Preparing for Increased Takeover Activity in Europe

The following post comes to us from Laurent Alpert, a partner at Cleary Gottlieb Steen & Hamilton LLP focusing on mergers, acquisitions and leveraged buyouts, and is authored by Klaus Riehmer. This post discusses a Cleary Gottlieb memorandum, which is available here.

In spite of the crisis relating to state debt in certain European countries, 2011 has so far been a year that has seen a resurgence in the field of mergers and acquisitions in Europe. The proposed merger of the NYSE and Deutsche Börse, Volkswagen’s bid for MAN SE, LVHM’s tender offer for jewel company Bulgari and Stanley Black & Decker’s acquisition of Niscayah are just a few of the more publicized deals that have dominated the headlines of the European financial press in 2011. In a world where most of the transactions are cross-border mergers and may touch various juridictions, it is increasingly imperative that legal professionals engaged in these transactions possess the information to quickly access the required legal information in the respective countries.

The attached memorandum, Preparing for Increased Takeover Activity in Europe – Overview of Key Legal Parameters, seeks to provide the M&A practitioner (and the M&A academic) with a basic overview, on a country-by-country basis, of the rules pertaining to takeovers in Belgium, France, Germany, Italy, the UK, the Netherlands and Russia. The specific questions addressed are set forth below:

  • Can we talk to target without triggering disclosure obligations?
  • Stake building – can we buy stock on market?
  • Deal certainty – can we lock in reference shareholders? Can we get exclusivity from target?
  • Can we make public statements about a possible bid?
  • What must we bid for?
  • What sort of consideration can we offer?
  • Can we make our bid conditional? Is a MAC clause permissible?
  • Can we otherwise walk away once we have announced?
  • Offer document – how detailed and time consuming is this?
  • What’s the regulator and how long does it take to get it approved?
  • Can we go hostile?
  • What sort of defenses can a target put up? How effective are they?
  • May we squeeze-out residual minority? What’s the threshold?
  • How do we get target delisted?

While a more in-depth analysis of the particular issues touched upon in this memorandum must be sought from qualified legal counsel of each respective jurisdiction, we hope that this overview will provide the fundamental tools necessary for the cross-border M&A practitioner to begin to assess the intricacies and challenges surrounding takeovers in the jurisdictions covered.

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