Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Contractual offer definition

What does Contractual offer mean? In public M&A practice, a contractual offer is the takeover route where the bidder (offeror) makes a contractual proposal to each shareholder of the target (offeree) to buy their shares for stated consideration (cash, shares, loan notes or a mix-and-match alternative). The expression is descriptive. In UK legislation it corresponds to a “takeover offer” under Part 28 of the Companies Act 2006, overseen by the UK Takeover Code (applicable across England & Wales, Scotland and Northern Ireland). In Ireland, the concept aligns with a “takeover bid” regulated by the Irish Takeover Panel and the Companies Act 2014. Key features: -...

UK public company takeovers: irrevocable commitments and letters of intent under the City Code—definitions, types, Rule 5/2/21, disclosure, market abuse, PDMRs, market practice and drafting considerations

Published by a LexisNexis Corporate expert

Practice notes

This Practice Note examines the law and practice on giving irrevocable commitments or undertakings or letters of intent in the context of a public company takeover (whether by way of contractual offer or scheme of arrangement) as governed by the City Code on Takeovers and Mergers (Code).

It explores the legal and practical aspects of obtaining irrevocable commitments or undertakings and letters of intent in public company takeovers—whether via a contractual offer or a scheme of arrangement—under the City Code on Takeovers and Mergers (the Code). It contrasts irrevocables with letters of intent and the main reasons to prefer one over the other. Bidders typically seek irrevocable undertakings to accept from major target shareholders just before a Rule 2.7 firm intention announcement, to gain comfort that the bid will succeed. Such commitments let the offeror show substantial support on announcement and may help secure a recommendation from the offeree board. Letters of intent are often used instead. Institutional shareholders often avoid binding themselves to one bidder, as policy or where competition may yield a higher offer...

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Web page updated on 22/05/2026

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