Irrevocable undertaking

An irrevocable undertaking is signed by a named shareholder, usually before the offer is announced, and commits that holder to accept a contractual offer or to vote for a scheme of arrangement. It is the UK equivalent in function of a US voting agreement, but it is given to the bidder rather than agreed between the boards, which follows from Rule 21: the target board cannot hand a bidder deal protection, so the bidder goes to the shareholders instead.

The distinction that matters is hard against soft. A hard irrevocable survives a higher competing offer. A soft one falls away if a rival bids above a stated price, or sometimes on a set date. Institutional shareholders usually give soft undertakings, since a fiduciary cannot easily promise to reject a better price.

So the headline percentage is a poor guide to how locked up a deal is. A bidder announcing undertakings over a third of the register looks unassailable and may not be, if those undertakings lapse the moment someone bids more. Reading the announcement for which kind was given is the sort of detail that distinguishes an informed answer.

They matter arithmetically as well as commercially. A contractual offer needs 90% of the shares it does not already hold to squeeze out the rest, and a scheme needs a majority in number of those voting representing 75% in value. Undertakings are how a bidder gets close to those thresholds before it commits to the process at all.