Day 1 of the Takeovers Code – from the trenches

18 October 2022

1 July 2022 marked the 21st anniversary of the New Zealand Takeovers Code. Then Takeovers Panel Deputy Chair David Jones, and Chapman Tripp Partner John Strowger, reflect on the high profile Montana takeover on the day the code came into force.

David Jones’ reflections

Sunday, 1 July 2001

Allied Domecq had some days earlier announced an offer to take over Montana in a manner that it believed would not fall foul of the Code when it came into force. John King was the Chair of the Panel at the time and I was the Deputy Chair.  He telephoned me the day of the announcement to say that he would have to step away immediately from any consideration of the offer by the Panel as his firm acted for Lion Breweries, which had an interest in Montana.  

His parting comment - “Good luck, David” - had echoes in my mind of the voice in Mission Impossible when sending the team into the field…

Much of what happened in the following days was refining the processes and procedures that had been developed over several years of preparation and were now being put into practice for the first time.  

We wanted to ensure that we acted promptly for certainty in the market. I called around the Panel members to see who was available and not conflicted.  From memory the division of the Panel was myself, Colin Giffney, Alastair Lawrence and Kevin O’Connor. I called them to meet in Auckland at my offices on Sunday afternoon along with the Chief Executive, Kerry Morrell and the General Council, Margaret Bearsley.  

I decided that properly the division would retain an appropriate QC to assist the Panel.  Kerry Morrell suggested that one of the QC’s who assisted the Securities Commission would be sensible.  None were available so I contacted Paul Heath a QC based in Hamilton who was happy to assist.

After long deliberations, finishing in the early evening, the Panel resolved to hold an inquiry into the Allied Domecq offer as it appeared that it might breach the Takeovers Code. Chapman Tripp partner John Strowger represented AD in respect of its offer for Montana. John and I have always been on good collegial terms. I called John who appeared to be a bit surprised to receive my call on a Sunday evening in the middle of winter. 

The call went something like this:  

“John, I’m calling in my capacity as the Chair of a division of the Panel in relation to the AD offer for Montana”. Reply: [cautious silence] “Yes”. [Me again] “John, the Panel considers that AD’s offer may breach the Code so we have requisitioned a meeting pursuant to section 32 of the Takeovers Act to consider the matter in five days time”. [John’s response, again after cautious silence]. “Who do you think you are”. [Me again] “John, the Takeovers Panel”. [That was really the end of the call]

At the inquiry a number of eminent lawyers appeared. The finding was a breach of the Code, and as a consequence, the issue of a restraining order on the offer by the Panel.

John and I spoke after the meeting.  John was adamant that the Panel’s decision was quite wrong. Within a few days, Lion Breweries, a competing bidder for Montana, was before the Panel in what was considered to be a breach of the Code in relation to the terms of its offer.  

After a similar formal hearing, the Panel found Lion to be in breach of the Code.  Following the decision, John Strowger telephoned me to congratulate the Panel on its decision which I think was very sound.  We both had a bit of a giggle given his view on the Panel’s decision re. AD’s offer the week prior.

John Strowger's comments

"David’s account is entertaining. Like many aspects of life, recollections may vary. Certainly my view has always been that the Panel got both its first two decisions wrong! One obviously went in our client’s favour, the other did not…."

This is the second article in a series marking the 21st anniversary of the Takeovers Code. For more information about New Zealand takeover law contact any of the following:

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