Merger and Acquisition Transaction in Singapore
Before the offer announcement, the bidder has to assemble its board committees to consider the bid process and the day to day
matters associated with the bids. This will allow the other directors of the board to continue their oversight of the management of
the business. The committees will usually be the CEO, CFO, company secretary, legal advisers, financial advisers, and reporting
The financial adviser and legal advisers will involve in advising on the deal structure, takeover strategies and timing of the bid.
These will include arranging financing for the bid, conducting legal due diligence, drafting the legal documents and setting up any
Due diligence is often divided into legal, financial, tax and accounting due diligence. Due diligence will generally cover the material
information of the target company such as contracts, banking agreements, financial statement, memorandum and articles of
association, and licenses among others. There can be confidentiality, exclusivity and standstill agreements depending on the
Secrecy Before Announcement
Rule 2 of the Takeover Code prescribes that there must be absolute secrecy before an announcement of a bid to prevent the
creation of a false market.
Memorandum of Understanding (MOU)
MOU or letter of intent is not intended to be legally binding. MOU usually indicates the nature of the proposed transaction and
summarizes the key terms. In lieu of the MOU, the parties may use the term sheet as the basis to negotiate the main merger and
Ideally, the bid is announced by the bidder and/or the target only when the parties are ready to do so and there is no leakage of
information to the market, no unusual movement in the share price of the bidder or target and there is no rumor or speculation.