William Arrenberg and Michael Alliston examine the tax implications of the different ways of effecting public takeovers and mergers.
In this article we consider the tax implications of the different ways of effecting public takeovers and mergers. It is assumed that the shareholders and companies are UK resident and that the recipient of any sale proceeds will be subject to tax on chargeable gains as opposed to income tax.
There are two principal ways to effect a takeover of a UK public company. It can be implemented by way of a contractual offer by the bidder for the shares of the target. Alternatively a takeover can be effected by a scheme of arrangement under which the court using a statutory procedure gives effect to the takeover.
