Good morning, it's Paul here with the SCVR for Tuesday.

Jack's busy today, but found the time to contribute an update on ERGO below, thanks to him for that.

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Lord Lee/Sharesoc campaign re takeovers

Mello Monday, the popular online investor evening (fortnightly) was very interesting last night.

I thought Lord Lee gave an insightful talk about the shortcomings of the current rules of the takeover panel. He gave some examples where companies had failed to notify investors over an extended period, when takeover talks were actually underway.

I'm preparing a letter of my own to the Takeover Panel, to back up John's stance on this. My thoughts are along these lines;

1. Takeover bids are often revealed by the press. Companies are then forced to issue an RNS called e.g. "Response to press speculation", confirming that they are in takeover talks, or have had some approach. Surely this cannot be right? We need a proper system, with rules, for when shareholders should be told about possible bid talks. I appreciate that a preliminary, or speculative takeover approach, should not necessarily be announced to the market, but surely the owners (shareholders) of any company have a fundamental right to be told, if a serious bidder expresses interest & wants to engage with management about a possible bid?

2. False market - if the company is in bid talks (usually at a c.30-50% premium price), then that means the prevailing market price may be false, i.e. people selling their shares are not aware that a takeover bid might be in the pipeline, so they are selling at a price which is not reflecting undisclosed, price sensitive news. Buyers of the shares could be insider dealing, or tipped off about a potential bid, hence might be effectively stealing money from the sellers. As we all know, insider dealing is rarely caught or prosecuted, but is probably widespread, judging from share price movements that sometimes occur just before a takeover bid. Hence why price sensitive information must be promptly disclosed, which should include any credible takeover approaches.

3. It's a fine balance between what to disclose, and what not to disclose, so I feel tighter rules need to be put in place, rather than it seemingly being left to the discretion of companies, or the vagaries of press rumours, to decide what gets announced and when.

4. Can we…

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