Acquiring listed companies by scheme of arrangement

By Michael Sheng and Marie McDonald, Blake Dawson
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Under Australian law there are two main methods of obtaining control of a listed company: takeover bid and scheme of arrangement. For large transactions, schemes have increasingly become the preferred method of acquisition. Advantages of a scheme, as compared with a takeover bid, include that a scheme:

  • requires a lower threshold of target shareholder approval in order to attain 100% ownership;
  • has more flexibility in terms of the structure of the consideration that can be offered to shareholders;
  • is an “all or nothing” structure, giving certainty of outcome; and
  • has a more certain timeframe.

A recent example of an acquisition by way of scheme of arrangement was the acquisition of Arrow Energy – valued at A$3.5 billion (US$3.5 billion) – by a joint venture company owned by PetroChina and Royal Dutch Shell. As part of this transaction, Arrow Energy demerged its international assets into a new ASX-listed entity, Dart Energy.

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Michael Sheng is a partner in the Shanghai office, and Marie McDonald is a partner in the Melbourne office, of Blake Dawson

Blake Dawson

Blake Dawson Shanghai office

Suites 3408-10, CITIC Square

1168 Nanjing Road West, Shanghai

Postal code: 200041

Tel: 86 21 5100 1796

Fax: 86 21 5292 5161

E-mail:

michael.sheng@blakedawson.com

marie.mcdonald@blakedawson.com

www.blakedawson.com