare and the Mitchell Trustees from rule 56 to the extent that, for the purposes of determining the consideration payable under compulsory acquisition, the shares held or controlled and the acceptances given by the Mitchell Trustees for the offer by Positive Educare would otherwise be included in—
As a result of this exemption, rule 57 of the Code may apply to the compulsory acquisition, depending on the level of acceptances of the takeover offer by the minority shareholders in Kidicorp.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemptions from rules 35 and 56 of the Code because the exemptions—
would avoid an unintended consequence of the Code; and
would not disadvantage other shareholders or prevent them from deciding the merits of the proposed offer for themselves; and
facilitate the utilisation of a special purpose company for making the proposed offer and for compulsorily acquiring the outstanding securities, and the use of such companies is accepted market practice; and
preserve the integrity of the compulsory acquisition price determination process encapsulated in rules 56 and 57 of the Code.