TransCanada PipeLines Ltd. has adopted a plan to encourage fair treatment of shareholders in event of a takeover offer. The plan addresses concerns that existing Canadian law does not allow enough time for the board or shareholders to properly consider a takeover bid. Under the plan, shareholder rights can only be exercised when a person announces the intention to acquire 20 percent or more of TransCanada's common shares without complying with the "permitted bid" provisions of the rights plan. Each right allows the holder (but not the acquirer) to purchase common shares of TransCanada at a 50-percent discount to market price.
A permitted bid is one made for all common shares to all shareholders that is open for at least 60 days. If at least 50 percent of outstanding shares (other than those owned by the offeror) are tendered by then, the offeror may take up and pay for the shares but must also extend the bid for a further 10 days. According to David Annesley, TransCanada spokesman, the company is merely reacting to the fact that a takeover can be accomplished under present law in as little as three weeks. Annesley says no takeover is imminent. (em LB t
Lori A. Burkhart is an associate legal editor and W. Lynn Garner is senior writer of PUBLIC UTILITIES FORTNIGHTLY.
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