Invoking protective conditions to terminate public mergers and acquisitions transactions

Bidder protective conditions (such as material adverse change clauses) are used by bidders in takeover offers of publicly listed targets, allowing them to withdraw their offers costlessly when events specified in such conditions occur. This article examines the scope and efficacy of protective conditions in UK, under the City Code on Takeovers and Mergers and case law, and compares with the regulatory positions in US and Australia. It analyses whether UK should uphold its current regulatory approach towards protective conditions, in the light of recent events.