Sagasco Amadeus Pty Limited & Anor v Magellan Petroleum Australia Limited

Sagasco Amadeus Pty Limited and Sagasco Holdings Limited (the appellants) appealed to the High Court of Australia against a decision of the Court of Appeal concerning the interpretation of a provision of the Corporations Law. The dispute arose from a transaction where the appellants acquired all the shares in a company at a price stated to be higher than that of a proposed takeover offer, but this acquisition occurred before the takeover offer was formally made. The core of the disagreement centred on whether this pre-takeover acquisition constituted giving a benefit to a person whose shares might be acquired under a takeover scheme, in contravention of the relevant legislation.

The High Court was required to determine the proper construction of section 754(1)(a) of the Corporations Law. Specifically, the court had to decide whether a person who acquires all of another person's shares at a price higher than a subsequent proposed takeover offer, but prior to the offer being made, has given a benefit to a "person whose shares may be acquired under the takeover scheme" within the meaning of that section. This involved considering whether the recipient of the benefit must be someone whose shares could still be acquired under the scheme after the prior transaction, or if the section applied to individuals whose shares were potentially subject to the scheme before any acquisition occurred.

The appellants argued that by acquiring all of the shares before the takeover offer was made, the vendor was no longer a "person whose shares may be acquired under the takeover scheme" as contemplated by the legislation. They contended that the language of the section, its underlying policy, and its legislative history supported this interpretation. The Court of Appeal had reached a contrary conclusion, interpreting "takeover scheme" in a broader, more general sense than its statutory definition. The High Court's ultimate decision would clarify the scope of the prohibition against providing undisclosed benefits in the context of takeover offers, particularly concerning transactions that precede the formal offer.