Introduction
On 28 September 2026, Bodycote published the scheme document for its takeover by Veritas Capital, an American private equity firm. The deal values the engineering group at roughly £1.65 billion, or about £1.85 billion including debt, at 940p a share in cash. If you hold a FTSE 250 tracker, a FTSE All-Share tracker or a UK equity fund, you already own a slice of that company takeover, and nobody asked you first.
A company takeover is one of the few events in investing that can sell a holding on your behalf, at a price you did not set, on a date you did not choose. It is also one of the least explained. This guide walks through how a company takeover works in the UK, using a live deal as the worked example: the two legal routes a bidder can take, the thresholds that settle the outcome, what lands in your account and when, and why the tax differs inside an ISA and outside one.
This article is for information and education only. It is not financial advice or a personal recommendation. Investments can fall as well as rise and you may get back less than you put in. Tax treatment depends on your individual circumstances and may change.
Quick Answer: What A Company Takeover Does To Your Shares
In a company takeover, a bidder sets out to buy every share in the target. Under a scheme of arrangement, a majority in number representing 75 per cent in value of the shareholders who vote binds everyone, including those who voted against. Your shares are cancelled, cash arrives in the same account, and you never had a veto.
How A Company Takeover Works In The UK
A bid starts privately. A bidder approaches the target board, usually more than once, and the board either engages or rebuffs it. Veritas and CVC Advisers both submitted conditional proposals for Bodycote in early August 2026 at around 914p to 915p a share. Veritas returned with 940p, and on 1 September 2026 the board recommended it.
Once a firm intention to make an offer is announced, the deal enters a regulated process governed by the Takeover Code. The consideration can be cash, shares in the bidder, or a mixture, and that choice drives almost everything that follows for you, including the tax. Bodycote shareholders are being offered cash only.
The bidder is not aiming for a majority stake. It wants every share, so the company can leave the stock exchange. There are two ways to get there.
940p a share, in cash
The agreed price for each Bodycote share. Earlier conditional proposals from Veritas and CVC Advisers in early August 2026 sat at around 914p to 915p.
£1.65 billion
The equity value of the deal, or roughly £1.85 billion including debt. Bodycote is a FTSE 250 constituent, so UK index funds hold it by rule rather than by choice.
The Two Routes: Scheme Of Arrangement Or Contractual Offer
The first route is a scheme of arrangement under Part 26 of the Companies Act 2006. The company itself puts the deal to its own shareholders, who vote at a court meeting. Section 899 of the Act sets the bar: the court may sanction the arrangement where it is agreed by “a majority in number representing 75% in value” of the members voting. Once sanctioned, the Act states the arrangement “is binding on all creditors or the class of creditors or on the members or class of members”. There is no opt out. If the vote passes and the court agrees, everyone is bought out together.
The second route is a contractual offer, where the bidder goes directly to shareholders and each one accepts or declines individually. Anything above 50 per cent of the voting share capital gives the bidder control, but to sweep up the last holders it needs acceptances covering 90 per cent of the shares to which the offer relates, at which point the compulsory acquisition rules in the Companies Act let it buy out the rest.
The practical difference matters. A scheme is all or nothing. A contractual offer can leave a bidder controlling a company it does not fully own.
Source: Companies Act 2006, section 899, and the compulsory acquisition rules in the same Act. Verified 1 October 2026.
The scheme threshold of 75 per cent in value sits between the 50 per cent that gives a bidder simple control and the 90 per cent it needs to force out the last remaining shareholders. Bodycote is using a scheme, so 21 October 2026 is the date that decides it.
A Live Worked Example: The Bodycote Timetable
The scheme document published on 28 September 2026 sets out the full timetable. The bidding entity is Vulcan Alpha Bidco Limited, a newly formed company owned indirectly by funds managed by Veritas Capital Fund Management. The directors unanimously recommend shareholders vote in favour. What stands out is the gap between the vote and the money.
| Stage | Date and time |
|---|---|
| Terms agreed, board recommendation | 1 September 2026 |
| Scheme document published | 28 September 2026 |
| Proxy deadline, court meeting | 10.00am, 19 October 2026 |
| Proxy deadline, general meeting | 10.15am, 19 October 2026 |
| Voting record time | 6.30pm, 19 October 2026 |
| Court meeting | 10.00am, 21 October 2026 |
| General meeting | 10.15am, 21 October 2026 |
| Court sanction hearing | 11 March 2027, or another date in Q1 2027 |
| Expected effective date | Q1 2027 |
| Long stop date | 1 September 2027 |
Source: Bodycote plc, Publication of Scheme Document, 28 September 2026, and the recommended cash acquisition terms announced 1 September 2026. Verified 1 October 2026.
Two features catch people out. The vote happens in October 2026, but the scheme is only expected to become effective in the first quarter of 2027, and the long stop date, when the deal lapses if its conditions are unmet, is 1 September 2027. Until then you still own the shares and the cash is not yours.
What Happens Inside A Tracker Fund
If you own Bodycote through a FTSE 250 or FTSE All-Share tracker rather than directly, nothing in your account changes and no decision reaches you. The index rules do the work.
FTSE Russell’s ground rules for the FTSE UK Index Series state that a constituent is removed once it is “subject to a takeover offer that has been declared unconditional with bidders shareholding reaching at least 75%” and irrevocably accepted for payment. The replacement is announced after market close two days before the deletion, and in the FTSE 100 and FTSE 250 the company leaving is replaced by the highest ranking FTSE All-Share constituent not already in those indices.
So the fund manager makes no judgement call. The company leaves by rule and a new constituent takes the slot. That is worth understanding if you are weighing up how ETFs work or choosing between accumulating and distributing share classes. It is also happening often: Bloomberg reported UK takeover activity passing 100 billion dollars in 2026 after a summer surge in deals.
Where People Get A Company Takeover Wrong
Four misunderstandings come up repeatedly.
You cannot simply refuse
Under a sanctioned scheme of arrangement, section 899 of the Companies Act 2006 makes the arrangement binding on every member of the class. Voting against does not let you keep your shares.
The quoted price usually sits below the offer
Until a deal completes, the shares normally trade a little under the offer price, because the payment is neither certain nor yet made. The gap reflects waiting time and completion risk.
Cash is not a tax-free rollover
Where a bidder issues shares, no Capital Gains Tax arises at the point of exchange. Where it pays cash, GOV.UK is explicit that Capital Gains Tax is due on that cash.
It is not quick
Bodycote shareholders vote on 21 October 2026, but the scheme is only expected to become effective in the first quarter of 2027, with a long stop date of 1 September 2027.
The Tax Side: Inside And Outside A Wrapper
In a general investment account, an all-cash takeover is a disposal. GOV.UK guidance on share reorganisations, takeovers and mergers draws the line clearly. If the acquiring company issues shares only, “you don’t pay Capital Gains Tax when you get the shares”, and the new holding inherits the original cost and acquisition date. If you receive cash, “You must pay Capital Gains Tax on any cash you get as part of the takeover”.
There is a narrow let out where cash forms a small part of a mixed deal. If the cash is under £3,000, or under 5 per cent of the value of your holding, and does not exceed the original cost, no gain is taxed then. Your allowable cost is reduced by the cash instead, which defers the gain rather than removing it. It is no help in an all-cash deal.
Inside an ISA or a SIPP, none of this applies. GOV.UK lists gains made from ISAs among those on which you do not pay Capital Gains Tax, and confirms the charge applies to “any shares that are not in an ISA (Individual Savings Account) or PEP”. The same takeover at the same 940p produces a tax calculation in one account and nothing in the other.
How It Looks On A UK Platform
In practice most investors meet a takeover as a message rather than a legal document. A corporate action notice appears in the account with the terms and a voting instruction deadline.
Three things matter. Your platform deadline falls earlier than the company’s own proxy deadline, because the provider has to collect instructions and submit them as a single nominee vote. If you do not respond you are usually not voted at all, which is not the same as voting against. And after the effective date the holding disappears from the account and the cash is credited to the cash balance in the same wrapper, so proceeds from shares held in an ISA stay inside the ISA.
Corporate action handling is rarely mentioned in marketing material and varies between providers. If you hold individual shares rather than funds, read your provider’s corporate actions pages before you need them. Our interactive investor review covers one of the larger UK providers in detail.
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Key Takeaways
A takeover can sell your holding for you
Under a sanctioned scheme of arrangement every shareholder in the class is bought out on the same terms, whether they voted for it, against it, or not at all.
75 per cent in value is the number to know
That is the threshold section 899 of the Companies Act 2006 sets for a scheme, measured across the shareholders who actually vote rather than the whole register.
The wrapper decides the tax, not the deal
An all-cash takeover outside a wrapper is a disposal for Capital Gains Tax. Inside an ISA or SIPP, GOV.UK confirms there is no Capital Gains Tax to pay.
Trackers handle it by rule
FTSE Russell removes a constituent once a bid is declared unconditional at 75 per cent and fills the slot with the highest ranking eligible company. No decision reaches you.
Sources: Bodycote plc, Publication of Scheme Document, 28 September 2026. Companies Act 2006, section 899. FTSE Russell, FTSE UK Index Series Ground Rules. GOV.UK, Capital Gains Tax on share reorganisation, takeover or merger. GOV.UK, Capital Gains Tax: what you pay it on. Bloomberg, UK takeovers past 100 billion dollars, 1 September 2026. All verified 1 October 2026.
This article is for information and education only. It is not financial advice or a personal recommendation. Investments can fall as well as rise and you may get back less than you put in. Tax treatment depends on your individual circumstances and may change.
