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Reverse takeover
Practical Law UK Glossary 3-107-7167 (Approx. 5 pages)
Glossary
Reverse takeover
A takeover or acquisition where the target is larger than the bidder with the result that the target shareholders become majority shareholders in the bidder. The term has different meanings depending on its context:
In the context of the Listing Rules, a transaction where certain listed companies acquire a business, company or assets where either:
- Any percentage ratio calculated in accordance with the class tests in Listing Rule 10 is 100% or more.
- The transaction, in substance, results in a fundamental change in the business or a change in the board or voting control of the listed company.
For a premium listed company, the transaction requires shareholder approval. The combined group must apply for listing and is treated as a new applicant. For more information, see Practice note, Listing Rules: LR 5.6: Reverse takeovers.
In the context of the AIM Rules for Companies, any acquisition(s) in a 12 month period which for an AIM company either:
- Exceeds 100% in any class tests (AIM).
- Results in a fundamental change in its business, board or voting control.
- In the case of an investing company, departs materially from its investing policy (as stated in its admission document or as approved by its shareholders).
For an AIM company, the transaction requires shareholder approval. The combined group must apply for admission to AIM and is treated as a new applicant. For more information, see Practice note, AIM: reverse takeover transactions.
In the context of the Takeover Code, a transaction where a bidder may as a result need to increase its existing issued voting share capital by more than 100%.