By Evarist Baimu Nyaga Mawalla - Home

Monopolies and Commission. On 24 September it was announced that the M.M.C hadconcluded that the acquisition would not operate against the public interest. Norton Opaxwas then free to proceed with its offer. 2.2 On 25 September 1986 Norton Opaxannounced its final offer for McCorquodate. The offer was two new Norton Opaxordinary shares for each McCorqodale ordinary share and at that time, valued eachMcCorqodale ordinary share at 290p. In addition there was an underwritten cashalternative o 260p per McCorquodale, advised by Kleinwort Benson, recommendedshareholders to reject the offer 2.3 On 1 November 1986 a competing offer wasannounced.The offeror was Datafin a new company formed by certain executive director andmembers of the management of McCorquodate and backed by a number of financialinstitutions led by Prudential Bache. The offer was 300p cash per McCorquodate share.Subsequently on 6 November 1986. Norton Opax announced an increased final offer ofseven new Norton Opax ordinary shares for every three McCorquodate shares valuingeach McCorquodate share (on the basis of Norton Opax’s share price at the time) at340.7p with an underwritten cash alternative of 303.3p per share.Datafin then increased its offer first to 310p and subsequently to 315p cash per share 2.4During the course of the offers Mr. Robert Maxwell acquired a substantial shareholdingin McCorquodate and by the time of the announcement of Datafin’s final offer held some22 percent. At that stage he undertook to commit his entire shareholding to NortonOpax’s offer on the basis that if it failed both his shareholding as to acceptances havingreceived acceptances representing 50.2 per cent of the share capital of McCorquodateAt the request of the executive, Norton Opax has agreed not to declare its offer fullyunconditional pending the result of this hearing.Both the alternative cash offers by Norton Opax were underwritten in a novel, butnot unprecedented, form, involving core underwriters and core sub-underwriters ascontrasted with traditional market underwriters. The executive reported:“Under these arrangements in outline, a number of potential sub-underwrites areidentified who are prepared to accept a lower commission If the offer fails, on the basisof a higher on if it is successful. This practice has recently developed and its rationale isapparent in the case of companies bidding for other larger than themselves where there isa particular need to save costs if the bid is unsuccessful.It was first used in the Argyll/Distillers offer and was also seen as relevant for NortonOpax’s bid for McCorquodate Both core underwriters and market underwriters receive agreater commission if the bid is successful, but the difference is more marked in the caseof the core underwriters. Full details of the commission arrangements are set out inSamuel Montagu’s submission but they can be summarized as follows. (1) Marketunderwriters receive a commitment commission of per cent for each period of 7 days (orpart) in excess of 30 days (2) Core underwriters receive a commitment commission of percent increased to 1 per cent if the bid is successful. (3) Both market and core underwriter154