The Netherlands Takeover Guide

Transcription

1 The Netherlands Takeover Guide Contacts Christiaan de Brauw, Leo Groothuis and Rogier Stevens NautaDutilh

2 Contents Page 1 INTRODUCTION 1 2 PRE-OFFER PHASE 6 3 STANDARD TIMELINE (FRIENDLY CASH OFFER) 10 4 OFFER PROCESS AND CONTENT OF THE OFFER DOCUMENT 11 5 POST OFFER PHASE 15 6 IMPLEMENTATION OF TAKEOVER DIRECTIVE _1_ takeover guide - the netherlands

3 1 INTRODUCTION General This Guide sets forth the various legislation, regulations and procedural steps a potential offeror must take into account in connection with the announcement and launch of a public offer in the Netherlands. Netherlands Public Offers in General The main legislation and regulations regarding the public offer procedure in the Netherlands are the Financial Supervision Act ("FSA"), the Public Offer Decree ("Decree"), certain exemption decrees and several policy regulations of the Netherlands supervisory authority for the financial markets ("AFM") (the "Offer Rules"). This body of law is based on the European Directive on takeover bids (the "Takeover Directive"), which has been fully incorporated in the Offer Rules since 28 October The statutory basis of the Netherlands public offer rules is incorporated as a prohibition: a public offer for securities admitted to trading on a regulated market in the Netherlands is prohibited, except if an offer document has been made available which has been approved by the AFM or another authorised EU supervising authority. The Offer Rules make a distinction between the moment the (then usually intended) offer is formally announced to the market and the moment later in the process when the offer is actually made/launched and becomes legally binding and irrevocable for the offeror. Before elaborating on the requirements of the offer procedure and the offer document in general, a brief outline on the supervisory authority, the four types of offers recognized in the Netherlands (being the full offer, the partial offer, the tender offer and the mandatory offer) and certain related matters will be set forth in the following sections. Supervisory Authority (AFM) The Netherlands Authority for the Financial Markets, the AFM, is appointed to oversee the compliance with the legislation and regulations by the offeror and the target company, as well as by the respective managing directors and supervisory directors involved. The AFM supervises the conduct and provision of information by all parties on the financial markets in the Netherlands. The AFM's objectives are to promote an orderly and transparent market process on the financial markets, preserve the integrity of relations between market players, and protect the consumer. More specifically in the context of public offers, the AFM's objectives are to promote the distribution of adequate information to shareholders, to promote equal treatment of shareholders, to prevent abuse of insider trading and to promote an orderly offer process. The AFM is the relevant authority to approve the offer document, in case of: A target company with its corporate seat in the Netherlands and listed on NYSE Euronext Amsterdam; A target company with its corporate seat in another EU member state or EEA state but with a listing only on NYSE Euronext Amsterdam; A target company with its corporate seat in another EU member state or EEA state with a dual listing in the Netherlands and a member state other than its seat of incorporation, but whose shares were first admitted to trading in the Netherlands; _1_ takeover guide - the netherlands page 1

4 Full Offer A target company with its corporate seat in another EU member state or EEA state, with a dual listing admitted at the same time, but which has opted for supervision by the AFM; A target company with its corporate seat in a non-eu member state or EEA state, but with a listing on NYSE Euronext Amsterdam; and A target company being an open ended investment entity (i.e. an investment entity where, pursuant to the articles of association or other regulations, shares are directly or indirectly purchased or redeemed at the request of participants against the assets of the undertaking) with its corporate seat in a EU member state or EEA State other than the Netherlands, but with a dual listing on NYSE Euronext Amsterdam and in such other EU member state or EEA State. In case the AFM is not authorised to supervise the offer (for instance because another EU/EEA authority supervises the offer) and the target is a Netherlands company, the Netherlands offer rules dealing with corporate matters may still apply, including the (scope of) the mandatory offer obligation, the requirement to convene an informative EGM and publish a position statement, the squeeze-out and buy-out rights and the rules on frustrating actions and breakthrough (if applied on a voluntary basis by the target), as will be further described below. A full offer is a public offer (other than a mandatory offer) aimed at the acquisition of all issued and outstanding shares of the class to which the offer relates. The full offer is the most common type of public offer made in the Netherlands. Partial Offer Much less common, a partial offer is a public offer stipulating the fixed price offered to acquire only a part of the issued and outstanding shares of the class to which the offer relates, up to a maximum of 30% of the voting rights minus one vote in the target company's general meeting of shareholders. If the shares that are tendered in the offer represent more than 30% of the voting rights, the offeror is obliged to settle the offer "pro rata" using a non-discriminatory allocation system in order to obtain a maximum of 30% of the voting rights minus one vote. Partial offers can be used to: Tender Offer acquire a substantial interest in a target company for strategic considerations against a purchase price per share, which should be at the same level as the stock exchange rate; to explore the willingness of target shareholders to sell their shares; and to intervene in a public offer of a competitor of the offeror. The tender offer is fairly uncommon in the Netherlands. A tender offer is addressed to all holders of the (class of) shares to which the offer relates and - like a partial offer - may only result in the acquisition of less than 30% of the voting rights in the general meeting of shareholders of the target company. The offeror invites the addressees to sell their shares for a price stipulated by each of the tendering shareholders. A tender offer stipulates the number or percentage of shares to be acquired by the offeror and the indicated maximum price per share the offeror will pay. A tender offer will be declared unconditional if the intended acquisition is possible at the indicated maximum price _1_ takeover guide - the netherlands page 2

5 The highest price accepted by the offeror shall be paid to all tendering shareholders. Similar to a partial offer, if more shares are tendered than the offeror is entitled or obliged to accept, the tendered shares are accepted proportionally. Mandatory Offer Pursuant to the mandatory public offer rule, the person or entity that acquires "predominant control" in a Netherlands company listed on a regulated market in the EU/EEA is obligated to launch a public offer on all the outstanding shares and depository receipts of such listed company. "Predominant control" is deemed to occur when such acquiring person or entity is able to exercise 30% or more of the voting rights in the general meeting of shareholders of the company. The obligation to launch a public offer will also apply to persons or entities which acquire predominant control while acting in concert, together with other persons or entities. Persons or entities are deemed to act in concert: when acting in concert with the aim of acquiring predominant control in the listed company; or when the co-operation is also with the listed company and is aimed at the frustration of the success of an announced public offer. The mandatory public offer should be made against a "fair price". The fair price is the price which equals the highest price paid for target shares by the offeror in the period of one year before the mandatory public offer is announced. When the offeror has, after the announcement but before the settlement of the offer, acquired shares for a higher price than the (initial) fair price, such price shall be regarded as the fair price. Certain exceptions apply to the obligation to launch an offer. These include exemptions with regard to: other group companies; control acquired in an open-ended investment entity; when depository receipts of shares have been issued by an independent foundation, such foundation is exempted; a temporary (maximum 2 year) issuance of preference shares to an independent foundation as a defensive measure against an announced (hostile) offer; entities or persons that already had a considerable control at the time of implementation of the Netherlands legislation and regulations on public offers; persons who keep predominant control at time of an initial public offering; persons who obtain predominant control in a company that has been declared bankrupt or has applied for suspension of payments; entering into irrevocable undertakings that exceed 30% of the voting rights (subject to certain conditions being satisfied, including that the undertaking is unconditional and obliges the shareholder to vote in favour of certain specific resolutions at the general meeting of the target company); and if the general meeting of shareholders of the target company agrees to an exemption with a majority that includes at least 90% of the votes cast by _1_ takeover guide - the netherlands page 3

6 independent shareholders (i.e. shareholders other than the party having predominant control and, if applicable, parties acting in concert with it). In principle, if a person or entity acquires predominant control, but is able to dispose such control within a 30 days grace period thereafter (which may be extended to 90 days with the approval of the Enterprise Chamber of the Amsterdam Court of Appeals), then this person or entity is not obligated to launch a public offer. Finally, if a party acquires more than 50% of the voting rights in the general meeting of shareholders of the target company pursuant to a voluntary public offer, it is not subsequently obliged to make a mandatory offer, because the minority shareholders have already had an exit opportunity. Types of Consideration In a full or partial public offer it is possible to offer a cash amount per share, an amount of securities issued by the offeror per share, a combination of both, or to make an offer whereby the tendering shareholders may choose between a cash amount or an amount of securities. In the event of a "mix and match" offer, the tendering shareholders may choose between a cash amount, an amount of securities, or a combination of both. An exchange offer is not permitted in case of a tender offer, which must be for cash. This results from the nature of the tender offer procedure, as the tendering shareholders will determine the cash offer price. Under the equal treatment rule the offeror must make the same offer, subject to the same terms and conditions, to all the target company's securities holders. Under the best price rule the offeror must pay the highest of (i) the price offered under the offer (whether or not raised) and (ii) the highest price paid by the offeror pursuant to transactions in the target company's securities other than in regular stock exchange trading entered into by the offeror after the moment of formal announcement of the offer (also see below). Friendly, Unsolicited and Hostile Offers Most public offers in the Netherlands are "friendly", i.e. with consent of, and recommended and supported by, the boards of the target company, which obviously increases the chances of success. If a public offer is announced at the unsolicited initiative of the offeror (i.e. not upon request of the target company), the offer is referred to as an unsolicited offer. If such offer is deemed by the target boards to be against the interests of the target company and its stakeholders, the public offer can be qualified as a hostile offer. Hostile or unsolicited offers have not been traditionally common in the Netherlands. More recently, however, various successful hostile and unsolicited offers have occurred. In the Netherlands a shift in the appraisal of defensive measures has occurred over time. For many years, it was common for companies listed on the Amsterdam stock exchange to have extensive defence mechanisms in place. A first shift in this approach occurred during between 2004 and This was primarily due to discussions of corporate governance policies of listed companies, the Netherlands Corporate Governance Code, as well as other changes to Netherlands corporate law including the implementation of the Takeover Directive. Because shareholders became increasingly involved during that period in the course of events of listed companies, an increasing number of companies listed on the Amsterdam stock exchange chose to be unprotected against (hostile) takeovers. However, the possibility to issue preference shares is still common for many companies listed on NYSE Euronext Amsterdam. Since 2008, the importance of creating defensive measures is reassessed and defensive measures seem to become more popular again, also depending on the type of company. Newly listed companies often choose to implement structural defensive measures (e.g. the right to issue preference shares to a protection foundation) _1_ takeover guide - the netherlands page 4

7 Other Transaction Structures to Acquire a Netherlands Listed Company A full public offer is the most common type of acquisition of a controlling interest in a Netherlands publicly listed target company. However, other transaction structures are sometimes also used in practice, including: Asset sale: Control can also be obtained by a sale of all the assets and liabilities of the listed target to the buyer, followed by a dissolution of the target and payment of a cash distribution of the proceeds of the sale to the target's shareholders. As a rule, the target shareholders need to approve the transaction with a simple majority (although in a particular case enhanced shareholder mandates may be required). This type of transaction may be used in case the buyer is not willing to make a public offer, or if there are compelling regulatory or tax reasons preventing a public offer. Normally the acquirer who wants to pursue an asset sale instead of a public offer should also be willing to pay a premium for deal certainty and the possibility to start the integration of the target in its group immediately upon closing of the transaction without having to complete the squeeze-out or other post public offer restructuring. Legal merger: In situations where both target and offeror are listed companies a legal merger may be considered as transaction structure, particularly in merger of equals situations. Either the target company could disappear in the offeror against issuance of new shares in the offeror to the target shareholders or the two companies involved could both merge into a newly incorporated entity against issuance of listed shares in to the newly incorporated entity to the shareholders of both companies involved. The shareholders of a Netherlands company involved in a merger should approve the merger generally with an absolute majority (or at least a majority of two thirds of the votes in case less than 50% of the issued share capital is represented at the general meeting). The shareholders in the disappearing entity may only receive a cash consideration for an amount equal to 10% of the nominal value of the shares of the remaining entity. The remaining consideration must consist of shares of the remaining entity. Cross border legal merger: Under the EU Directive on Cross Border Legal Mergers it is also possible for two EU/EEA companies to pursue a cross border legal merger. Under the Netherlands implementation rules, in case the Netherlands company is the disappearing company the minority shareholders who vote against the merger have a cash-out withdrawal right. Another complication is employee consultation as contemplated by the EU Directive: a potentially lengthy process of up to 6 months and perhaps 12 months to determine the employee consultation system of the merged entity following the transaction. Other structures In more exceptional circumstances other transaction structures may be used, such as a reverse takeover or a buyer obtaining control through block-trades or an issuance of new shares by the target (in most case followed by a mandatory offer, see below). Another special structure is the creation of a dual listed company structure (e.g. Unilever) where two listed companies join together and agree to act as one company on a contractual and governance basis (e.g. joint board and sometimes joint shareholder electorate, equalisation arrangements and joint operating companies), while both companies remain their separate listing and shareholder class _1_ takeover guide - the netherlands page 5

8 2 PRE-OFFER PHASE General Disclosure Obligations and Exemptions The principle of market transparency determines that all investors should have access to the same information at the same time. Resolving information inequalities significantly reduces the possibility of insider trading. Pursuant to Netherlands law on market abuse, a company listed on NYSE Euronext Amsterdam should always immediately make any price-sensitive information public in order to prevent rumours or incorrect information which might interfere with the share price or encourage insider trading. Under the Offer Rules, an offeror must immediately publicly disclose price-sensitive information (by means of press release, with a copy to the AFM) insofar as this information relates directly to itself or to the proposed, announced or launched offer. If the offeror is a listed company and is under an obligation to disclose own price-sensitive information, that offeror is also required to disclose information that is price-sensitive for the target company if such information is connected with the proposed, announced or launched offer, even if it is not necessarily directly related to the offeror. Postponement of price sensitive information Disclosure of price sensitive information by the target and/or the offeror may be postponed as long as all three applicable conditions for postponement are and remain fulfilled. These conditions are - briefly summarized - that: (i) there is a legitimate reason for the delay of the disclosure (which requirement would for instance be fulfilled if not disclosing the information is deemed reasonably necessary in view of the negotiations until signing of a definitive merger agreement); (ii) there is no risk of misleading the public (in case of rumours with - partial - factual basis combined with unusual target share price fluctuations or heavy trading, the risk of misleading could be present which could trigger the obligation for target (and the offeror) to disclose the relevant price sensitive information) and (iii) confidentiality is safeguarded (to that effect the target (and the offeror) need(s) to actively monitor that confidentiality is and remains safeguarded, for instance by ensuring that everyone who has knowledge about the price sensitive information is bound to strict confidentiality obligations and by monitoring share price developments and market rumours to ensure no information leakage has occurred). Once any one of these three conditions is no longer fulfilled, the disclosure of the price sensitive information is to be made immediately by way of a press release. Leak strategy Accordingly, in principle, not every exploratory interaction between a target and an offeror will result in the obligation to make a public announcement. However, if rumours begin to spread, whether or not by means of a leak, a simple denial is not always the best solution. Denial may be contrary to the facts, may result in the condition for postponement of disclosure referred to above no longer being fulfilled and may even lead to actions for damages in certain circumstances. Refraining from any comments may lead to even further speculation on the market. A neutral position and comment by means of a public announcement on the nature and the state of affairs might be the best solution and may indeed be required. The offeror and target company usually agree on leak strategy and prepare leakage press releases. Transactions in securities to which the offer relates As from the first formal public announcement of the offer - see below - the offeror and the target company have an ongoing obligation to make a public announcement regarding any transactions in the securities to which the envisaged public offer relates _1_ takeover guide - the netherlands page 6

9 First Announcement As soon as an (intended) offer is formally announced to the market, the regulated offer process starts. Friendly offer As a general rule, Netherlands law provides that if a public offer is in preparation, then, as soon as the offeror and the target reach conditional or unconditional agreement, the offeror and the target company shall make a first formal announcement of the (intended) offer. The agreement will normally be conditional on the outcome of the advice procedure with the works council and the consultation procedure with the trade unions. The first announcement must set forth the intended price or exchange rate, if such has been agreed upon, plus the other material terms and conditions. A guidance or temporary price or exchange rate may also be issued, as the final price or exchange rate need only be included in the offer document. Before the issuance of the public offer, as soon as the definite price or exchange rate has been set, the price or exchange rate must be publicly announced. Unsolicited or hostile offer An unsolicited or hostile offer is deemed announced if the offeror has made public "concrete information" regarding an intended offer. "Concrete information" is deemed to have been made public if the offeror has made public the name of the target and (i) the intended offer price or exchange ratio; or (ii) a concretely defined timetable for conducting the intended offer. However, e.g. in case of early disclosure of the possible offer as a result of a leak in a friendly scenario, if the target company announces immediately after the publication of said information by the offeror that it is still in negotiations with the offeror, the latter will not be deemed to have formally announced an unsolicited offer. Mandatory offer A mandatory offer is announced by the person or entity acquiring predominant control by means of a press release at the end of the 30 day grace period after obtaining such control - also see above - unless such person or entity was able to dispose such control within this 30 days grace period, in which case the obligated to launch a public offer lapses. A mandatory offer is also (deemed to be) made if the Enterprise Chamber has ordered to proceed with the mandatory offer, which the Enterprise Chamber may do at the request of the listed company or a shareholder or holder of depository receipts in case the mandatory offer obligation is not honoured. Interaction with Target In a friendly scenario, it is not uncommon that the potential offeror confirms its intentions via an indication of interest or even a term sheet (thus prior to signing of the merger protocol - see below - and often prior to due diligence). The indication of interest will usually contain provisions that are (still) vague or that are still subject to conditions (such as due diligence outcome or third party approvals) and will therefore not (yet) constitute a binding and enforceable commitment to make an offer. Prior to any discussion being held, it is most likely that the offeror and the target company will also sign a confidentiality agreement and possibly a standstill agreement. In an unsolicited or hostile scenario, obviously less interaction will take place with the boards of the target company compared to a friendly scenario, although in practice some discussion between the target boards and the offeror often has to take place, in any event after announcement of such offer, as per guidance in takeover case law _1_ takeover guide - the netherlands page 7

10 The scope of the due diligence before signing of the merger protocol - see below - may be rather limited (consisting mainly of publicly accessible information), with sometimes additional confirmatory due diligence taking place after the signing of the merger agreement and the initial announcement of the transaction. However, nowadays offerors are regularly able to perform more extensive and full due diligence before signing of the merger agreement. Merger Protocol In a friendly scenario the offeror and the target will enter into a merger protocol (sometimes also referred to as a merger agreement) upon reaching agreement on the conditions of the offer. A merger protocol provides an outline of the transaction's terms including the offer price or exchange ratio, the number or percentage of shares the offeror wishes to acquire in order for it to declare its offer unconditional (i.e. the minimum acceptance level), and any other conditions the offer is being subjected to, as will be described in more detail below. The merger protocol could also include deal protection provisions such as exclusivity, no shop, limited no talks, fiduciary termination rights, revocation of recommendation provisions and break fees. In addition the merger protocol often includes topics such as future corporate governance, conditions of employment and other relevant provisions regarding target shareholders' interests. The merger protocol itself does not need to be disclosed under the Offer Rules, but the main elements thereof will have to be incorporated in the offer document. Consultation of Shareholders and Irrevocables The offeror and the target company are allowed to approach (large) shareholders and discuss an envisaged public offer prior to the first public announcement regarding such an offer. Such contact with (large) shareholders is permissible provided the consultation is limited to the extent reasonably necessary to determine whether the offer will be successful and appropriate measures are taken to ensure confidentiality and compliance with the rules prohibiting the use of price sensitive information. It is common to acquire irrevocable undertakings from (large) shareholders to tender their shares under a public offer prior to the first public announcement. Entering into irrevocables is not considered a violation of the prohibition to enter into a transaction using price sensitive information, provided the irrevocables state exactly how many shares the shareholder agrees to tender. If (large) shareholders are approached regarding an envisaged public offer, these shareholders become insiders and are no longer allowed to trade their shares or inform anyone about the envisaged public offer. The fact that irrevocables have been entered into should in any event be made public at the time the public offer is announced. "Put-up or shut-up" rule Pre-announcement Under the "put-up or shut-up" rule, a potential offeror may be required to announce an offer within six weeks of an order by the AFM or to confirm that no offer will be made. In addition, the offeror may be required to make an initial announcement that the "put-up or shut-up" rule has been imposed on him by the AFM. The rule can only be triggered by the target company and, accordingly in a friendly scenario the put-up or shut-up rule is not very likely to become relevant. A target company could ask the AFM to impose the "putup or shut-up" in case information has become public which indicates that the potential offeror may prepare a bid. A confirmation that no offer will be made will trigger a standstill waiting period of at least six months, subject to certain exceptions such as a new competing offer being announced. During this standstill period the potential offeror is also prohibited from increasing its stake in the potential target company to a level that would _1_ takeover guide - the netherlands page 8

11 require them to make a mandatory offer (30% or more of the voting rights in the general meeting of shareholders - see above). After announcement A similar six-month waiting period will apply if, at any time during the offer process after the announcement, the offeror fails to take the next step in the process. An example of this is where the offer document has been approved, but the offeror decides not to make the offer. Another is where the offeror decides not to declare the offer unconditional because a condition has not been fulfilled. Employee Consultation Employee consultation is usually an important part of any acquisition process of a Netherlands company. If a works council is established at the target company, in case of a friendly offer its advice will usually requested. The consultations with the works council (and trade unions, if any) should take place at such a time that the advice obtained may still have a material influence on the decision of the board of managing directors of the target company, i.e. in friendly scenarios after announcement but as a pre-condition before the offer is actually made. In practice, the formal request for the works council's advice is submitted to the works council just after the initial public announcement (i.e. after signing of the merger protocol). After the initial announcement, the offeror and target company must notify the trade unions, if any, and provide them with a statement concerning the rationale for the transaction, the intentions with respect to the company's policy and the social, economic and legal consequences of the contemplated transaction. This notification must also be sent to the SER Merger Committee. If the works council provides negative advice or advice subject to unacceptable conditions, then there will be a suspension period of one month during which the works council is able to go to court to challenge the management s decision to support the transaction. After such period, if no such proceeding has been initiated or after the court has rejected the works council's claim, the target is no longer required to suspend its cooperation with the Offer. If a proceeding has been initiated, no steps pertaining to the transaction can be implemented during such proceeding. If the court invalidates the management s decision (which generally can only happen on procedural grounds, as there is only a marginal and no full reassessment of the merits of the management decision), the management board would need to make a new decision and seek again advice from the works council. Acquisition of Target Shares The offeror is free to acquire shares of the target company before or after the first public announcement, provided the offeror does not hold any price sensitive information. Under the best price rule the offeror must pay the highest of (i) the price offered under the offer (whether or not raised) and (ii) the highest price paid by the offeror pursuant to transactions in the target company's securities other than in regular stock exchange trading entered into by the offeror after the moment of formal announcement of the offer. Disclosure of Major Holdings Disclosure obligations may occur for entities, such as an offeror, in the event a certain percentage of control in an issuing institution is acquired or sold. The disclosure requirements apply to holdings of shares and voting rights (including derivatives) in an 'issuing institution'. Issuing institutions are: _1_ takeover guide - the netherlands page 9

12 Netherlands public limited companies whose shares or depositary receipts are admitted to trading on a regulated market in an EEA member state; and non-eea companies whose shares or depositary receipts are admitted to trading on a regulated market in the Netherlands and of which the Netherlands is the host member state within the meaning of the Transparency Directive. A Netherlands target company whose shares are admitted to trading on NYSE Euronext Amsterdam qualifies as an issuing institution. An open-end or semi open-end collective investment undertaking is not considered to be an issuing institution. The threshold values which trigger notification requirements if reached or crossed with respect to Netherlands public limited companies and non-eea companies of which the Netherlands is the home member state within the meaning of the Transparency Directive are: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%. In addition, an investor in such listed companies will be required to disclose not only his capital interests and/or voting rights but also his gross short positions (as from 3%). Such disclosures are included in online AFM registers. Shareholders who have voting agreements are deemed to act in concert and must file together when they exceed a relevant threshold. In addition, the situations in which a person is deemed to hold voting rights include: voting rights that are held by a third party with whom it has entered into a contract which provides for a temporary and paid transfer of voting rights; or voting rights that it could exercise as proxy holder at its own discretion. In addition to the above, pursuant to the EU Regulation on Short Selling, net short positions in companies whose shares have been admitted to trading on a regulated market or multilateral trading facility in the EU must be notified to the AFM as from 0.2% and are included in an online AFM register as from 0,5%. 3 STANDARD TIMELINE (FRIENDLY CASH OFFER) The following indicative time schedule may be regarded as a standard timeline for the offer procedure in case of a friendly cash offer. DAY ACTION -30 to 0 Negotiations between offeror and target, which lead to conditional or unconditional agreement and signing of the merger protocol. +0 A first public announcement and press release are to be dispatched before the opening of the stock market, with copies to the trade unions and the Social Economic Council. There is also an ongoing obligation of notification to the AFM. +0 A request for advice is to be submitted to the works council + invite trade unions. +0 up to and including +29 Representatives of the trade unions and the target company's works council are to be consulted. +28 Ultimate day of second press release with the AFM announcing when the offer document is expected to be filed with AFM for consent _1_ takeover guide - the netherlands page 10

13 +28 to +70 Obtaining of the final (positive) advice from the target company's work council and completion of consultations with the trade unions. +28 (to +70) Filing offer document with AFM + certain funds announcement (at the latest). +38 (to +80) AFM must give its decision within 10 business days after filing (subject to extension in case of a request of the AFM for additional information). +44 (to +86) Offeror must make offer document public within 6 business days after AFM's decision. Start acceptance period of 8 to 10 weeks (not earlier than the first business day following the launch of the offer, and no later than nine business days after the AFM's approval). +90 (to +146) At the latest 4 business days before the target's informative extraordinary meeting of shareholders to discuss the offer, the boards of the target company publish their position statement. +93 (to +149) 7 business days before the end of the tender period an extraordinary meeting of shareholders of the offeror must be held (if required). +94 (to +150) 6 business days before the end of the acceptance period an extraordinary meeting of shareholders of the target company must be held, in which the board of the target informs the shareholders on the offer and its position (to +156) End of the acceptance period of 8 to 10 weeks, if not extended by 2 to 10 weeks (to +159) 3 days after the end of the acceptance period the offeror must announce whether the public offer is declared unconditional (to +162) Settlement will occur. This usually takes place 3 business days after the offer has been declared unconditional (to +176) Possible post-acceptance period (maximum of two weeks). 4 OFFER PROCESS AND CONTENT OF THE OFFER DOCUMENT Filing draft offer document with AFM for approval Within four weeks after the first announcement, a second announcement must be made by the offeror announcing whether a request for approval of the offer document will be submitted to the AFM (if not, a standstill waiting period of at least six months is triggered, subject to certain exceptions such as a new competing offer being announced). The offeror must submit such request for approval of the offer document with the AFM within 12 weeks. Within 10 business days, the AFM must decide whether it approves or disapproves the offer document. The AFM may request for additional information, which may result in an extension of the 10 business days' period. In practice more filings are made and the clearance process takes 3 to 4 weeks. Certainty of Funds Ultimately on the date of filing the request of approval of the offer document with the AFM, the offeror will have to ensure the cash funding of the offer at settlement of the offer. In case of an exchange offer, if the shareholders' approval of the offeror is required, the offeror should announce when the shareholders meeting is expected, the issuance _1_ takeover guide - the netherlands page 11

14 and delivery of the exchange shares at completion. The offeror must make a public announcement as soon as the offeror has such "certainty of funds". In case of a cash offer, the offeror does not have to provide a separate commitment letter or guarantee from the financing banks as to the funding of the offer. The AFM does not make an independent assessment of the certainty of funds but will ensure that adequate transparency is provided. The offeror will have to describe the available funding and the arrangements it has entered into with the banks (e.g. binding term sheet). Launch of Offer and Acceptance Period Within 6 business days of obtaining approval from the AFM on the offer document, the offeror shall launch its offer by making an offer document generally available to the public. The most practical way to do so is by means of a press release and publication of the offer document on the website of the offeror and/or target company. The availability of the offer document must be publicly announced. The acceptance period for the shareholders to tender their shares under the offer commences not earlier than the first business day following the launch of the offer, and no later than nine business days after the AFM's decision to approve the offer document. The minimum acceptance period will be 8 weeks. The maximum limit of the acceptance period is 10 weeks. The convocation of the extraordinary general meeting of shareholders of the target company will take 42 days, which the target company is obligated to hold a minimum of 6 business days before the end of the acceptance period. Content of Offer Document The offer document shall include the information as required by the relevant annexes to the Decree, including whether there have been meetings with the target company about the offer; the bodies it held these meetings with; the underlying reasons for the offer; financial information concerning the target and the offeror, advice on the preparation or fairness of the offer obtained by the offeror from third parties (i.e. financial advisors); the strategic plans after the takeover and the effects of the takeover for the employees; information regarding keeping on directors and reimbursements payable to directors related to the offer; and the main elements of the merger protocol (the merger protocol itself does not need to be disclosed under the Offer Rules). Where a (partial) exchange offer is being launched, more extensive requirements are applicable to the disclosure of information with regard to the exchange rate, the offered securities and the offeror. Conditions to the Public Offer All conditions to the offer must be set forth ultimately in the offer document. However, the offeror should also announce the conditions to its offer known at the time of the announcement of the offer. Offer conditions may include: a minimum percentage of all the shares must be offered (e.g. 95% but in practice lower minimum percentage levels are also used); no third-party public offer has been made; no material adverse change arises not known to the offeror; the removal of anti-takeover measures and amendment of the articles of association; competition clearances; _1_ takeover guide - the netherlands page 12

15 the receipt of a judgment or decree by means of which the offer will be delayed or prohibited; and, the passing of certain resolutions in the general meeting of shareholders of the target company or the offeror, including conditional approval of appointment of the new board post offer. As soon as the offeror can determine that a condition to its offer will not be fulfilled, the offeror must publicly announce this event without delay and also its decision as to whether or not the offer is withdrawn as a result. No conditions may be made where the condition's fulfilment depends on the will of the offeror. Regulatory Approvals Depending on the type of offeror, the type of target company, and the businesses of both companies, competition and security regulatory approvals and filings from the Netherlands and the EC, as well as other jurisdictions, may be necessary and may influence the timeline of the envisaged public offer. Tendering of Target Shares The shares to which the public offer relates may be tendered from the start of the acceptance period. Holders of target company's shares are usually requested to make the tendering of their shares known through their bank or stockbroker to the appointed exchange agent. In practice, most shareholders in the Netherlands tender their shares on the last day or days of the acceptance period. Right to Withdraw In general, as part of the terms and conditions of the offer, shareholders of the target company do not have a right to withdraw the shares they have tendered under the offer. A right to withdraw will exist however, if the acceptance period for the offer is extended by the offeror (see below). Recommendation by Target Under Netherlands law, directors are required to act in the corporate interest of the company. The concept of corporate interest does not merely entail the interest of the company s shareholders, but also the interests of the company s other stakeholders, such as employees, customers and creditors. When assessing a public offer and in making the decision whether to recommend it to the company s shareholders, the target company s board of directors will always have to assess whether the transaction is in the corporate interest of the company and its stakeholders, also compared to continuing the existing stand-alone strategy or pursuing other available strategic attendees. In the event of a public offer, the target company must hold an extraordinary general meeting of shareholders to discuss the offer as laid down in the offer document. In this extraordinary general meeting, the board of managing directors and the board of supervisory directors should provide all information necessary to assess the offer. The target company may also submit to the shareholders meeting certain decisions to be made (for example, appointment of members of the board of managing directors and/or board of supervisory directors or the amendment of the articles of association). The target company must make available a position statement to its shareholders ultimately four days before the extraordinary general meeting. In practice, the position statement is often already published together with the offer document. The position statement shall include the information as required by the relevant annexes to the _1_ takeover guide - the netherlands page 13

16 Decree, including an explanation of the company's position, information on the equity and results of the target company and other information necessary for a good evaluation of the offer. In a friendly offer the board of managing directors and the board of supervisory directors are likely to request a fairness opinion from an investment bank. The fairness opinion is generally incorporated into the position statement. Competing Offer Should a third party make a competing offer, the competing offeror will have its own timeline and be subjected to the same timing rules as the initial offer. In order to have the same acceptance period as the competing offeror, the initial offeror could extend its own acceptance period. If a competing offer is made for the same shares prior to the end of the acceptance period of the initial offer, the board of managing directors of the target company will not need to convene another extraordinary shareholders meeting, but may simply make a public announcement as to its views on the competing offer. Possible Extension of Offer Period An extension of the regular acceptance period, with a minimum extension of 2 weeks and a maximum extension of 10 weeks, is generally only allowed only once in. In case of a competing offer for the same shares made prior to the end of the acceptance period of the initial offer, the acceptance period may be extended - or, if already extended, it may be extended again - to bring it in line with the acceptance period of the competing offer. The offeror may increase its price an unlimited number of times during the acceptance period (including during an extended acceptance period). If such an increase leads to a change in the composition of the price and the increase does not consist exclusively of cash, the offeror must publish a supplement to the offer document. If the remaining acceptance period is shorter than seven business days, the period will be extended so that shareholders have at least seven business days to respond to the price increase. Declaring the Offer Unconditional Ultimately, on the third trading day after the (regular or extended) acceptance period has ended, the offeror must publicly announce whether the offer will be declared unconditional. The offeror must include in this announcement the number and percentage of shares tendered under the offer. If the offeror decides not to declare the offer unconditional because a condition has not been fulfilled, both the potential offeror and any parties acting in concert with it are prohibited during a six-month period from announcing or making a public offer for the securities of the target company (subject to a new competing offer being announced). Post-Acceptance Period It is common for an offeror to provide the shareholders of the target company, which have not tendered their shares, an opportunity to tender after the offeror has declared its offer unconditional. This is possible during a post-acceptance period. The offeror must announce the post-acceptance period ultimately at the time it announces the offer is declared unconditional. In such announcement, the offeror must amongst others state the reasons for the post-acceptance period and that the post-acceptance period is subject to the same conditions as in the offer document. The post-acceptance period lasts for a maximum period of two weeks. The offeror must publicly announce (ultimately on the third trading day following the end of the post-acceptance period) the amount and _1_ takeover guide - the netherlands page 14

17 percentage of shares acquired during the post-acceptance period and the total amount and percentage of shares the offeror holds after the post-acceptance period. 5 POST OFFER PHASE Best Price Rule After the Offer If an offeror declares its offer unconditional, and therefore the offer should be regarded as successful, the offeror may not, for a period of one year following the date of the publication of the offer document, acquire shares of the same type to which the offer related on terms more favourable for the holders of these shares than if they would have tendered their shares under the original public offer. This prohibition envisages preventing the offeror from making agreements with shareholders to acquire their shares for a better price than if these shareholders would have tendered under the original public offer. This prohibition is in any event not applicable in the event that: the shares are acquired in the normal course of a purchase on a stock exchange; a third party subsequently launches a new public offer; or the squeeze-out procedure is applied. Delisting After a Successful Public Offer After the offeror has made a successful public offer, the offeror may decide to delist the target company from NYSE Euronext Amsterdam. For obvious reasons terminating the listing is generally desirable to allow integration and to avoid the need to comply with disclosures and other rules applicable to listed companies. The policy of NYSE Euronext Amsterdam with respect to delisting shares is laid down in an announcement. Pursuant to the announcement shares of a certain type can be delisted from NYSE Euronext Amsterdam s stock exchange at the request of the offeror or the target company, including in case the offeror holds at least 95% of the shares after the public offer becomes unconditional, and the target company agrees to the delisting. Delisting is generally also possible in consultation with NYSE Euronext in case of alternative transaction structures that take place after or instead of a public offer, for instance in case of a legal merger or an asset sale followed by a liquidation of the target company, provided the target s shareholders receive the full amount of liquidation distribution. If the applicable conditions are met and the target company or offeror wants to proceed with the delisting, a request to that effect must be submitted to NYSE Euronext Amsterdam. If NYSE Euronext Amsterdam decides in favour of the request, delisting will take place 20 trading days after publication of the decision, or later if this is specified in an exit arrangement. Squeeze-Out, Sell-Out and Buy Out Proceedings Statutory squeeze out and sell out rights after a public offer If the offeror has acquired 95% or more of the issued share capital after a public offer of the target company, the most common way to acquire 100% of the target company's shares is through the statutory squeeze-out proceedings. By means of this procedure, the remaining shareholders can be forced to transfer their shares to the offeror. The squeeze-out proceedings may be initiated against the remaining shareholders if after a _1_ takeover guide - the netherlands page 15

18 public offer one or more co-operating shareholders provides 95% or more of the share capital of the target company, which also represents at least 95% of the voting rights of the share capital of the target company. In addition, the remaining shareholders of the target company have a sell-out right against the offeror if the offeror has acquired 95% of the share capital representing at least 95% of the voting rights. Both the sell-out and the squeeze-out proceedings must be initiated within 3 months after the acceptance period of the public offer has ended and must be brought before the Enterprise Chamber of the Amsterdam Court of Appeal. If the claim is honoured, the court will determine what the fair price will be for the transferred shares in the target company. If 90% of the shareholders have accepted the public offer, the offer price is presumed to be a fair price for the shares of the minority shareholders. Notwithstanding this presumption the Enterprise Chamber may appoint independent experts to determine a fair price. Regular statutory buy out proceedings In addition to the statutory squeeze out right of offerors after a successful public offer as described above, a separate "regular" statutory buy out right exists for a shareholder that has 95% or more of the share capital and voting rights in a Netherlands limited company (BV or NV), Such shareholder can buy out the remaining minority shareholders via proceedings at the Enterprise Chamber. The main differences between "regular" buy out proceedings and the aforementioned squeeze out proceedings after a public offer, are that there is no requirement to initiate buy out proceedings within a 3-month period after a public offer (as with squeeze out proceedings) and the aforementioned `fair price presumption does not apply to regular buy out proceedings. Other Legal Restructurings and Dilution of Minority Interest In addition to the statutory squeeze-out proceedings, and depending on the state of affairs after the offeror has declared its public offer unconditional, an offeror may also seek other means to dilute minority shareholders not tendering their shares under the public offer. These means of dilution exist below the aforementioned 95% threshold and include: an asset sale followed by a liquidation; a legal merger; a legal split-off; and open market purchases. Therefore, in practice lower minimum offer acceptance levels e.g. 70/80% and up are also used by offerors since such levels may already be sufficient to obtain full control in the target company. In recent Dutch practice "pre-agreed" or "pre-wired" legal restructurings have become more common. Such restructurings are pre-agreed between target company and the offeror at the outset of a friendly offer as part of the overall-agreement on the transaction. In those cases the offeror is willing to lower the acceptance level to for instance 80% or the 75% breakthrough threshold contemplated by the Takeover Directive referred to below, thereby increasing deal certainty. In return pre-commitments are agreed between the target company and the offeror on an alternative legal restructuring after the offer in case the 95% squeeze out threshold described above is not reached. Such alternative legal restructurings may for instance take the form of a legal merger or an asset sale followed by liquidation and payment of cash proceeds to the remaining minority _1_ takeover guide - the netherlands page 16

19 6 IMPLEMENTATION OF TAKEOVER DIRECTIVE Restrictions on Defence Mechanisms The Takeover Directive was implemented into Netherlands law on 28 October This paragraph discusses the ways the articles 9, 11 and 12 of the Takeover Directive have been implemented in the Netherlands. The rules regarding the restrictions on the transfer of shares are applicable to Netherlands companies which have shares listed on a regulated market in the EEA. Under the rules target companies have the ability to incorporate in their articles of association certain actions in the event of a hostile or unsolicited offer. These are: the target company will not take any ad hoc defence measures (neutrality); and an offeror which has acquired 75% or more of the issued and outstanding share capital of the target company may put permanent defence measures out of order in a shareholder's meeting (breakthrough). Both situations are optional for the target company, which may opt-in or opt-out of such a protected character. In practice, it is very rare for Netherlands companies to opt-in to these limitations on protective measures. Optional Neutrality The articles of association of the target company may provide that, after the first announcement of a public offer, the target company may not perform any legal action which might frustrate the success of the public offer. Two exceptions exist to this rule. The first exception occurs when the potential impeding action has been approved by the general meeting of shareholders of the target company. The second exception allows the target's board of directors to explore an alternative public offer from a white knight. In addition, a target company may provide that resolutions duly resolved before the public offer, but which have not yet been fully executed, may not be further executed if this could frustrate the success of the public offer, unless approved by the general meeting of shareholders. Optional breakthrough The articles of association of the target company may include the so-called breakthrough sale and provide that an offeror, which has acquired 75% or more of the issued and outstanding share capital of the target company, is authorised to convene a general meeting of shareholders, wherein any special rights of shareholders regarding appointment and dismissal of managing board and supervisory board members will not apply. Reciprocity Due to the reciprocity rule, an unprotected company may incorporate defence measures should it be targeted by an offeror which itself has put defence measures in place. A target company may also call on the reciprocity rule if the offeror has incorporated defence measures the target company has not put in place. If a foreign company launches a public offer on a Netherlands target company which applies the neutrality and breakthrough rules, the Dutch target who opted to apply the neutrality and breakthrough such must apply those rules. If not, the Netherlands target company is allowed to call on the reciprocity rule _1_ takeover guide - the netherlands page 17

20 Disclosure Obligations Listed Company The obligation for listed companies falling within the scope of the Takeover Directive to disclose information such as the corporate structure, restrictions on the transfer of shares of the company, important participations, shareholders with special voting rights and other required information of the company, is implemented in the Netherlands Civil Code and further regulations _1_ takeover guide - the netherlands page 18