UK M&A transactions and strategic leaks

If you are working on an M&A transaction which involves a quoted company, then Primary Market Bulletin 54 | FCA published on 14 March 2025 will be relevant to you.

What are the key points for issuers and their advisers?

There are five key points.

1. First that in the FCA’s view, “individuals directly involved in transactions appear to be handling inside information poorly and taking inadequate action to prevent leaks”. 
2. Second, the FCA is “concerned that a culture may have developed among market participants where strategically leaking inside information to the media is acceptable during a transaction”. PMB 54 makes it clear that strategic leaks are not acceptable and anyone unlawfully disclosing inside information, deliberately or otherwise, risks being investigated by the FCA for market abuse.
3. Third, issuers and their advisers “can mitigate reputational and professional risk by taking precautions when dealing with inside information and adopting a firm stance to combat any form of unlawful disclosure”.
4. Fourth, it's not enough to rely on written policies and procedures for identifying and handling inside information. Issuers and their advisers also need to foster a culture and working practices which actively discourage leaks. 
5. Fifth and perhaps surprisingly, given its been in the UK Takeover Code for ever, the FCA has felt the need to flag Rule 2.1(a) of the UK Takeover Code which sets out the importance of secrecy and security on code-regulated transactions. Rule 2.1(a) states that: “Prior to the announcement of an offer or possible offer, all persons privy to confidential information, and particularly price-sensitive information, concerning the offer or possible offer must treat that information as secret and may only pass it to another person if it is necessary to do so and if that person is made aware of the need for secrecy. All such persons must conduct themselves so as to minimise the chances of any leak of information.”

What’s the focus of PMB 54?

In PMB 54, the FCA has focussed on:

• leaks which occur inadvertently and which do not involve the disclosure of specific details of a transaction and
• strategic leaks where “inside information” is deliberately given to the press by individuals at an issuer or its advisers.

By way of background, the FCA notes that:

• Article 14 of UK MAR expressly prohibits the unlawful disclosure of inside information by stating that: “A person shall not… unlawfully disclose inside information”. 
• Article 10 of UK MAR defines “unlawful disclosure’ as ‘… where a person possesses inside information and discloses that information to any other person, except where the disclosure is made in the normal exercise of an employment, a profession or duties”.
• Article 14 of UK MAR applies to individuals regardless of whether they are employed by a regulated firm or issuer.
• For breaches of UK MAR, the FCA can impose unlimited fines, order injunctions, or prohibit regulated firms or approved persons.

Why has the FCA focussed on strategic leaks and unlawful disclosure?

Simply because the FCA has “seen an increase in instances where material information on live M&A transactions appears to have been deliberately leaked to the press”.

Examples of leaks flagged by the FCA include:

• details of discussions between the board of a target company and a potential bidder following an approach for a possible takeover
• situations in which a target company board has rejected an approach but an increased offer is likely. 

The FCA notes that, in many cases, the information leaked constituted “inside information” under article 7 of the UK Market Abuse Regulation (UK MAR) and resulted in a significant effect on the share price of the target company and/or the bidder.

How can we help?

If you would like to discuss any of the changes to the UKLR which are taking place, please speak to your usual contact at Burges Salmon, Nick Graves (head of the firm’s Corporate Department), AJ Venter or Charlotte Hamilton.