Q&A
PUSU stands for ‘Put up or Shut up’ – it’s a rule in the Takeover Code which is triggered by a leak announcement and requires a bidder to announce a fully financed binding offer within 28 days or announce it will not be making an offer in which event it is subject to a 6-month standstill.
Note – that the Panel can relax this 28 day PUSU deadline if the target requests it to do so (which often happens) but clearly the power dynamic tilts in favour of the target.
Most prospective bidders loathe this rule as it causes them to put their head above the parapet before they are ready and a premature announcement like this can be fatal.
For a high profile example of the impact of a PUSU see the statement by Astra Zeneca plc following the possible offer announcement by Pfizer
It is therefore essential for bidders to be aware of how to minimise the risk of a leak and a consequent PUSU obligation being triggered.
Naming bidder and triggering a PUSU
The Code requires that –
- The prospective bidder is named in the first announcement even if its name has not been mentioned in the press or announced by the bidder
- A 28 day PUSU deadline is set, even if the identity of the bidder is not yet in the public domain.
PUSU stands for ‘Put up or Shut up’ – in other words the bidder must announce a fully financed binding offer within 28 days or announce it will not be making an offer in which event it is subject to a 6 month standstill (although can make a single approach to the target to see if the target is receptive to an offer after 3 months have elapsed).
Note that the Panel can relax this 28 day PUSU deadline if the target requests it to do so (which often happens) but clearly the power dynamic tilts in favour of the target.
Avoiding a PUSU
A bidder can minimise the risk of a premature leak announcement by having a full understanding of the rules on leak announcements. For guidance on when a bidder may be required to make a leak announcement see my post here.
Steps a bidder can take to avoid a leak announcement being triggered are:
- Maintain secrecy and minimise the number of insiders
- Defer engaging a financial adviser to advise it on the offer as this is a key factor the Panel looks at when considering whether a bidder is in ‘active consideration’
- Take care not to make any public statements other than ‘no comment’ and brief the investor relations team accordingly
Even if a bidder takes these steps, it is always prudent to have a draft leak announcement ready.
Sometimes a bidder can persuade the Panel that no announcement need be made if it agrees voluntarily to cease active consideration of the offer for six months.
