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ICLG
The International Comparative Legal Guide to:
Mergers & Acquisitions 2018
12th Edition
A practical cross-border insight into mergers and acquisitions
Published by Global Legal Group, with contributions from:
Aabø-Evensen & Co Advokatfirma G. Elias & Co. Schoenherr
Advokatfirman Törngren Magnell Gjika & Associates Attorneys at Law SEUM Law
Alexander & Partner HAVEL & PARTNERS s.r.o. Skadden, Arps, Slate, Meagher
Ashurst Hong Kong Houthoff & Flom LLP
Astrea Indrawan Darsyah Santoso Škubla & Partneri s.r.o.
Atanaskovic Hartnell Maples and Calder Slaughter and May
Bär & Karrer Ltd. Matheson SZA Schilling, Zutt & Anschütz
BBA Mehrteab Leul & Associates Rechtsanwaltsgesellschaft mbH
Bech-Bruun Law Office Ughi e Nunziante Studio Legale
Bonn Steichen & Partners MJM Limited VCI Legal
Corpus Legal Practitioners Motta Fernandes Advogados Villey Girard Grolleaud
Cyril Amarchand Mangaldas Nader, Hayaux & Goebel Vukić and Partners
Debarliev, Dameski & Kelesoska Nishimura & Asahi Wachtell, Lipton, Rosen & Katz
Attorneys at Law Nobles WBW Weremczuk Bobeł
Dittmar & Indrenius Oppenheim Law Firm & Partners
Attorneys at Law
E & G Economides LLC Popovici Niţu Stoica & Asociaţii
WH Partners
ENSafrica Ramón y Cajal Abogados
Zhong Lun Law Firm
Ferraiuoli LLC SBH Law OfficeThe International Comparative Legal Guide to: Mergers & Acquisitions 2018
General Chapters:
1 Private Equity and Public Bids: UK Developments in 2017 – Scott Hopkins & Richard Youle,
Skadden, Arps, Slate, Meagher & Flom (UK) LLP 1
2 Global M&A Trends in 2018 – Lorenzo Corte & Denis Klimentchenko, Skadden, Arps, Slate, Meagher
& Flom (UK) LLP 4
Contributing Editors 3 For Corporate Litigation, Delaware is Still the First State – Adam O. Emmerich & Trevor S. Norwitz,
Scott Hopkins and Lorenzo Wachtell, Lipton, Rosen & Katz 7
Corte, Skadden, Arps, Slate,
Meagher & Flom (UK) LLP Country Question and Answer Chapters:
Sales Director 4 Albania Gjika & Associates Attorneys at Law: Gjergji Gjika & Evis Jani 11
Florjan Osmani
5 Australia Atanaskovic Hartnell: Jon Skene & Lawson Jepps 18
Account Director
6 Austria Schoenherr: Christian Herbst & Sascha Hödl 25
Oliver Smith
7 Belarus SBH Law Office: Alexander Bondar & Elena Selivanova 35
Sales Support Manager
Toni Hayward 8 Belgium Astrea: Steven De Schrijver 42
9 Bermuda MJM Limited: Peter Martin & Brian Holdipp 53
Editor
Nicholas Catlin 10 Brazil Motta Fernandes Advogados: Henrique de Rezende Vergara &
Cecilia Vidigal Monteiro de Barros 59
Senior Editors
Suzie Levy 11 British Virgin Islands Maples and Calder: Richard May & Matthew Gilbert 66
Caroline Collingwood 12 Bulgaria Schoenherr (in cooperation with Advokatsko druzhestvo Stoyanov & Tsekova):
Ilko Stoyanov & Katerina Kaloyanova 72
Chief Operating Officer
Dror Levy 13 Cayman Islands Maples and Calder: Nick Evans & Suzanne Correy 81
Group Consulting Editor 14 China Zhong Lun Law Firm: Lefan Gong 87
Alan Falach 15 Croatia Law firm Vukić and Partners: Zoran Vukić & Ana Pehar 94
Publisher 16 Cyprus E & G Economides LLC: Marinella Kilikitas & George Economides 101
Rory Smith
17 Czech Republic HAVEL & PARTNERS s.r.o.: Václav Audes & Jan Frey 107
Published by 18 Denmark Bech-Bruun: Steen Jensen & David Moalem 114
Global Legal Group Ltd.
59 Tanner Street 19 Ethiopia Mehrteab Leul & Associates Law Office: Mehrteab Leul Kokeb &
London SE1 3PL, UK Getu Shiferaw Deme 120
Tel: +44 20 7367 0720 20 Finland Dittmar & Indrenius: Anders Carlberg & Jan Ollila 126
Fax: +44 20 7407 5255
21 France Villey Girard Grolleaud: Frédéric Grillier & Daniel Villey 133
Email: info@glgroup.co.uk
URL: www.glgroup.co.uk 22 Germany SZA Schilling, Zutt & Anschütz Rechtsanwaltsgesellschaft mbH:
Dr. Marc Löbbe & Dr. Stephan Harbarth, LL.M. (Yale) 139
GLG Cover Design
F&F Studio Design 23 Hong Kong Ashurst Hong Kong: Joshua Cole & Chin Yeoh 146
GLG Cover Image Source 24 Hungary Oppenheim Law Firm: József Bulcsú Fenyvesi 152
iStockphoto 25 Iceland BBA: Baldvin Björn Haraldsson & Stefán Reykjalín 158
Printed by 26 India Cyril Amarchand Mangaldas: Nivedita Rao & Anand Jayachandran 164
Ashford Colour Press Ltd 27 Indonesia Indrawan Darsyah Santoso: Eric Pratama Santoso & Barli Darsyah 172
March 2018
28 Ireland Matheson: Fergus A. Bolster & Brian McCloskey 178
Copyright © 2018
Global Legal Group Ltd. 29 Italy Ughi e Nunziante Studio Legale: Fiorella Alvino & Fabio Liguori 187
All rights reserved 30 Japan Nishimura & Asahi: Tomohiro Takagi & Tomonori Maezawa 193
No photocopying
31 Korea SEUM Law: Steve Kim & Seonho Kim 202
ISBN 978-1-911367-97-0
32 Luxembourg Bonn Steichen & Partners: Pierre-Alexandre Degehet 210
ISSN 1752-3362
33 Macedonia Debarliev, Dameski & Kelesoska Attorneys at Law:
Strategic Partners Emilija Kelesoska Sholjakovska & Ljupco Cvetkovski 216
34 Malta WH Partners: James Scicluna & Rachel Vella Baldacchino 223
35 Mexico Nader, Hayaux & Goebel: Yves Hayaux-du-Tilly Laborde &
Eduardo Villanueva Ortíz 229
36 Montenegro Moravčević Vojnović and Partners in cooperation with Schoenherr:
Slaven Moravčević & Miloš Laković 235
37 Netherlands Houthoff: Alexander J. Kaarls & Willem J.T. Liedenbaum 242
38 Nigeria G. Elias & Co.: Obianuju Ifebunandu & Yemisi Falade 250
Continued Overleaf
Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720
Disclaimer
This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.
Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.
This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified
professional when dealing with specific situations.
WWW.ICLG.COMThe International Comparative Legal Guide to: Mergers & Acquisitions 2018
Country Question and Answer Chapters:
39 Norway Aabø-Evensen & Co Advokatfirma: Ole Kristian Aabø-Evensen &
Gard A. Skogstrøm 257
40 Poland WBW Weremczuk Bobeł & Partners Attorneys at Law: Łukasz Bobeł 271
41 Puerto Rico Ferraiuoli LLC: Fernando J. Rovira-Rullán & Yarot T. Lafontaine-Torres 278
42 Romania Popovici Niţu Stoica & Asociaţii: Alexandra Niculae 285
43 Saudi Arabia Alexander & Partner: Dr. Nicolas Bremer 290
44 Serbia Moravčević Vojnović and Partners in cooperation with Schoenherr:
Matija Vojnović & Vojimir Kurtić 297
45 Slovakia Škubla & Partneri s.r.o.: Martin Fábry & Marián Šulík 305
46 Slovenia Schoenherr: Vid Kobe & Marko Prušnik 312
47 South Africa ENSafrica: Professor Michael Katz & Matthew Morrison 323
48 Spain Ramón y Cajal Abogados: Guillermo Muñoz-Alonso & Álvaro Bertrán Farga 332
49 Sweden Advokatfirman Törngren Magnell: Johan Wigh & Viktor Olsson 338
50 Switzerland Bär & Karrer Ltd.: Dr. Mariel Hoch 344
51 Ukraine Nobles: Volodymyr Yakubovskyy & Tatiana Iurkovska 351
52 United Arab Emirates Alexander & Partner: Dr. Nicolas Bremer 359
53 United Kingdom Slaughter and May: William Underhill 367
54 USA Skadden, Arps, Slate, Meagher & Flom LLP: Ann Beth Stebbins &
Thomas H. Kennedy 374
55 Vietnam VCI Legal: Tuan A. Phung & Kent A. Wong 391
56 Zambia Corpus Legal Practitioners: Sharon Sakuwaha 397Chapter 8
Belgium
Astrea Steven De Schrijver
The Belgian legal environment on takeovers is, like in other
1 Relevant Authorities and Legislation
European jurisdictions, characterised by a fundamental difference
between voluntary takeover bids on the one hand and mandatory
1.1 What regulates M&A? takeover bids on the other hand.
The distinction reflects two possible methods through which a
The European Takeover Directive 2004/25/CE of 21 April 2004 bidder can obtain full control over a Belgian company:
was transposed into Belgian law by: the Law of 1 April 2007 on (i) Voluntary offer
public takeovers (the “Takeover Bid Law”), subsequently amended A bidder can launch a voluntary (public) offer on the securities
by the Law of 25 April 2014, the Law of 19 April 2014 and the which he does not yet own. This “method” of acquiring securities
Law of 17 July 2013; the Royal Decree of 27 April 2007 on public is generally used in the situation where there is no controlling
takeovers (the “Takeover Decree”), subsequently amended by the shareholder in the targeted company.
Royal Decree of 26 September 2013; and the Royal Decree of
In the case of a voluntary offer, applicability is not based on
27 April 2007 on squeeze-out offers (the “Squeeze-Out Decree”)
whether or not a company is listed or incorporated in Belgium, but
(together referred to as the “Takeover Regulations”). Furthermore,
on whether or not the offer is public pursuant to Article 6 of the
the Belgian Companies Code of 7 May 1999 also includes some
Takeover Bid Law. The Law on Takeover Bids defines what must
provisions with regard to public takeovers. Some public takeovers
be understood by “public offer”, namely an offer which is addressed
also have to be examined in light of the Law of 8 June 2008 on
to the holders of securities of the targeted company and which is
cross-border mergers (see question 2.1) and Council Regulation
designed to acquire all or part of their securities. Consequently,
(EC) 139/2004 of 20 January 2004 on the control of concentrations
under Belgian law, an offer is considered to be public when one of
between undertakings (the so-called “Merger Control Regulation”),
the following two conditions is met: either (i) a communication is
which was amended by Council Regulation (EU) 1269/2013 of 5
made in whatever form by the bidder or a person acting together with
December 2013.
or on behalf of the bidder, which contains sufficient information on
The main regulatory authority for public offers in Belgium is the the terms of the offer to enable holders of securities to assess the
Financial Services and Markets Authority (“FSMA”). The FSMA possible transfer of their securities; or (ii) the bidder (or a person
is the successor to the former Banking, Financial and Insurance acting together with or on behalf of the bidder) uses public measures
Commission (“CBFA”), which changed its name on 1 April 2011 such as an advertisement to announce or promote the public offer
as a result of the changes in its powers and, more particularly, its in Belgium.
exclusive power to monitor rules of conduct. Since this succession,
When reading the definition on the public offer, it is important to
the financial services market supervision in Belgium is organised
bear the two following concepts in mind:
in a “Twin Peaks” model, meaning that there are two autonomous
supervisors, these being the National Bank of Belgium and the ■ when assessing the public character of an offer, in particular
FSMA. Whereas the FSMA primarily monitors compliance by the communication presenting sufficient information on the
terms of the offer, it must be assessed on the basis of the
the relevant players with all applicable legislation in respect of
actual content of the communication and not on the basis of
takeover offers, the micro-prudential and systematic control as well
the qualification by the bidder; and
as the macro-prudential control is entrusted to the National Bank
■ public measures are defined broadly, and include any sort
of Belgium. The Takeover Decree contains legal provisions which
of communication tool, including verbal and written media
relate both to voluntary bids and mandatory bids.
advertisements.
As regards the jurisdiction, the Law on Takeover Bids determines that
1.2 Are there different rules for different types of public takeovers are regulated by the supervisor of the jurisdiction
company? in which the targeted company has its registered office if its shares
are admitted to trading on the regulated market in that country. The
First of all, in short we can assume that a takeover will be subject same principles apply to mandatory takeovers (see below), namely
to Belgian law if the following conditions are met: (i) the takeover that the bid shall be governed by Belgian law if the bid relates to
must consist of a public offer to acquire securities; and (ii) it must a Belgian company with a registered office in Belgium and whose
be effected in Belgium. Below, we will have a closer look at those securities are wholly or partly listed on the Belgian regulated market
conditions. or a designated multilateral trading facility.
42 WWW.ICLG.COM ICLG TO: MERGERS & ACQUISITIONS 2018Astrea Belgium
(ii) Mandatory offer
2 Mechanics of Acquisition
Mandatory offers only apply when a person, as a result of its own
acquisition or the acquisition by persons acting in concert with
it, acquires directly or indirectly more than 30% of the voting 2.1 What alternative means of acquisition are there?
securities in a company with a registered office in Belgium whose
securities are listed on a regulated market, Alternext, or the Public companies are usually taken over as a result of a public
NYSE Euronext Brussels Free Market. This means that foreign offer. An alternative means of acquisition would be a concentration
Belgium
target companies (including Belgian companies that are not listed between undertakings (commonly referred to as “mergers”). A
on one of the Belgian regulated markets) cannot be acquired on the merger can in particular occur when two independent undertakings
basis of the Takeover Bid Law. decide to integrate, when one undertaking or one person having
In relation to a mandatory bid, the following general principles are control of an undertaking purchases another undertaking or part
applicable: of its activities (acquisition), or when two undertakings create a
■ the price of a mandatory bid is regulated by the Takeover lasting common undertaking between them (joint venture). Since
Decree; the implementation of EU Directive 2005/56/EC by the Belgian
Law of 8 June 2008, the acquisition can also be completed by way
■ a bidder cannot withdraw a mandatory bid; and
of a cross-border merger. The legal provisions for (cross-border)
■ a mandatory bid must be unconditional.
mergers under Belgian law are set forth in the Belgian Companies
Please be advised that exceptions exist as to the applicability of Code. Although mergers are usually not the preferred course of
voluntary and mandatory public offers which fall outside the scope action, given the specific (burdensome) formalities that have to
of this chapter. be complied with (see question 10.1, however, on the reduction of
(de)merger formalities under Belgian law, under specific
1.3 Are there special rules for foreign buyers? conditions), they may be useful when the controlling shareholders
of the target wish to squeeze out minority shareholders of the target
but do not meet the legal requirements to launch a formal squeeze-
No. There are, however, some specific sector-related rules, as set
out procedure (e.g. when they own less than 95% of the voting rights
out in question 1.4, which apply regardless of the nationality of the
in the target).
bidder.
2.2 What advisers do the parties need?
1.4 Are there any special sector-related rules?
From the perspective of the bidder − although there is no obligation
Prior to the takeover of companies in specific industry sectors, such
for the bidder to hire a specific type of adviser, it is market practice
as investment companies, insurance companies, credit institutions
to hire financial and legal advisers. The financial adviser can play a
and market operators, the takeover will have to be approved by the
significant role in establishing the financial structure for the offer, as
FSMA. Furthermore, the Belgian state holds a “golden share”, or
well as drafting the price justification. Legal advisers will play an
the majority of the voting rights, in some previously state-owned
important role in drafting the prospectus and ensuring compliance
companies whose articles of association can contain change-of-
with the information obligations vis-à-vis the shareholders of
control approval clauses which allow the Belgian state to oppose a
the target. Furthermore, the Takeover Regulations require the
change of control.
appointment by the bidder of a settlement agent (an accredited
stockbroker or financial institution) who is charged with handling
1.5 What are the principal sources of liability? the receipt of the acceptances and seeing to the correct payment of
the offer price to the target shareholders.
There are many possible sources of liability in relation to public From the perspective of the target company − target companies
offers. Article 36 of the Takeover Bid Law authorises the FSMA are not required to hire any legal or financial advisers. However,
to impose measures upon parties who violate the provisions of they usually do hire such advisers to assist them with the drafting
the Takeover Bid Law. In the case of non-compliance with these of the response memorandum. The response memorandum sets out
measures, the FSMA can impose a penalty of up to a maximum the target’s views on the offer and must be submitted to the FSMA
amount of EUR 2,500,000.00 upon the party violating the measures within five days from the notification of the draft prospectus. The
imposed by the FSMA. In addition, Article 38 of the Takeover target’s management body often requests an investment bank to issue
Bid Law provides for administrative fines of up to EUR 15,000.00 an opinion on the offer price, and uses that opinion to support the
and even criminal sanctions (imprisonment of up to one year) for views expressed in the response memorandum. It is also common
specific violations in relation to the disclosure of incomplete (or practice for the majority shareholders of the target to hire their own
incorrect) information to the FSMA (requested by the latter in legal (and sometimes financial) advisers to assist them during the
relation to the public offer), the issuance of a misleading prospectus, offer procedure.
or advertisement of the public offer by using misleading information
on the terms and conditions of the public offer. The Takeover
Regulations all serve a single purpose, which is the protection of the 2.3 How long does it take?
equal treatment of shareholders (in terms of the offered price and the
information provided). Furthermore, members of the management The procedure for a public takeover is subject to a strict timeframe,
bodies, as well as financial and legal advisers, should be aware of which can be summarised as follows:
potential liability that might arise from pre-offer negotiations (even ■ informal talks between the parties in a takeover context,
in the absence of contractual representations and warranties). (generally) followed by a letter of intent;
■ informal notification to the FSMA. Following the “put up
or shut up” principle for investors, which is in the interest
of bringing clarity and certainty to a market where there is
ICLG TO: MERGERS & ACQUISITIONS 2018 WWW.ICLG.COM 43Astrea Belgium
rumour regarding a potential takeover, the FSMA has the For voluntary offers (bidder has no control or already controls the
power to require an investor to declare its intentions with target), the deal terms and conditions can be determined freely by
regard to a potentially targeted company; the bidder. Examples that are frequently approved by the FSMA
■ due diligence. Although there is no formal requirement are, among others, the obtainment of a specific acceptances
prohibiting or allowing a potential bidder from carrying out threshold, adjustments to the target’s articles of association and the
an due diligence, it is rather unusual to conduct due diligence non-occurrence of an event beyond the bidder’s control.
prior the formal notification of the FSMA, except in the case
The verification of the terms and conditions by the FSMA is limited
Belgium
of a private acquisition of a controlling stake followed by a
public takeover bid; to the extent that it must only assess whether the offer is likely to
succeed. Hence, in practice the FSMA is reluctant to approve any
■ filing of the draft prospectus with the FSMA;
conditions that are likely to limit the success of the bid.
■ the target board must indicate to the FSMA and the bidder
– within five business days – whether it considers the draft If a bidder, during the offer, offers a higher price, it will have to offer
prospectus to be incomplete or misleading; that particular price to all of the target’s shareholders. If the bidder
■ the FSMA will receive the file once it is complete and decide offers a higher price outside of the offer, the price to be offered to the
on the approval of the prospectus (within 10 business days); target’s shareholders is set by law at that higher price.
■ drafting by the target’s management body of a response If a person (or several persons acting together) has/have directly or
memorandum within five business days of the transfer by the indirectly acquired 30% (or more) of the voting rights in a listed
FSMA of the approved prospectus; company, the offer will be mandatory (please note, however, that
■ approval of the response memorandum by the FSMA within there are a number of exceptions). In such cases, the bidder has to
five business days after receipt thereof (once approved, the offer the same price as the one offered to acquire the participation of
response memorandum must be published immediately); 30% (or more) to all remaining target shareholders. The price of the
■ opening of the offer, no earlier than five business days after mandatory offer is not free. Pursuant to the Takeover Regulations, it
the approval by the FSMA of the prospectus or the response must be at least higher than (i) the highest price paid for the securities
memorandum, whichever occurs first; of the target by the bidder (or the persons acting together with it)
■ bidding period/acceptance period for a minimum of two weeks during the 12 months preceding the announcement of the offer, and
and a maximum of 10 weeks. An extension of the bidding (ii) the weighted average market price of such securities during the
period by two weeks is possible if the target’s shareholders 30 calendar days preceding the event triggering the obligation to
convene to approve a capital increase, a securities issue or launch the mandatory offer.
another event that could significantly affect the target’s assets
The FSMA also verifies the price offered by a competing bidder
and liabilities; and
(which must exceed the bid price by at least 5%).
■ publication of the outcome of the offer within five business
days after the conclusion of the acceptance period. When the bidder holds at least 90% of the voting rights as a result of
the (voluntary or mandatory) offer, he must reopen the offer in order
Taking into account the above, the time required for a public
to enable all shareholders to sell their remaining shares on the same
takeover is approximately 7–17 weeks.
terms as the initial offer.
This time frame is, broadly speaking, the same for both hostile
When the bidder holds at least 95% of the voting rights of the target
and recommended bids. However, within the framework of
as a result of the offer (or its re-opening), the bidder can re-open
recommended bids, it is common practice: (i) to informally discuss
the offer for at least 15 days in order to squeeze out the remaining
with the FSMA the preparation of the prospectus and the response
minority shareholders on the same terms as the initial offer, subject
memorandum, as well as its official filing and formal approval; and
to the reservation to do so in the prospectus. Any securities that
(ii) that both the prospectus and the response memorandum are filed
were not offered by the said remaining shareholders during the
with, and approved by, the FSMA at the same time.
squeeze-out are considered to have been transferred to the bidder,
and the price therefore will be transferred into an escrow account.
2.4 What are the main hurdles?
When the bidder holds at least 95% of the voting rights of the target
as a result of an offer other than a squeeze-out, he must re-open
During the offer procedure, there can be several obstacles to a the offer in order to enable all shareholders to sell their remaining
swift conclusion, such as the approval by the FSMA of the draft shares. The offer price is, in such cases, determined freely, but may
prospectus, the launching of counter- or higher offers (merely the only be paid in cash. Furthermore, the prospectus must include a
intention to launch a counter offer can still be filed as late as two report from an independent expert evaluating the offer price.
days prior to the conclusion of the acceptance period!) and, possibly,
The Takeover Regulations allow a voluntary offer subject to approval
the initiation of legal proceedings by the target’s shareholders.
by the European or local competition authorities. Furthermore, an
offer can also be subject to other (objective) conditions as approved
2.5 How much flexibility is there over deal terms and by the FSMA in the prospectus (e.g. obtaining a minimum level of
price? acceptances). A mandatory offer must be unconditional (see also
question 7.1).
The FSMA will verify whether the deal terms and price are
compliant with the Takeover Regulations. As such, it will see to the
2.6 What differences are there between offering cash and
credibility of the offer, including the offer price. Under Belgian law other consideration?
on voluntary takeover rules, the bidder can freely set the price of its
offer, and it is unanimously accepted that the FSMA cannot express
Pursuant to Article 54 of the Takeover Decree, the consideration
an opinion on the merits of the offer, nor has it the power to request
offered in the context of public offers can consist of cash (a so-called
a higher price. The prospectus will even contain a disclaimer to the
cash offer), securities (a so-called exchange offer), or a mixture of
benefit of the FSMA in that respect.
both cash and securities.
44 WWW.ICLG.COM ICLG TO: MERGERS & ACQUISITIONS 2018Astrea Belgium
In Belgium, cash public offers are preferred over exchange offers, absence thereof, the employees themselves) of the publication of
since the evaluation of the value of shares offered in exchange is an offer and provide them with a copy of the prospectus once it has
more complex. As a result, an exchange offer is subject to more been rendered publicly available.
formalities. The management body of the target must inform its employees’
In the case of a public cash offer, the cash amount required to complete representation of its opinion on the offer. This opinion is included
the offer needs to be available either in a (locked) bank account in the response memorandum which the target’s management body
of a financial institution, or in the form of an unconditional and must draft. Likewise, the opinion of the employees’ representatives
Belgium
irrevocable credit with a financial institution. The aforementioned will be attached to the management body’s opinion.
financial means will be locked in order to guarantee the payment in If the target has a works council, the legal representatives of the bidder
cash of the securities acquired during the public offer. will be interviewed by the target’s works council. The interview
In cases of a public exchange offer, the bidder either disposes of the can, however, be waived by unanimous decision of the target’s
securities to be exchanged for the target’s shares or has the power works council. During this interview, the bidder will comment on its
to issue or acquire the securities required to complete the offer. In intended industrial and financial policies for the target and the possible
cases where the bidder does not have the power to issue the said consequences of such policies for the employment in the target.
securities, he is required to have, either in law or in fact, the power Subsequently, the target’s works council can formulate remarks on the
to ensure that the concerned legal entity has the power to issue the bidder’s comments. The interview needs to be held within 10 business
required securities. days of the opening of the bid. If the representatives of the bidder do
In cases of a public exchange offer, the bidder and his financial not attend the interview, the bidder is prohibited from exercising the
advisers will have to see to a careful drafting of the section in the voting rights attached to the securities it acquires in the bid.
prospectus on the evaluation of the shares offered in exchange for In the case of a bid, the target, although not legally required to do so,
the target’s shares. customarily informs the pension trustees enabling them, if necessary,
to protect the pension fund from bids where high borrowings could
affect the security of the fund.
2.7 Do the same terms have to be offered to all
shareholders?
2.11 What documentation is needed?
Yes. Differential treatment of shareholders is not allowed. As
explained above, the Takeover Regulations serve a single purpose: Documentation to be provided by the target:
the protection of the equal treatment of shareholders (in terms of the ■ Independent expert’s report: the majority shareholder that
offered price and the information provided). This is demonstrated wishes to extend an offer in relation to the shares in the
by, amongst other things, the fact that if a bidder offers a higher price Belgian company controlled by him is required to have
during the offer, he will have to offer that increased price to all of the an independent expert establish a report on the offer. The
target’s shareholders. If the bidder offers a higher price outside of independent expert’s report is therefore not always required.
the offer, the price to be offered to the target’s shareholders is set by ■ The response memorandum (mandatory): the target’s
law at that higher price. management body must establish a response memorandum in
However, it is important to note that if the bid relates to different relation to the prospectus that was approved by the FSMA.
categories of securities, differences in price are justified if they are Documentation to be provided by the bidder:
based on inherent differences between these categories. ■ The prospectus (mandatory), duly approved by the FSMA.
■ The initial notification by the bidder to the FSMA: during the
2.8 Are there obligations to purchase other classes of acceptance period, specific persons defined in the Takeover
target securities? Regulations must notify the FSMA each day after the closing
of the stock market on which the securities concerned by
the offer are traded, of specific transactions (defined in the
The bidder in a public offer (whether voluntary or mandatory) Takeover Regulations) involving the said securities. The
will not only have to make an offer in relation to all of the target’s goal is to ensure that neither the bidder, nor persons close to
securities to which voting rights are attached, but also to all the bidder, can acquire the target’s securities at a price higher
securities that grant a right to acquire voting rights (e.g. convertible than the price indicated in the offer.
bonds or warrants). There is, however, no obligation to make an ■ Publications in the financial press (duly approved by the
offer in relation to securities to which no (potential) voting rights are FSMA) announcing the opening of the acceptance period of
attached (such as shares or profit-sharing certificates without voting the offer, the outcome of the offer and, as the case may be, the
rights). re-opening of the offer and/or the squeeze-out offer.
■ As set out in question 2.10, the employees’ representatives
2.9 Are there any limits on agreeing terms with
can formulate remarks with respect to the bidder’s industrial
employees? and financial intentions for the target.
During the public offer procedure, the parties to the offer must
The Takeover Regulations do not specify any limits on agreeing transfer to the FSMA all agreements (in full, not only an excerpt)
terms with employees. The employees do have specific information that might possibly and effectively influence the evaluation of the
rights, which are set out in question 2.10. offer, as well as on the process and the completion thereof, if so
requested by the FSMA.
2.10 What role do employees, pension trustees and other
stakeholders play? 2.12 Are there any special disclosure requirements?
As soon as the bid has been announced by the FSMA, both the bidder Pursuant to the Takeover Law, the prospectus must contain the
and the target must notify their employees’ representatives (or, in the terms of the offer and all necessary information to enable the target
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shareholders to make a reasoned assessment of the offer, taking to be fulfilled. A majority of deals will only be completed upon
into account the characteristics of the bidder, the target, the shares the condition that 100% of the shares can be acquired. Within this
subject to the bid and, as the case may be, the securities offered in context, the squeeze-out rule implies that the bidder needs to acquire
exchange. 95% of the shares, upon which he can squeeze out the remaining
The Takeover Decree sets forth a detailed list of information which 5% shareholders. However, acquiring 95% of the shares is already
should be included in the prospectus. This includes the following: a difficult task; the squeeze-out rule does not, therefore, really seem
to be a “deal facilitation” rule.
Belgium
■ confirmation that the offer was approved by the FSMA;
■ the names of the parties responsible for the content of the
prospectus; 2.16 When does cash consideration need to be committed
and available?
■ the price offered, as well as its justification;
■ financial information relating to the target and the bidder;
The bidder must be able to demonstrate to the FSMA, at the time
■ details of current and past ownership of the target’s shares by
of the initial notification of the bid, that the cash consideration is
the bidder and its affiliates;
available, either in a bank account or in the form of an unconditional
■ the bidder’s intentions with the target and its employees, as and irrevocable credit facility. A certificate issued by the bank
well as its intentions with regard to dividend distributions;
confirming the availability of the necessary funds must be joined
■ variations in the market share price during at least the past 12 to the notification.
months;
■ the response memorandum of the target’s board;
■ the views of the works council in relation to the offer; and 3 Friendly or Hostile
■ if the offer is issued by a controlling shareholder of the target,
a valuation report prepared by one or more independent 3.1 Is there a choice?
experts.
Any new significant fact or any substantial fault in the prospectus Yes, there is an opportunity to choose between friendly or hostile
which may have an impact on the shareholders’ assessment of the takeovers (see question 2.1). Although hostile takeovers are
offer must be disclosed by way of a supplement to the prospectus. generally rare in Belgium, there has recently been an attempt of
To the extent that the bidder receives privileged information from the a hostile takeover, where Novo Nordisk publicly announced a bid
target, it is, strictly speaking, not required to disclose such information on the biotechnology company Ablynx without first consulting the
in the prospectus. This is subject, however, to the principle of equal Board of Directors of Ablynx. The reason that hostile takeovers
treatment of shareholders. As such, Belgian courts have held in are rare in Belgium, is partially due to the fact that many public
the past that shareholders may have a right to disclose additional companies in Belgium are owned by a controlling (group of)
information provided to the bidder. Also, counter-bidders have shareholder(s), i.e. the so-called “reference shareholders”, whose
the right to receive the same information and are thus entitled to prior approval is typically required for the bid to be successful.
disclosure of any privileged information provided to the initial bidder.
3.2 Are there rules about an approach to the target?
2.13 What are the key costs?
When approaching shareholders of the target company, a bidder
The main costs incurred by the bidder are: should be careful not to trigger the rules applicable to takeover
■ fees of legal, financial and other advisers; bids (e.g. by soliciting more than 150 persons). In addition, the
■ fees of the settlement agent; Takeover Decree emphasises the importance of absolute secrecy
before announcing any offer. In principle, only the FSMA is
■ fees for the publication of the offer in the financial press;
allowed to announce the bid publicly. Prior to this announcement,
■ translation costs, if the offer is originally drafted in English the bid must be kept secret by all parties. The FSMA, however,
(under specific conditions, only a Dutch and French summary may require any prospective bidder to make a public announcement
must be provided); if such an announcement is deemed necessary to maintain order in
■ handling fees of the FSMA; and the market (e.g. in the case of speculation in the market, or if the
■ listing fees of Euronext in the event of an exchange bid. target company’s share price is changing significantly; see question
2.3 above). In addition, pursuant to Regulation (EU) 596/2014 on
market abuse with regard to market soundings, the disclosing party
2.14 What consents are needed?
must inform the recipient of the market sounding results that, by
agreeing to receive the information, the recipient is obliged to keep
In some cases, competition clearance may be required. Any other the information confidential. Generally, this is done by entering into
specific consent requirements are sector-related (see question 1.4). a confidentiality agreement.
2.15 What levels of approval or acceptance are needed? 3.3 How relevant is the target board?
All offers, both mandatory and voluntary, must be launched for Belgium does not have a board neutrality rule. The board of the target
all outstanding voting shares and profit-sharing certificates. In must deliver a separate opinion on the takeover offer, the so-called
addition, voluntary bids may also be made conditional upon response memorandum, which must be prepared and submitted to
reaching a certain level of acceptance of the offer. Such a level the FSMA within five days from the transmission of the prospectus
of acceptance is subject to prior approval by the FSMA, and must by the FSMA. The response memorandum includes the target
be reasonable. The bidder is required by law to structure its bid in board’s view(s) on the prospectus, including the potential impact
such a way that the conditions precedent can be reasonably expected of the bid, the bidder’s strategic plans and the possible application
46 WWW.ICLG.COM ICLG TO: MERGERS & ACQUISITIONS 2018Astrea Belgium
of any pre-emption right. Consequently, such a memorandum can related information, such as the articles of association
influence the shareholders. Although the board usually follows the (including details on the number and nature of securities
opinion of the target’s controlling or largest shareholders, dissenting and on the existence of defensive measures, such as transfer
opinions of board members must be mentioned in the memorandum. restriction), information on the composition and functioning
If such dissenting opinions are expressed, this may have an impact of the board and its committees, governance charters, minutes
of shareholders’ meetings, and information on dealings
on the shareholders’ position towards the offer.
between the target and its controlling shareholders;
Belgium
■ transparency declarations made by shareholders, as well
3.4 Does the choice affect process? as declarations of shareholders wishing to make use of the
grandfathering regime, pursuant to Article 74 of the Takeover
As already mentioned, there are very few examples of hostile Law;
takeover bids in Belgium. Generally, however, friendly takeovers ■ all official publications of the target in the Belgian Official
are expected to run more smoothly than hostile ones. Journal (appointments and resignations of directors, statutory
auditors and proxy holders, changes in the capital, amendments
Defence mechanisms in the context of a hostile offer
to the articles of association, etc.); and
There are generally two measures that can be adopted to frustrate a ■ press releases and analyst reports.
hostile offer:
In addition to the aforementioned publicly available information, it
(i) The passive rule: this measure implies that the company, and
is common practice in the case of friendly takeovers to provide the
in particular its Board of Directors, is not entitled to adopt
bidder with additional information on the target in the course of a prior
any measure which may frustrate the bid, unless the measure
has been approved by the shareholders. Consequently, the due diligence. Such information may take the form of an information
shareholders are the ultimate decision-makers during an offer memorandum prepared by the target’s board, management
period. presentations, or more extensive information and documents made
In this scenario, the target’s articles of association will available in a data room. The extent of the due diligence exercise
contain provisions such as the prior authorisation of the varies. It largely depends on the board’s attitude towards the takeover
shareholders’ meeting before the board can take any bid and other considerations. The target’s board must take into
measures, unenforceability during the bid of, e.g., restrictions account its duty of confidentiality concerning information on the
on the transfer of securities granting voting rights (or access company’s business, insider trading prohibitions and the corporate
to voting rights), or other restrictions provided in the target’s interest of the company when sharing information with the bidder. In
articles of association or in contractual agreements between addition, it must consider its obligation to provide any counter-bidder
the target and the target’s shareholders. with the same information as that provided to the initial bidder.
(ii) The business judgment rule: this measure implies that the
The provision of any additional information is usually subject to the
Board of Directors of the targeted company can, at any
bidder entering into an appropriate non-disclosure agreement.
time, safeguard the corporate interests of the company,
and, consequently, can adopt – under its own responsibility
– certain measures to protect the targeted company from a 4.2 Is negotiation confidential and is access restricted?
hostile offer, as to which the Board of Directors is of the
opinion that it is contrary to the corporate interests of the
targeted company. Prior to the official announcement of the bid, negotiations can be
kept confidential, provided that such confidentiality does not conflict
The board must exercise its powers in the company’s best
with the target’s obligation to disclose any fact or information that, if
interest. Consequently, when taking certain measures, it must
take into account the interests of all security shareholders, as made public, could significantly affect the market price of its shares.
well as well as those from its employees and creditors. Generally, such disclosure can be postponed, provided that the target
company takes measures to avoid information leakages or insider
The passive rule is considered the general rule when a targeted
trading. In practice, confidentiality agreements are very common
company is confronted with a hostile offer. Member States,
for negotiations between the bidder and the target’s board and for
however, are entitled, on the one hand, to include a clause in their
due diligence. If rumours start to emerge in the market which may
national implementing legal provisions offering their companies the
have an impact on the share price, the target company will generally
possibility to “opt out” of the passive-rule regime and, on the other
contact the FSMA which, after assessment, may request the target
hand, to foresee the possibility that companies can also “opt in”.
to make an announcement relating to the potential bid (the “put up
Although Belgium has decided not to follow the neutrality and the or shut up” rule). Agreements reached between the bidder and the
passive-rule regime and thus consequently “opted out” of the rules, target shareholders should be communicated to the FSMA, which
in accordance with Directive (EU) 2004/25/E on takeover bids, may request disclosure thereof.
Belgian companies still have the possibility to include the passivity
Pursuant to the recently adopted EU Regulation 596/2014 on
and neutrality principles in their articles of association.
market abuse with regard to market soundings, the disclosing
market participant must inform the person receiving the market-
4 Information sounding information that they are obliged to keep the information
confidential.
4.1 What information is available to a buyer?
4.3 When is an announcement required and what will
become public?
First of all, the bidder has access to all the information that the
(listed) target company is required by law to publish. Such
All information included in the prospectus will be made public. In
information includes:
addition, as mentioned, agreements reached between the bidder
■ the annual reports, including the report of the board of and the target shareholders may become public upon request of the
directors, the statutory and consolidated accounts and the FSMA.
report of the statutory auditor; and corporate governance-
ICLG TO: MERGERS & ACQUISITIONS 2018 WWW.ICLG.COM 47Astrea Belgium
fact that the offender gained a profit or avoided a loss, these amounts
4.4 What if the information is wrong or changes? may be increased by up to twice the profit gained or the loss avoided.
Any new significant fact or any substantial fault in the prospectus
5.2 Can derivatives be bought outside the offer process?
which may have an impact on the shareholders’ assessment of the
offer must be disclosed by way of a supplement to the prospectus.
Derivatives (e.g. stock options, warrants) fall within the scope
In the case of a voluntary offer, the bidder may provide for certain
Belgium
of application of the Takeover Bid Law, hence the conditions for
conditions precedent (including the absence of material adverse
derivatives to be bought outside of the offer process are identical to
changes), but the terms of the offer may not be changed after the
those applicable to shares (see question 5.1).
launch of the offer, unless such changes are to the benefit of the
target shareholders. In the event of a hostile takeover bid, the bidder
may change the terms of the offer or even withdraw the bid (subject 5.3 What are the disclosure triggers for shares and
to the FSMA’s approval) if the target company takes defensive derivatives stakebuilding before the offer and during
the offer period?
measures, such as a capital increase.
See questions 2.5 and 2.7.
5 Stakebuilding
5.4 What are the limitations and consequences?
5.1 Can shares be bought outside the offer process?
See questions 2.5 and 2.7.
Prior to announcing the bid, there is no prohibition on building Non-compliance with disclosure obligations under the applicable
a stake in the target, subject to insider dealing restrictions and transparency regulations may give rise to suspension of voting rights
disclosure agreements (i.e. should the bidder have non-public inside and/or criminal sanction. Failure to comply with the disclosure
information on the targeted company, it is prohibited to acquire or duties under the Takeover Regulations may give rise to criminal
sell any securities until this information has been made public or is sanctions.
no longer price sensitive). However, according to the Belgian law
of 2 May 2007 on the disclosure of major holdings in issuers whose
shares are admitted to trading on a regulated market and laying 6 Deal Protection
down miscellaneous provisions (also known as the “Transparency
Law”), any acquisition or disposal of voting securities in a listed
6.1 Are break fees available?
Belgian company – which can be bought by the bidder outside of
the offer process – amounting up to 5% or more of the total voting
It is not common for public offers in Belgium to provide for break
rights, the shareholding must be disclosed to the FSMA and to the
fees to be paid by the target if the offer fails. However, since there
target. This disclosure notification is legally required when the
is a tendency for public offers to follow the Anglo-Saxon example,
shareholding exceeds or drops below the threshold of 5% or any
it would not be surprising if break fees were to become increasingly
other multiple of 5% of the total voting rights (for example, capital
popular in future public offer negotiations. Recently, the Belgian
increase/decrease). Notwithstanding, different thresholds may
market has seen two major deals providing for break fees. In the
be agreed upon in the target’s articles of association (in practice,
AB Inbev/SAB Miller merger, AB Inbev agreed to pay US$3 billion
usually 3% or 5% of the shares and any multiple thereof). To the
to SABMiller if the merger would have failed because of the failure
extent that the bidder has the intention to acquire control over the
to obtain regulatory clearances or the approval of the AB InBev
target company, such an intention must be notified to the FSMA,
shareholders. Likewise, in the case of Ahold/Delhaize, a break fee
which will announce it publicly.
of EUR 150 million would have been due if either company had
The threshold calculation takes the shareholdings of affiliates and withdrawn from the transaction.
concerted parties into consideration and also includes financial
There are no specific Belgian legal provisions on break fees.
instruments which, under a formal agreement, grant the holder either
Belgian law does, however, require that the actions of a company
the unconditional right to acquire securities carrying voting rights or
are in compliance with its best corporate interests. For instance, if
the faculty of acquiring such rights, but only on the holder’s own
a successful offer would permit the restructuring of a company in
initiative. Financial instruments with similar economic effect will
financial difficulties, the corporate interest of the company could be
also have to be taken into account.
served by agreeing to pay a break fee, should the offer to acquire
The disclosure notification must be made by the acquirer to the its shares fail. The amount of the break fee should not exceed the
targeted company and the FSMA promptly and no later than four bidder’s reasonable costs, and any penalty element in the break fee
days as from the day on which the event triggered the obligation. is prohibited.
The targeted company, in turn, must publish the information
contained in the notification within three trading days from the day
of its receipt. There are also a few exemptions from the disclosure 6.2 Can the target agree not to shop the company or its
assets?
obligation (e.g. for marketing, making and trading books).
Failing to comply with the obligation to disclose information is
In the case of a voluntary offer, the target’s board can validly commit
a criminal offence which could also result in civil sanctions (e.g.
not to seek alternative offers. However, if a third party announces
suspension of voting rights attached to the relevant shares) and in
a counter-offer, the board of the target is required by law to assess
addition, administrative fines can be imposed by the FSMA (up
such a counter-offer in an objective manner.
to EUR 2 million for a private individual and EUR 10 million for
legal entities or 5% of the consolidated yearly turnover, whichever Even when the target’s board favours a certain bidder, it is
is higher). Should the failure to disclose information result in the recommended in the corporate interests (and those of the security
48 WWW.ICLG.COM ICLG TO: MERGERS & ACQUISITIONS 2018Astrea Belgium
holders) to remain neutral, so other potential counter bidders that
may offer better prospects to the target and/or a better price to the 7.2 What control does the bidder have over the target
target’s security holders are not discouraged. during the process?
After the recommendation of a bid by the target’s board, the bidder
The bidder has no control over the target during the takeover process.
and the target may agree on a number of matters concerning the bid.
The bidder does not really benefit from any specific protection, with
These agreements must be disclosed in the prospectus. Common
the exception of the squeeze-out rule by which he can squeeze
market practice in a recommended takeover is the conclusion of a
Belgium
out the remaining 5% shareholders once he has acquired 95% of
memorandum of understanding between the bidder and the main
the shares. However, as mentioned previously, reaching the 95%
shareholders of the target company, including, among other things,
threshold is difficult, and therefore, the squeeze-out rule cannot
undertakings from the target’s shareholders to: (i) accept the bid
really be considered to facilitate the takeover process from the
and tender their securities in the bid; (ii) abstain to dispose of their
perspective of the bidder (see question 2.15 for an overview).
securities, except for in acceptance of the bid; and (iii) not solicit
any bid by third parties.
7.3 When does control pass to the bidder?
6.3 Can the target agree to issue shares or sell assets?
In practice, the bidder will seize control of the target as from the
announcement of the success of the offer. Legally, control passes
The target’s shareholders’ meeting can decide at any time to increase
upon settlement of the offer.
the share capital and issue new shares. The target’s board may do
so via, and within the limits of, the so-called “authorised capital”
procedure, provided that the shareholders have approved such a 7.4 How can the bidder get 100% control?
procedure no more than three years earlier. The newly issued shares
must be fully paid up, their subscription price must be equal to or Once the bidder holds more than 95% of the voting securities, he
higher than the offer price in the pending takeover bid, and the can initiate a “squeeze-out procedure” and minority shareholders
number of shares cannot exceed 10% of the share capital outstanding can exercise their right to sell their shares. In the case of a voluntary
immediately preceding the capital increase. bid, squeeze-out is possible, provided that the bidder has acquired
Regarding the sale of assets pending a takeover bid, the Belgian 90% of the voting securities which he did not possess as a result
Company Code provides that only the shareholders’ meeting of the of the takeover bid. In the case of a mandatory bid, reaching the
target may grant rights to third parties which have an impact on the 95% threshold is sufficient to launch the squeeze-out. The terms
assets and liabilities of the company or result in a debt or obligation, and conditions of the squeeze-out will be the same as the takeover
if the exercise of such rights is dependent on the issue of a takeover bid, if such terms and conditions are provided in the prospectus.
offer on the company’s shares, or a change of control taking Limitations on the launch of a new bid
decisions. Likewise, between the announcement of the takeover
Should the bidder fail to obtain control of the target, there are no
bid and its closing, only the shareholders’ meeting has the power to
specific limitations foreseen on the launch of a new bid when the
decide on a transaction which substantially changes the composition
initial bid fails. However, a new bid will only be allowed by the
of the assets and liabilities of the target, or to take on a commitment
FSMA if the terms of the bid are likely to succeed. Consequently, the
without real consideration. Such decisions may not be taken under
FSMA will most likely not allow a new (second) bid under the same
the condition precedent of success or failure of the takeover bid.
conditions as the initial one, although exemptions are not excluded
(e.g. in the case of an important change of certain circumstances).
6.4 What commitments are available to tie up a deal?
During a period of 12 months after the closure of the bid (or the
reopening thereof), the bidder is prohibited from buying shares for a
See questions 6.1 to 6.3. higher price than the price offered within the framework of the bid.
Should the bidder nevertheless pay a higher price during this period,
the price difference must be paid to the shareholders who tendered
7 Bidder Protection
their shares within the framework of the bid. Once this 12-month
period has passed, there is no limitation on buying shares in the
7.1 What deal conditions are permitted and is their targeted company.
invocation restricted?
8 Target Defences
Unlike a mandatory offer, a voluntary offer can be made subject
to the fulfilment of certain conditions precedent, such as a specific
level of acceptance or the absence of material adverse changes (see 8.1 Does the board of the target have to publicise
also question 2.5). As mentioned before, the terms of the offer discussions?
may not be changed after launch, unless such changes are to the
advantage of the target shareholders. If the offer is subject to a level There is no specific requirement for the board to publish any
of acceptance and such level is not reached at closing, the bidder discussions relating to the takeover bid. As mentioned previously,
must announce, within five days from the closing, whether or not it however, the board of the target must deliver a separate opinion on
wishes to pursue the offer anyway. the takeover offer – the so-called response memorandum – which
In cases where the target’s board takes defensive measures, such as a is to be included (or referred to) in the published prospectus.
capital increase exceeding 1%, the acquisition by the target of its own The response memorandum should contain the board’s views on,
shares or the sale of important assets, the bidder is entitled to withdraw amongst other things: the draft prospectus; the effect of the bid
its offer within five days from the notification of such measures. The on the interests of the company, its shareholders, creditors and
same applies in the case of a counter-offer by a third party. employees; and the bidder’s strategic plans for the target and their
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