What are the key means of effecting the acquisition of a publicly traded company?
Mergers & Acquisitions (2nd edition)
The three most common methods to acquire all shares in a Norwegian publicly traded company are stakebuilding with an ensuing voluntary or mandatory tender offer; voluntary or mandatory tender offer (with or without a preceding stakebuilding); and statutory mergers. It is also, of course, possible to structure a takeover as an asset transaction by which the purchaser acquires the business assets of the target instead of the shares in the target.
Stakebuilding is the process of gradually purchasing shares in a publicly traded company in order to gain leverage and thereby increase the chances of a successful subsequent bid for the entire company (i.e. the remaining outstanding shares). It is possible (and fairly common) in a stakebuilding process to seek irrevocable undertakings (pre-acceptances) from key shareholders prior to announcing a subsequent voluntary bid.
However, the most common approach when acquiring a company listed on a Norwegian regulated market is through a voluntary tender offer with a subsequent squeeze-out of minority shareholders. A voluntary offer can be subject to various forms of conditions precedents such as satisfactory due diligence, no material adverse change, governmental approvals, and minimum acceptance requirements (typically acceptance from 90% or two-thirds of the shares and votes). There are no statutory provisions regarding minimum consideration in a voluntary offer. Nonetheless, and in order to make the offer attractive, it is common to add a 20% to 40% premium on the current share trading price. If a voluntary offer entails that the mandatory bid obligation is triggered (i.e. more than one third of the voting rights) if the bid is accepted by those able to make use of it, a voluntary offer in accordance with the rules on voluntary offers shall be made. In this case certain requirements related to mandatory offers (e.g. offer document, equal treatment of shareholders) will likewise apply for the voluntary offer.
A bidder which directly, indirectly or through consolidation of ownership (following one or more voluntary offers) has acquired more than one-third of the votes in a Norwegian target company listed on a Norwegian regulated market (or in a foreign company listed in Norway but not in its home country), must make a mandatory offer for the remaining outstanding shares. Certain exceptions do apply, the most practical being when shares are acquired as consideration in mergers and demergers. After passing the initial one-third threshold, the bidder’s obligation to make a mandatory offer for the remaining shares is repeated when he passes (first) 40% and (then) 50% of the voting rights (consolidation rules apply). Certain derivative arrangements (e.g. total return swaps) may be considered as controlling votes in relation to the mandatory offer rules.
A statutory merger, the shareholders of the surrendering company have to be compensation by way of shares in the acquiring company, or alternatively by a combination of cash and shares, provided the amount of cash does not exceed 20% of the aggregate compensation. If the acquiring company is part of a group, and if one or more of the group companies hold more than 90% of the shares and votes of the acquiring company, the compensation to the shareholders of the surrendering company may consist of shares in the parent company or in another member of the acquiring company’s group. It is also possible to effect a merger by combining two or more companies into a new company established for the purpose of such merger.
As noted in question 1 above, it is currently not possible for a foreign company to acquire shares in a company listed on the YSX. However, following the implementation of the MCL, it is anticipated that up to 35 per cent foreign investment in listed companies will be possible. In terms of share acquisitions more broadly, under Notification No 1/2016 of SECM, an extraordinary report would be required in connection with share acquisitions that result in a change in the parent company or major shareholder (defined as a shareholder with greater than 20 per cent shareholding), or a transfer of the company’s material undertaking.
Unsolicited, hostile transactions are in practice not possible in Myanmar. In relation to listed companies, there are currently no takeover regulations in Myanmar and there is no history of unsolicited transactions involving YSX-listed companies.
In addition to share acquisitions in publicly listed companies, as with all companies, it is possible to acquire the business or assets of a publicly listed company.
Schemes of arrangement are also possible under the MCL and permit the acquisition of a company subject to court supervision where 75 per cent of the shareholders’ vote has been obtained. While schemes of arrangement may theoretically also be possible under the MCA, they have not historically been used in Myanmar.
Stocks of publicly traded companies are acquired freely, unless the potential acquirer initiates a takeover bid, thus triggering the application of Law 3461/2006. Said law enables potential buyers of publicly traded companies to issue bids on a voluntary or mandatory basis to acquire stocks of Greek publicly traded companies.
Under a voluntary bid, the buyer must acquire all offered stocks, unless it has designated a maximum acceptable amount of stocks. A public bid is mandatory for any person acquiring stocks representing voting rights in excess of 1/3 of the total voting rights, as well as for any person holding more than 1/3 but less than ½ of the total voting rights and subsequently acquiring stocks that represent more than 3% of the voting rights of the target company within six months.
Any public bid must be notified to the HCMC immediately after the decision to launch such a bid is taken, and prior to any other public announcement, together with a draft information document.
The acquisition of a listed company can be effected by virtue of a public offer addressed to the shareholders of such listed company for the acquisition of their shares in exchange for cash, securities, or a combination of the two.
The German Takeover Act provides for two options with respect to the takeover procedures a mandatory tender offer and a voluntary tender offer. The acquisition of control, whether by a privately negotiated share transaction with one or several major shareholders or by purchasing target shares on the stock exchange, triggers the obligation of the purchaser to publish the acquisition of control and to launch a mandatory tender offer. “Control” is defined as the holding of at least 30% of the voting rights in the target. For purposes of calculating the percentage of the voting rights in the target, voting rights attached to target shares held by a third party may under certain circumstances be attributed to the bidder (pls. see question 25 for more details).
Statutory mergers pursuant to the German Transformation Act (including cross-border mergers) are also possible to gain control, but rare. The implementation of a merger requires, among other things, the conclusion of a merger agreement by the management board of both companies. Thus a merger is only possible in a solicited/negotiated scenario.
Generally speaking, acquisitions in Belgium usually take the form of a share deal or an asset deal. In a share deal, the shares of the target company are being transferred by means of a share purchase agreement. Through an asset purchase agreement, all or certain (cherry-picking) assets of the target company are being transferred.
Given the larger number of shareholders in a publicly traded company, it might prove difficult to enter into separate share purchase agreements. A controlling interest in publicly traded companies is usually acquired following a mandatory or voluntarily public offer for the shares of the target company.
Alternatively, a publicly traded company can be merged with another Belgian or EU company under the Belgian Companies’ Code. This type of transaction involves a transfer of the company’s assets and liabilities by operation of law. It can be effected through the absorption of a company or through merging into a new entity.
5.1 In Vietnam there are two stock exchanges on which public companies may list their securities for trading, namely the Ho Chi Minh City Stock Exchange (the HOSE or the HSX) and the Hanoi Stock Exchange (the HNX).
5.2 Investors wishing to acquire securities of Vietnam-domiciled public companies which are listed for trading on the HOSE or the HNX (Listed Securities) may do so by way of normal “on-market” acquisitions from unidentified vendors (On-Market Acquisitions), implemented using the services of Vietnam-licensed securities brokers and via the electronic trading and clearance systems maintained and operated by the Vietnam Securities Depository (the VSD) and “custodian banks” being members of the VSD (Custodian Banks).
5.3 Investors may also acquire Listed Securities by way of sale and purchase agreements entered into directly with identified vendors (Direct Agreement Acquisitions). Direct Acquisition Transactions are, however, subject to “trading band” restrictions, pursuant to which any transaction implemented at a purchase price per share being >7% (in the case of the HOSE) or >10% (in the case of the HNX) above or below the closing price of the relevant securities on the HOSE or the HNX (as applicable) on the trading day immediately prior to the completion of the Direct Agreement Acquisition, requires the specific case-by-case approval of the State Securities Commission.
5.4 Direct Agreement Acquisitions must also be implemented using the services of Vietnam-licensed securities brokers and via the electronic trading and clearance systems maintained and operated by the VSD and Custodian Banks.
5.5 In the case of securities of unlisted public companies, acquisitions must be implemented via the Unlisted Public Company Market (the UPCOM), also using the services of Vietnam-licensed securities brokers and via the electronic trading and clearance systems maintained and operated by the VSD and Custodian Banks. Acquisitions of UPCOM-registered securities are implemented in manners being broadly similar (but not identical) to the On-Market Acquisitions and Direct Agreement Acquisitions described above in relation to Listed Securities.
5.6 Any acquisition of voting shares in any Vietnam-domiciled public company (whether listed or unlisted) resulting in the acquirer (aggregated with its related persons and entities) holding ≥25% of issued and paid-up voting share capital must be implemented by way of a “mandatory public offer”, approved by the State Securities Commission and implemented in accordance with specifically legislated rules and procedures (an MPO).
5.7 Once any shareholder (aggregated with its related persons and entities) holds ≥25% of issued and paid-up voting share capital, then the following types of further acquisitions must also be implemented by way of an MPO:
- any acquisition by that shareholder (aggregated with its related persons and entities) of between ≥5% and <10% of issued and paid-up voting share capital, implemented within 12 months of any previous MPO transaction; and/or
- any acquisition by that shareholder (aggregated with its related persons and entities) of ≥10% of issued and paid-up voting share capital, implemented at any time.
5.8 MPO exemptions can, however, be obtained by way of ordinary resolutions of the General Meeting of Shareholders of the target company (which usually require the affirmative votes of ≥51% of the issued and paid-up voting share capital represented at the relevant Annual General Meeting of Shareholders (AGM) or Extraordinary General Meeting of Shareholders (EGM) and being eligible to vote on the proposed resolution).
5.9 Investors may also acquire shares of a public company by way of subscription pursuant to private placement transactions, subject to approval by the General Meeting of Shareholders of the relevant target company (requiring super-majority affirmative voting, usually necessitating ≥65%) and approval by the State Securities Commission, which must be implemented in accordance with specifically legislated rules and procedures.
The primary means to acquire a publicly traded company is the launch of a public tender offer. A statutory merger is the transaction structure of choice for mergers of equals of two Swiss companies. Reverse triangular mergers or schemes of arrangement under applicable foreign laws are used to implement mergers of equals between Swiss and foreign companies if the top holding company is to be domiciled in Switzerland after closing.
The main and most widespread structure of an M&A transaction involves transacting with shares (participation interests) in a target company in a privately negotiated deal. Public acquisitions (through tender offers or otherwise) are practically absent – few Russian companies are listed, and those that are listed float the number of shares that is not sufficient to gain control of the company. However, application of squeeze-out procedures is becoming more common in complex acquisitions of major public companies.
Asset deal are rather rare, as they are usually associated with considerable formalities, including transfer of real estate, assignment of operational agreements, obtaining of required operational permits, certificates and authorisations and transfer of personnel. These formalities may be rather complex and time consuming.
Effecting corporate reorganisations (mergers and amalgamations) requires passing through a lengthy and formalistic process and registration formalities as well. Such reorganisations may or may not follow M&A deals in Russia but are very rarely an M&A vehicle.
Publicly traded companies are acquired either by public offers (of various types, in line with EU directives and practice) or by special sale orders.
Under the Commercial Companies Law, where a company seeks to acquire shares that will result in it holding 51% of the capital of the target company or will result in it holding 40% of the shares of the target company (where that makes it the largest shareholder) then the same will need to be completed by way of resolution of the shareholders of both companies in a meeting in which at least 75% of shareholders must be in attendance.
The QFMA Mergers & Acquisitions Rules provide that any person who owns 10 percent of the shares must notify the QFMA if he or she will acquire more shares and any person or group that acquires 20 percent of the shares must be notified to the QFMA. Any acquisition up to 30 percent is to be made through the market or by formal offer to the shareholders (Article 2).