Takeovers Panel Considers Allied Farmers' Proposed Offer May Not Comply With Code

20 April 2006

The Takeovers Panel will hold a meeting on Wednesday 26 April 2006 to determine whether Allied Farmers Limited's proposed takeover offer for Prime Finance Limited complies with the Code.

On 10 April 2006 Allied Farmers Limited gave notice of its intention to make a takeover offer for the shares in Prime Finance it does not already hold. The draft offer document which accompanied the notice stated that the offer would be subject to a number of conditions including that the acquisition of Prime Finance securities under the offer is approved by shareholders of Allied Farmers.

The Panel considers that the condition of the proposed offer requiring Allied Farmers' shareholder approval of the offer may not comply with rule 25(1) of the Code.

Under rule 25(1) of the Code satisfaction of an offer condition cannot depend on the judgement of the offeror or any associate of the offeror, or be within the power, or under the control, of the offeror or any associate of the offeror. An offer condition requiring the approval of Allied Farmers' shareholders to the takeover offer may be within the power or control of Allied Farmers or associates of Allied Farmers. Accordingly, the Panel considers that the conditions of Allied Farmers' proposed offer may not comply with rule 25(1) of the Code.

A formal notice of the meeting is available on the Panel's website.

The Panel has made an interim restraining order under section 32(2) of the Takeovers Act in relation to the proposed offer. The order restrains Allied Farmers from making a takeover offer for Prime Finance which is subject to a condition requiring the approval of shareholders of Allied Farmers to the offer.