Dated at Auckland this 24th day of July 2012.
The Common Seal of the Takeovers Panel was affixed in the presence of:
D O Jones,
Statement of reasons
This notice applies to acts or omissions occurring on or after 3 August 2012 and expires on 31 December 2017.
The Takeovers Panel (the Panel) has granted—
an exemption from rule 16(b) and (d) of the Takeovers Code (the Code) to Pharmacybrands Limited (Pharmacybrands); and
an exemption from rule 7(d) of the Code to Cape Healthcare Limited (CHL) and LPL Trustee Limited (LPL) to the extent that that rule requires the notice of the meeting to vote on a resolution to approve the allotment of certain voting securities to CHL and LPL to comply with rule 16(b) and (d) of the Code.
Pharmacybrands proposes to declare a dividend in respect of Pharmacybrands’ 2012 financial year and to introduce, at the same time, a dividend reinvestment plan (DRP) for shareholders. Under the DRP, Pharmacybrands proposes to offer pro rata share allotments (DRP allotments) in Pharmacybrands to CHL and LPL under rule 7(d) of the Code during the approximate 5-year period expiring on 31 December 2017.
If the DRP is implemented, then CHL and LPL are likely to become the holders of an increased percentage of voting securities in Pharmacybrands. As both CHL and LPL already each hold more than 20% of the voting securities in Pharmacybrands, any increase in their voting rights as a result of the DRP allotments that does not comply with rule 7 of the Code would breach rule 6 of the Code. Accordingly, Pharmacybrands intends to seek shareholder approval for the DRP allotments.
However, Pharmacybrands is unable to provide the information that is required by rule 16(b) and (d) of the Code to be included in the notice of meeting for shareholder approval because of the period during which the DRP allotments will take place.
The exemptions relate to the disclosure of information in the notice of meeting for Pharmacybrands’ 2012 annual meeting relating to the particulars of voting securities to be allotted under the DRP and the issue price.
The exemptions are subject to conditions that ensure that the other shareholders in Pharmacybrands will be given sufficient information about the DRP and the DRP allotments to enable them to decide for themselves the merits of the proposal.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemptions because—
it is not possible for Pharmacybrands to comply with rule 16(b) and (d) of the Code because of the period of time during which the DRP allotments will occur and the uncertainty of the potential dividend payouts:
other shareholders will be given sufficient information about the DRP and DRP allotments to enable them to decide for themselves the merits of the proposal:
other shareholders will have the opportunity to vote on the potential allotment of voting securities to CHL and LPL under the DRP allotments:
if the other shareholders approve the potential maximum allotments of voting securities to CHL and LPL, then, by implication, they can be taken to approve any lesser number and percentage of voting securities that is actually allotted under the DRP allotments during the period of this notice:
the number and percentage of voting securities that may be allotted to CHL and LPL under the DRP allotments are likely to be low, and therefore the costs of compliance with the Code would be disproportionate to the benefits.