Winpar Holdings Ltd v Joseph Holt Group Plc

For the purposes of the statutory compulsory acquisition regime, an offer may remain a takeover offer even where documents contain special provisions governing overseas shareholders. The requirement that terms be the same concerns primary contractual terms, particularly the consideration, rather than administrative mechanics for making or accepting the offer. A takeover offer need not be communicated individually to every shareholder. It is sufficient that the offer objectively extends to all shares and provides a practical means of acceptance. A reserved power to waive acceptance requirements does not amount to a counter-offer. An application under section 430C presupposes that a notice has been given under section 429; it cannot be used where the alleged notice is said to be wholly invalid.

Joseph Holt Group Plc made a takeover offer for all the shares in Holt plc. The offer documents contained provisions restricting direct distribution into Australia and other jurisdictions, but stated that the offer extended to all Holt shares and allowed documents to be collected in the United Kingdom. After acceptances exceeded 90 per cent, Group served Winpar Holdings Ltd, an Australian minority shareholder, with a notice under section 429(1) of the Companies Act 1985 as amended.

A Deputy Judge of the Chancery Division dismissed Winpar’s challenge to the compulsory acquisition notice. The Court of Appeal considered whether there was a takeover offer, whether Winpar’s shares were excluded, whether acceptance was practically possible, whether individual communication was required, and whether Winpar had costs protection under section 430C(4).

1. Appeal dismissed. The three members of the court agreed with Lord Justice Peter Gibson’s reasons.
2. The special provisions for overseas shareholders concerned the mechanics of making and accepting the offer. They did not alter primary contractual terms, such as the consideration. Accordingly, the requirement in section 428(1) that the terms be the same for all shares was satisfied, subject to the limited variation permitted by section 428(4).
3. Construed objectively, the offer documents and the Financial Times advertisement extended the offer to all shares in Holt, including shares held by persons resident in the forbidden territories. The fact that documents were not sent directly to those shareholders did not exclude their shares from the offer.
4. Acceptance was practically possible. A shareholder could accept from outside the forbidden territories, and Group’s reserved power under paragraph 8(d) of the offer terms enabled it to waive the warranty requirements. Exercising that power did not constitute a counter-offer; it made the shareholder’s acceptance effective.
5. The validity of a takeover offer did not depend on communication to every shareholder. Such a requirement would frustrate the statutory purpose of enabling a successful offeror to acquire a small minority holding. Re Chez Nico Restaurants Ltd [1991] BCC 736 concerned invitations to treat and did not establish such a communication requirement.
6. The challenge was not properly brought under section 430C. That provision operates on the express premise that a notice has been given under section 429. The court rejected the proposed reading that it also covered a notice alleged to be invalid because section 429 had not been complied with.
7. Lord Justice Gibson added that the court’s conclusion should not be taken as approving the practice of withholding direct communication to overseas shareholders in every circumstance. A section 430C application might succeed in a different case, but the present facts gave it little prospect of success. The appeal was dismissed with costs to be assessed summarily.

• Court of Appeal (Civil Division): Winpar Holdings Ltd v Joseph Holt Group Plc [2001] EWCA Civ 770. Appeal dismissed with costs.
• High Court, Chancery Division: A Deputy Judge dismissed Winpar’s challenge to the section 429(1) notice and ordered it to pay three-quarters of Group’s costs.