Application from BB Sports in Relation to Magic Millions League Takeover Bid for Brisbane Broncos

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The Panel advises that it has received an application for a declaration of unacceptable circumstances and orders under sections 657A and 657D(2) of the Corporations Act from BB Sports Pty Ltd (a subsidiary of The News Corporation Ltd). The application relates to the announcement by Magic Millions League Pty Ltd on 17 December 2001 that its proposed takeover offer for the Brisbane Broncos Ltd will not proceed.

Magic Millions announced its intention to make a takeover offer for Brisbane Broncos at 16 cents per share on 29 November 2001, conditional on prescribed occurrences only and with no minimum acceptance condition.

On 14 December 2001 BB Sports announced its intention to make a takeover offer for Brisbane Broncos at 17 cents per share and lodged its bidder's statement with ASIC on the same day. The offer is conditional on Magic Millions' offer proceeding in accordance with Magic Millions' announcement of 29 November and on prescribed occurrences.

The reasons stated by Magic Millions for not proceeding with its offer are that BB Sports has made a higher offer for Brisbane Broncos, BB Sports' 44.9% relevant interest in Brisbane Broncos shares and that BB Sports and its associates do not intend to accept Magic Millions' offer.

Magic Millions has a relevant interest in 15.66% of Brisbane Broncos shares and BB Sports and its associates have a relevant interest in 44.9%.

BB Sports allege that Magic Millions' decision not to proceed with its offer gives rise to unacceptable circumstances because:

  • Magic Millions' 29 November announcement is a public proposal to make a takeover bid and under section 631(1) of the Corporations Act. Magic Millions therefore has an obligation to proceed with its offer as announced;
  • Magic Millions should not, contrary to the letter and spirit of section 631(1), be allowed to withdraw its bid other than in accordance with the terms it announced;
  • It was open to Magic Millions to insert conditions into its announcement to protect it against circumstances such as a competing bid for Brisbane Broncos being announced; and
  • To allow the withdrawal would mean that the market for Brisbane Broncos shares would not be competitive, efficient and informed, contrary to the policy of section 602(a) of the Corporations Act.

The Acting President of the Panel, Ms Nerolie Withnall, will shortly appoint a sitting Panel to consider this application.

George Durbridge
Counsel, Takeovers Panel
Level 47 Nauru House, 80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3553