For readers that don't recall, the Financial Times revealed in May that Stryker was looking at buying London-listed Smith & Nephew. However, once the US-based company was outed, it did an about turn and restricted itself from making an offer for six months.
Here is the Stryker statement from May:
I have no doubt this week's report - click on the link http://www.bloomberg.com/news/2014-11-24/stryker-said-to-weigh-bid-for-u-k-s-smith-nephew.html - is accurate (everybody in financial journalism knows that Bloomberg has the strictest sourcing guidelines so invariably its scoops are always on the money).
The thing is: under rule 2.8 e of the Takeover Panel code companies that have ruled themselves out from making an offer for a UK-listed business for six months are not allowed to speak to outside advisers about launching a fresh bid until the "lock up" period expires.
Here is rule 2.8 e of the Takeover Code:
"take any steps in connection with a possible offer for the offeree company where knowledge of the possible offer might be extended outside those who need to know in the potential offeror and its immediate advisers."
Now, I have been told by very well-placed sources that "immediate advisers" can include the company law firm and a retained M&A adviser but definitely not financing banks or anybody else in the wider advisory community.
If rule 2.8 e has been broken, the Takeover Panel can extend the six month lock up period.
Here is a quote directly from rule 2.8 e of the Takeover Code:
"Failure to comply with this Rule may lead to the period of six months referred to above being extended."
So, if Stryker doesn't launch a bid for Smith & Nephew this friday (when the lock up period expires) or anytime soon, perhaps rule 2.8 e might be the reason why?