Glossary
Plain-English definitions of terms that come up regularly in Daily BidCo issues. This is general education, not legal advice — always check the primary source (the deal's own announcements) for how a term applies in a specific case.
Break fee (inducement fee)
A payment a target agrees to make to a bidder if the deal falls through in certain circumstances — for example, if the target's board recommends a rival bid instead. Meant to compensate the original bidder for its costs and discourage the target walking away.
Cash confirmation (Rule 2.7(d))
A statement in a firm takeover announcement, given by the bidder's financial adviser, confirming that the bidder has the cash resources available to complete the offer. Required under Rule 2.7(d) of the UK Takeover Code so shareholders aren't asked to accept an offer that can't actually be paid.
Concert party
A group of people or entities who cooperate to acquire or exercise control over a company, and whose shareholdings are treated as combined for the purposes of takeover rules — even if no single member holds a large stake individually.
Due diligence
The investigation a buyer carries out into a target company's finances, contracts, legal position, and operations before completing a deal — to confirm what they're actually buying and surface any risks.
Firm offer (Rule 2.7 announcement)
The point at which a possible bidder commits to making a formal offer, under Rule 2.7 of the Takeover Code. Before this, a bidder can still walk away; after it, they're bound to proceed on the announced terms (subject to any conditions).
Irrevocable undertaking
A binding promise from a shareholder (often a director or major investor) to accept a takeover offer when it's made. Bidders often secure these before announcing a bid, to show they already have support lined up.
Leveraged buyout (LBO)
An acquisition largely funded with borrowed money, using the target company's own assets or cash flow as security for the debt. Common in private equity deals, where the buyer puts in relatively little of its own cash upfront.
PUSU deadline (Rule 2.6)
"Put up or shut up" — a deadline, usually 28 days after a possible bidder is publicly named, by which they must either announce a firm intention to make an offer or walk away and stay out for six months. Stops companies being left in prolonged bid speculation.
Scheme of arrangement
A court-approved procedure under Part 26 of the Companies Act 2006 for restructuring a company or completing a takeover. Requires approval from a majority in number, representing 75% in value, of shareholders voting, then court sanction. Common for recommended (friendly) UK takeovers because it lets a bidder acquire 100% of the target in one step, without needing to reach the 90% squeeze-out threshold used in a contractual offer.
Sell-out right
Under section 983 of the Companies Act 2006, once a bidder has acquired 90% of a target through a takeover offer, remaining minority shareholders can require the bidder to buy their shares too, on the same terms — the flip side of squeeze-out.
Squeeze-out
Under sections 979–982 of the Companies Act 2006, once a bidder has acquired 90% in value of the shares (and 90% of the voting rights) covered by a takeover offer, it can compulsorily buy out the remaining minority shareholders on the same terms — allowing it to take full, 100% control.
Takeover offer (Part 28 offer)
A contractual offer made directly to a target company's shareholders under Part 28 of the Companies Act 2006, as opposed to a scheme of arrangement. Can be used for both recommended and hostile (unsolicited) bids, and typically requires acceptances reaching 90% before squeeze-out becomes available.
VWAP (volume-weighted average price)
The average price a share has traded at over a given period, weighted by how many shares traded at each price. Often used in takeover announcements to show the premium a bidder is offering relative to recent genuine trading activity, rather than just a single day's closing price.