The Early Announcements of a Potential Takeover Bid: Reflections on the Put up or Shut up Rule Under Spanish Law

Abstract

This works deals with public announcements of the possible launch of a takeover bid that may be made prior to the formal announcement of the offer, when the offeror irrevocably undertakes to proceed with it. This is a matter that many European legal systems have made subject to various versions of the so-called "put up or shup up" rules, which forces the potential offeror to clarify its real intentions in relation to the presentation of the takeover bid within a short period of time. This rule -which is usually justified by the need to prevent false markets and to protect the interests of the target company and its shareholders against the uncertainty that is usually generated simply by the possibility of receiving a takeover bid- has also guided the supervisory action of the CNMV in a notable precedent in the Spanish market. The potential risk of these preliminary announcements are analyzed, depending on the party that makes them and on their content, as well as the legal criteria that should be applied to their assessment.

Keywords: Takeover bid; offer announcement; announcement of a possible takeover bid; false markets; disclosure of inside information; delay in the public disclosure of inside information; "put up or shut up" rule; siege of the affected company; virtual or unconventional offers

JEL Classification: K22