Panel Declares Circumstances Unacceptable in Relation to RP Data's Bid for Ltd

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The Takeovers Panel advises that it has today declared that unacceptable circumstances existed in relation to a takeover bid by two companies associated with RP Data Ltd (RP Data) for all the shares in Ltd. The declaration is in response to an application from the Australian Securities and Investments Commission made on 30 November, 2000.

The Panel found that a false market existed in Realestate shares between 5 and 30 October 2000. That was caused by a combination of circumstances which lead RP Data to make its 5 October announcement. The announcement itself lead the market to believe there was a reasonable prospect of the bid proceeding on the terms announced. There was in fact a real and unjustifiable risk of the bid not proceeding on the 5 October terms given the information publicly available at that time on Realestate's financial situation and the then recent changes in Realestate's financial situation. The changes are best reflected in the comparison of Realestate's position in the ASX Quarterly Report (Appendix 4C) for the June Quarter given by Realestate on 31 July 2000 (and its response on 3 August to an ASX query on its 4C) and its position as described in the September Quarter 4C released on 31 October 2000.

The Panel considers that the 5 October announcement, and the unjustifiable risk of it not proceeding were caused by:

RP Data

  • failing adequately to consider the publicly available information about Realestate's financial position; and
  • failing to take adequate heed of the warning signs which the Panel considers it should have seen in disclosures, or lack of, made by Realestate in a meeting between RP Data and Realestate on 3 October;

and by Realestate

  • encouraging RP Data to bid, and without providing any caution to RP Data that Realestate's then current financial disclosures were no longer representative of Realestate's financial position. Those disclosures included Realestate's Preliminary final result for 1999-2000, its June quarter 4C cash report to ASX, and Realestate's 3 August response to an ASX query.

On 5 October 2000, RP Data Ltd announced it proposed to make a takeover offer for Realestate. The offer would be $0.10 per Realestate share, plus one RP Data share for every two Realestate shares. The bid would also be subject to a due diligence condition and a "no material adverse changes" condition.

On 30 October 2000, RP Data announced it would not proceed with its bid announced on 5 October 2000, and announced a new offer for the issued shares in Realestate. The terms of the new takeover offer removed the offer of $0.10 per Realestate share, and made the offer conditional on acceptance by Realestate shareholders of a restructure proposal put to Realestate by RP Data.

The Panel has declined ASIC's application for an order under section 657D(2) of the Corporations Law that RP Data be directed to proceed with its bid announced on 5 October. The Panel has also declined ASIC's application for an order that RP Data add $0.10 per share cash consideration to the bid announced on 30 October. The Panel has received no submissions that the 30 October bid should not proceed.

The Panel considers that the information given by RP Data in its 30 October announcement, and in its bidder's statement, concerning its reasons for not proceeding with its bid on the terms it announced on 5 October was inadequate. However, the release of Realestate's September Quarter 4C Report, and the announcement by Realestate and News Ltd on 30 November mean that there is now little value in requiring RP Data to make any immediate further disclosure. However, RP Data should make better disclosure in its bidder's statement as to the reasons for its withdrawal of the 5 October bid.

The sitting Panel for this application is Jeremy Schultz (President), Marian Micalizzi and Fiona Roche.

The Panel's reasons will be published on its website shortly.

Nigel Morris
Corporations and Securities Panel
Level 47 Nauru House, 80 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3501