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ASIC policy statement looks at ‘truth’ issues

OFFERS, claims and counteroffers between South African mining giant AngloGold Ltd and United States-based Newmont Mining over Australia’s own Normandy Mining left many investors’ heads spinning.

Just a month after the drawn out takeover battle, won in the end by Newmont, the Australian Securities and investment Commission has released a draft policy statement that seeks to clamp down on misleading statements made by bidders, the target of substantial market participation during takeover battles.

“This policy statement addresses the issue of ‘truth in takeovers’. It is for the guidance of market participants (bidders, targets and substantial holders) making public statements during takeover bids,” the policy says.

The draft updates to Policy Statement 25 confirm that ASIC will hold a market participant to its last and final statement. It will not be able to change its statement if an event such as a rival bid occurs, unless it has specifically reserved the right to do so.

“A bidder or target should act consistently with its statements. Shareholders are entitled to rely on last and final statements in deciding whether and when to accept the offer or sell on-market,” ASIC director, corporate finance, Richard Cockburn said.

The policy says a market participant in any takeover talks must always make its position clear.

“If a market participant intends to reserve the right to depart from its statement on the happening of an event, it must qualify its statement by reference to that event,” it says.

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