Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Financial Services UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (June 22, 2020, 2:12 PM BST) -- The government has set out measures that will allow it to block foreign takeovers of British companies that are seen as critical in the fight against public health emergencies such as the coronavirus pandemic.
Members of Parliament were due to vote on Monday on changes to the 2002 Enterprise Act, the Department for Business, Energy and Industrial Strategy said. The amendments will allow the government to step in if a foreign business seeks to take over a British company that is essential to combating public health crises.
The new powers, which will come into force on Tuesday if approved, will allow the government to intervene in hostile takeovers of financially distressed companies that are directly involved in a pandemic response, the government department said Sunday. This could include vaccine research companies or manufacturers of personal protective equipment.
"To better protect the country's resilience to COVID-19 we are taking steps now to mitigate against public health emergencies," Secretary of State for Business Alok Sharma said Sunday. "These powers will send an important signal to those seeking to take advantage of those struggling as a result of the pandemic that the U.K. government is prepared to act where necessary to protect our national security."
Economic disruption caused by a pandemic could mean that some businesses with critical functions are more susceptible to hostile takeovers, which happen when the predatory business goes straight to its target's shareholders rather than its managers.
In its current form the Enterprise Act allows the government to block mergers and takeovers if there is a public interest consideration over national security and financial stability. The update will allow the government to intervene to combat a public health emergency.
The changes to the act are intended to be short-term in anticipation of a new National Security and Investment Bill, which will give the government additional powers to intervene in takeovers. The bill is waiting for a second reading in Parliament.
But no foreign transaction has ever been blocked on public interest grounds, the government said.
--Editing by Ed Harris.
For a reprint of this article, please contact reprints@law360.com.
