Certain funds

Rule 2.7 of the Takeover Code requires the bidder's financial adviser to confirm, in the firm intention announcement itself, that resources are available to satisfy full acceptance of a cash offer. An adviser will not give that confirmation without financing documents already signed, so the money is committed before the market hears about the bid.

The consequence for the financing is that conditionality is stripped down to a very short list of things within the bidder's control. Lenders cannot walk because markets moved, because a covenant was breached elsewhere in the group, or because diligence turned up something they dislike. This is why acquisition facilities for European public bids are documented on a certain funds basis, with the drawstop events cut back to matters like illegality.

The contrast with US practice is the point worth carrying into an interview. A US bidder can announce with a financing condition attached and go and raise the money afterwards. A UK bidder cannot, which shifts risk from the target's shareholders to the bidder and its banks, and which is a large part of why hostile UK bids are expensive to launch and rarely launched casually.

The knock on effect is that merger control becomes the last real route to failure in a UK public cash bid. Once financing certainty is a regulatory requirement rather than a negotiated term, the conditionality argument moves entirely onto clearance, the long stop date and what the bidder must do to get cleared.