The Panel advises that today it has accepted undertakings from Magic Millions and BB Sports in relation to the application from Magic Millions under section 657EA of the Corporations Act requesting a review of the decisions in the Brisbane Broncos Nos 1 and 2 proceedings.
The Review Panel had decided that the Cross Condition in BB Sports' bid that the Magic Millions bid still be open at the close of the BB Sports bid, could lead to unacceptable circumstances, and created an unacceptable level of uncertainty and disturbance in the market. However, with the undertakings offered by the parties a declaration of unacceptable circumstances and subsequent orders will be unnecessary.
The Review Panel was concerned that Broncos shareholders could have had a major disturbance in the market for Broncos shares but be left with no takeover offer. The Review Panel was concerned that the BB Sports bid, with the Cross Condition, could be a basis for Magic Millions relying on the provision in section 670F of the Corporations Act and not proceeding with its bid. In those circumstances it is likely that the defeating condition in BB Sports' bid would be activated.
The Panel considered that the possibility of such an outcome would detract from the confidence and certainty that the policy of section 631 of the Act was intended to provide and would detract from an efficient, competitive and informed market.
The Panel advised BB Sports that it would likely declare the Cross Condition to be unacceptable. It said that it would therefore be unreasonable to expect or require BB Sports to proceed with its bid in the face of the Panel's opposition to the Cross Condition. However, the Panel also advised that it considered that it would be unreasonable to strike down the Cross Condition and expect or require BB Sports to proceed with its bid without the Cross Condition.
BB Sports has given the Panel an undertaking that it will not proceed with the current bid with the Cross Condition, and will not include a condition which has the same effect as the Cross Condition in any future bid for Broncos, if BB Sports makes one.
The Review Panel advised BB Sports that although it would not compel BB Sports to proceed with its current bid without the Cross Condition, it would not object if BB Sports chose to do so. BB Sports has advised the Review Panel that it will announce by the end of Wednesday 23 January 2002 whether or not it will proceed with its current bid without the Cross Condition.
The Panel also advised BB Sports that it would have no objection to BB Sports making another bid for Magic Millions without a condition to the same effect as the Cross Condition, whether on terms similar or different to its current bid.
Magic Millions, for its part, has undertaken to proceed with its bid, as announced on 29 November 2001, by Tuesday 12 February 2002, unless BB Sports or an associate announces a bid for Broncos which Broncos shareholders would reasonably prefer to the Magic Millions bid. This was in response to the Panel indicating that Magic Millions only had a basis for not proceeding with its announced bid if a superior, rival bid was to be made.
The Panel said that it did not wish to be seen to be interfering with the respective strategic positions that Magic Millions and BB Sports had achieved by virtue of their takeover announcements and conditions, but it wished to minimise the risk of the market for Broncos shares being inflated by takeover announcements and then left without any bid on foot.
The President of the Panel, Mr Simon McKeon, said that he was very pleased with the outcome in a most unusual and complex matter, and especially with the cooperative way the parties had assisted the Panel resolve the issues.
The sitting Panel in this review application was Simon McKeon (sitting President), Ian Ramsay and Carol Buys.
The Panel will publish its reasons for this decision on its website in the near future.
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