(DGO.L) Dragon Oil PLC Buy/Sell

This is an Irish site:

http://www.mccannfitzgerald.ie/news_and_publications_5.asp?sID=12

Takeovers by scheme

The scheme provides a different approach to the acquisition as it does not involve an offer to each of the target's shareholders. Instead, it comprises a proposal put forward by a target company to its own shareholders which, if successful, would result in 100% of the share capital of the target being acquired by a third party. The target board will ask the target shareholders to vote on the proposal in a specially convened general meeting or meetings. The scheme must be approved by:



a majority in number

representing 75% in value


of the shareholders of each relevant class actually voting at a general meeting.

If the scheme is approved, and subsequently confirmed by the High Court, it becomes binding on all of the target's shareholders, regardless of whether or not they voted on the scheme.

Structure of takeover schemes

In takeover schemes, the entire issued share capital of the target is usually cancelled and the reserve created by that cancellation is applied to issue new fully paid shares (equivalent in number and value to those cancelled) to the acquirer, resulting in the acquirer owning 100% of the share capital of the target. The acquirer will then either pay cash or issue new shares in the acquirer (or a combination of cash and shares) to the former target shareholders in return for the cancellation of their shares in the target.

Shareholder approvals level

Careful consideration must be given to a target's shareholder profile in deciding whether a scheme might be appropriate. Where the acquirer is not confident of securing, by a takeover offer, the 80% acceptances necessary to enable it to acquire compulsorily the shares of the non-accepting shareholders, it may nonetheless believe that it would be able to muster the support of a majority in number, representing 75% in value, of the shareholders of each class who vote at the general meeting or meetings. In a scheme, shareholder apathy may favour the acquirer, as only the shareholders who vote, and the shares that are voted, are counted for the purpose of the above percentages. If a large number of shareholders do not vote, a relatively small percentage of shares voted in favour may be sufficient to carry the scheme. On the other hand, the position of a dissenting shareholder with a holding of, say, 5% of the target's shares may be enhanced in a scheme, as a small attendance of, say, less than 20% at the general meeting would enable that member to block the scheme.


Chew that over, folks.
I'm off to bed.