New Guide on Takeover Bids

Date 18 sep. 2014
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Introduction

On 1 July 2014, the new executive order on takeover bids entered into force. The new rules introduced a number of essential changes and on 16 September 2014, the Danish FSA published its interpretation of these rules in a new guide on the executive order on takeover bids.


Overview of the significant Amendments

 

 

 

The FSA’ Interpretation of the significant Amendments

Gaining Control by Way of a voluntary Offer

A new condition has been introduced which implies that in any voluntary offer, the transferee must achieve more than half of the voting rights in the target company in order to avoid having to submit a mandatory offer as well. Thus, it is no longer sufficient that the voluntary bidder gains a controlling interest in the target company. The reason for the condition is to prevent cases where the bidder can cross the threshold for control by making a voluntary offer at a price which is lower than the market price (creep-in).


Equal Treatment of Shareholders

The principle of equal treatment is extended so as to cover a period of six months after the announcement of the closing of the offer. The amendment implies that if the bidder acquires shares in the target company after the closing of the offer on terms more favorable than those that were given according to the offer document, the bidder must compensate the shareholders who accepted the offer. The compensation must be paid in cash in the currency in which the offer was settled and must be determined based on the difference between the consideration offered in the original offer and the consideration for which the bidder subsequently acquired shares.

 

Terms attached to voluntary Offers

The bidder must not attach any terms to a voluntary offer of which the fulfillment is in the control of the bidder.


In practice, the FSA often approves conditions on e.g.:

  • Achievement of regulatory approval;
  • Achievement of a certain percentage of the share capital and voting rights;
  • The target company not issuing any shares during the offer period;
  • The target company not making any amendments to the articles of association during the offer period; and
  • The absence of significant negative events for the target company during the offer period (a “MAC” clause).

Waiver or Improvement of the Terms and Conditions

Within the offer period, the bidder has the option of wavering or improving the terms and conditions of a voluntary offer, which simultaneously will extend the offer period by two weeks. This option does not apply if the offer has been running for eight weeks or more in that the offer period must not exceed 10 weeks.


The Bidder’s Deadline

The bidder must count the acceptances received within 18 hours of the conclusion of the offer period, and in the case of voluntary offers the Bidder must note whether or not the conditions have been met as well as publish notice of whether the offer will be extended or closed. The time limit of 18 hours is absolute and applies without consideration of weekends and holidays. If the offer is extended, the bidder must ensure that the FSA has the opportunity, within the 18 hours, to approve the necessary additional provision to the offer document. In this connection, the bidder must note that in the absence of any special agreement, the FSA is only available for approval of additional provisions within the FSA’s normal business hours.


The Bidder’s Right to send Information to the Shareholders

The bidder is given the option to forward information to the registered shareholders in the target company through the target company at the bidder’s own expense. The bidder decides which information the registered shareholders will receive. The target company is committed to faithfully forward the information from the bidder. The bidder may use this option up to three times within the offer period. 



If you have any questions or would like additional information regarding the amendments to and the impact of the new rules, please contact Partner Dan Moalem (dmo@mwblaw.dk) or Senior Associate Lennart Meyer Østenfjeld (lmo@mwblaw.dk).


The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.