The analyst note conundrum

Tomorrow's Business

Indecision, or should I say a difference of opinion, grips the flak trade. Some firms seem certain – to the point of their voices rising higher with fear – that they aren’t allowed to send analyst notes to hacks if there’s a takeover of any sort occurring.

If the deal is agreed, hostile or merely mooted, they won’t press the forward button.

Their lawyers have told them that distributing an analyst note in the midst of a takeover could leave them in serious trouble. They’d be in breach of takeover panel rules, since the analyst note is bound to include forward-looking estimates and the flak would in effect be approving those guesses.

The flaks in these cases aren’t trying to be unhelpful. They sound under very strict instructions. Are they right though?

I’ve asked around and got two different replies. One, from some big PR firms, is that this is an unnecessarily strict interpretation of the rules. They should relax.

The second, from old-timers who run their own firms, that it is total nonsense and the lawyers need putting back in their box.

I can’t see how not sending analyst notes is helpful to anyone.

Some clarity is needed…

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