Denmark Takeover Guide

Transcription

1 Denmark Takeover Guide Contact Jacob Bier Plesner Corporate Finance

2 Contents Page INTRODUCTION 1 REGULATORY FRAMEWORK 1 CONDITIONS TO OFFER 1 MINIMUM PRICE 1 PUBLICATION AND AMENDMENTS TO THE OFFER 2 CONSIDERATION 2 MANDATORY OFFER REQUIREMENTS 2 DOCUMENTATION 3 TIME PERIOD OF OFFER 3 MULTIPLE SHARE CLASSES 4 COMPULSORY ACQUISITION (SQUEEZE-OUT) 4 THE STATEMENT OF THE DIRECTORS 4 DUE DILIGENCE AND DISCLOSURE OBLIGATIONS 5 APPOINTMENT OF FINANCIAL ADVISER 5 BREAK FEES 5 EMPLOYMENT CONSULTATION RIGHTS 6 ANTITRUST 6 THE BREAKTHROUGH RULES OF THE TAKEOVER DIRECTIVE 6 INSTITUTIONS CONTACT DETAILS IN DENMARK 7 takeover guide - denmark (2014)

3 INTRODUCTION This guide gives an overview of the law dealing with takeovers, including mandatory offers, tender offers and compulsory acquisitions in Denmark as at 1 July In view of the ability of Danish companies to issue shares with differing voting rights and to restrict the number of votes exercisable by single shareholders, it will be important to carefully consider the articles of association of an intended target company to discover potential obstacles to an acquisition. REGULATORY FRAMEWORK The Danish Securities Trading, etc. Act is the principle regulatory instrument with respect to mandatory offers and tender offers. The Executive Order on Takeover Bids supplements the provisions in the Securities Trading, etc. Act with respect to the obligation to submit a mandatory offer and the content of mandatory and tender offers. The takeover rules are administered by Finanstilsynet (The Financial Supervisory Authority, the "Danish FSA"), which also issues the takeover rules for mandatory and tender offers. Further, the Danish FSA issues guidance on the interpretation of the takeover rules. Certain decisions of the Danish FSA can be appealed to Det Finansielle Råd (The Financial Council). The Danish Business Authority administers the Danish Companies Act, which sets out detailed rules for the regulation of Danish companies, including various issues related to tender offers, such as the regulation of compulsory acquisitions (squeeze-outs). CONDITIONS TO OFFER For mandatory offers no conditions are allowed, but for tender offers, the offeror is free, subject to good market practice, to set objective conditions, provided that such conditions relate to matters which the offeror has no control over. It is usual for a tender offer to be made subject to a specified level of acceptances; often set at a level that would give the offeror a controlling interest in the target and/or a right to squeeze out any shareholders that have not accepted the offer. De facto controlling interest may in some instances be obtained at levels which are lower than 50% of the shares and the votes of the target company, however, 90% of the share capital and voting rights in the target is required, to enable the offeror to exercise its legal squeezeout right under Sections of the Danish Companies Act to acquire compulsorily the outstanding minority. Another typical (objective) condition is, e.g. the obtaining of necessary competition clearances. An offer cannot be made subject to financing or satisfactory due diligence conditions. MINIMUM PRICE There is no minimum price regulation for tender offers. Mandatory offers must be made at a price that is at least equal to the highest price paid by offeror or any of its affiliates for any shares already acquired by the offeror during the six months preceding the date of approval of the offer document. The FSA may adjust the takeover guide - denmark (2014) page 1

4 offer price (up or down) in certain situations, including in the event that the price for the shares paid by the offeror in the six months preceding the offer has been manipulated, affected by extraordinary circumstances, or in the event that the offer is made for shares in a company in financial distress. If the target company has multiple share classes, the offeror must offer identical terms within each class of shares. The consideration offered for the different classes of shares must be determined as (i) the highest price as described above for listed share classes where shares have been acquired by the offeror or any of its affiliates during the preceding 6 months, (ii) the proportional price for listed share classes where shares have not been acquired by the offeror or any of its affiliates, or (iii) for non-listed share classes the prices may not exceed 50% of the price of the listed share class. During an offer period the offeror (and its affiliates) is obliged to treat the shareholders equally, meaning that any acquisition of shares above the offer price will result in an obligation to offer the same price to all shareholders within the same share class. If the offeror, or an affiliate, within a period of six months after the completion of a public offer acquires shares at more favourable terms than offered in the public offer, the offeror must pay a cash compensation to all shareholders who tendered their shares in the public offer. PUBLICATION AND AMENDMENTS TO THE OFFER Once published, the offer will, subject to the conditions of the offer, be binding on the offeror during the acceptance period of four to ten weeks. However, at any time until the expiry of the period during which the offer is open and until 18 hours hereafter, the offeror may, by a supplementary offer document (or if conditions are waived in a voluntary offer, by addendum) amend the terms attached to the offer if this constitutes an improvement of the terms offered to the shareholders. The amendment shall be effected within 8 weeks of the offer period to make sure the offer period will not exceed 10 weeks. CONSIDERATION In tender offers, flexible rules apply in Denmark with regard to the consideration. The offeror is free to determine the type of consideration in voluntary offers, that is, the offeror may offer cash, other shares or securities, or a combination of these as consideration for the target's shares. In mandatory offers the offeror may offer shares or cash (or a combination hereof) and cash must always be offered as an alternative to shares, if the shares offered are not listed on a regulated market, or if the offeror has acquired more than 5% of the voting rights in the target for cash during the six months preceding the offer. Where cash is offered as consideration there is no obligation on the offeror to include in the offer document any guarantee or assurance from a financial institution that the offeror will have sufficient cash available to satisfy the offer in full. MANDATORY OFFER REQUIREMENTS The Securities Trading, etc. Act and The Takeover Bids Order set out the circumstances in which a mandatory offer must be submitted by an acquirer of shares in a listed company admitted to trading on an alternative market place. The obligation to submit a mandatory offer is triggered if, as a result of a transfer of shares, the acquirer: takeover guide - denmark (2014) page 2

5 obtains at least one third of the voting rights in the company; becomes entitled to appoint or remove a majority of the members of the company's board of directors; obtains the right to control the company's financial and operational matters pursuant to the articles of association or an agreement; or as a result of agreements with other shareholders obtains control of at least a third of the voting rights in the company. If an offeror acquires between one third and half the voting rights in a target company the shareholder will, however, not trigger a mandatory offer if the offeror is able to prove that de facto control over the company is not obtained. This assessment will, inter alia, depend on the acquirer's ability to influence the composition of the board of directors or its majority and the composition of all the shareholders in the target company. Questions regarding the interpretation of the legal framework in connection with a potential transaction may be submitted for evaluation by the Danish FSA. In rare cases, the Danish FSA may grant exemptions from the obligation to submit a mandatory offer, typically if the acquisition is a result of a reorganization of a distressed company. If the majority of the target company's voting rights are obtained by means of a voluntary offer complying with the requirements of the Takeover Bids Order, a subsequent mandatory public offer is not required. Certain transfers of shares are exempted from the mandatory offer rule, including transfer by inheritance, debt enforcement, intra-group reorganizations, control gained through share buyback programs (unless it constitutes circumvention) and consolidation of controlling influence. DOCUMENTATION As soon as possible after the obligation to present a mandatory offer has been established or the decision to make a voluntary offer has been made, a notice regarding the offer shall be made public. As soon as possible and no later than four weeks after publishing the notice, the offeror must publish the offer and the offer document. The Takeover Bids Order sets out detailed minimum requirements for an offer document. To ensure that the content of the offer document is adequate and complies with the requirements of the Takeover Bids Order, the offer document must be approved by the Danish FSA. An offer document must include details concerning the target, the offeror, the terms of the offer, the offer conditions, offer price, information regarding the financing of the offer, the time and terms of payment, the acceptance period, information on publication of result of the offer, and a description of the offeror's future plans for the target company etc. Further, it must be stated in the offer document whether the shareholders who have already accepted an offer may withdraw their acceptance. If a competitive offer is made, shareholders who have tendered their shares are always entitled to withdraw their offer within three business days after the competitive offer has been made. TIME PERIOD OF OFFER The offer period must be a minimum of four weeks and maximum ten weeks, which can be extended up to nine months in order to obtain required regulatory approval. takeover guide - denmark (2014) page 3

6 Outstanding conditions at the expiry of the offer will either result in the offer lapsing or the condition(s) being waived. Alternatively, the offer period can be extended within the ten week period. The offeror shall at the latest 18 hours after the expiry of the offer period give notice as for whether the offer is extended or final. MULTIPLE SHARE CLASSES Certain Danish listed companies have multiple share classes; unlisted class A shares and listed class B shares. Usually, the class B shares will carry voting rights than the class A shares. This structure has historically been used to ensure that the founding family (or a foundation) retains control of the company after listing. Class A shares held by a commercial foundation of have additional transfer restrictions. Multiple share classes are often, in practice, one of the most important (defensive) structures preventing takeovers of Danish listed companies, although its popularity has been declining as a result of corporate governance reforms and objections from institutional investors. All shareholders of the same class of an target company must be treated equally by an offeror, and different listed classes of shares shall be treated on the same basis for example, if listed class A shares are offered at a price 30% above the market price, the offer to the listed class B shareholders has to be 30% above the market price for the class B shares. COMPULSORY ACQUISITION (SQUEEZE-OUT) When a shareholder holds more than 90% of the share capital and the voting rights in a Danish listed company, the outstanding shares may be acquired compulsorily by the shareholder. The squeeze out price is identical to the offer price at which shares have been acquired in connection with the mandatory or voluntary offer. The minority shareholders may, however, demand that the price at which their shares are acquired be fixed by an independent appraiser appointed by the local district court. If the appraiser determines that a higher price should be paid to the minority shareholders than that offered by the offeror, this higher price must be paid to all minority shareholders (of the same class of shares) who are squeezed out, regardless of whether they have requested an independent valuation. The costs related to the valuation are normally borne by the offeror. It should also be noted that if a single shareholder holds more than 90% of the share capital and the voting rights, the company's minority shareholders will be entitled to be squeezed out. The price shall be determined as described above, i.e. the offer price unless an independent appraiser appointed by the local court requires a higher price to be paid. THE STATEMENT OF THE DIRECTORS When a public offer has been made, the board of directors of the target company shall prepare a statement to the shareholders on the merits of the offer. The statement shall include the board of directors' opinion on the offer price, of the consequences for all the company interests, and the offeror's strategic plans for the target company and probable consequences for jobs. The statement shall be published by the board of directors before the expiry of the first half of the offer period as a company announcement. takeover guide - denmark (2014) page 4

7 The board of directors' statement shall be submitted to the FSA, made public via NASDAQ OMX Copenhagen A/S, communicated to the employees or their representatives, sent to all registered shareholders, and made public via a website. DUE DILIGENCE AND DISCLOSURE OBLIGATIONS When a potential offeror is seeking to acquire the shares of a listed Danish company (or its business activities), it will often be possible, subject to the provided confidentiality undertakings and securities regulation, for the acquirer to obtain more information through due diligence regarding the target than is available to the market. The level of due diligence is generally decided by the board of directors of the target company. The target company is obliged to disclose inside information immediately after the relevant decision or event has become a fact each step in discussions regarding a potential transaction may constitute inside information. It may be possible for the target company to delay such disclosure if it has a legitimate business purpose to do so, provided that such omission would not be likely to mislead the public, and such postponement cannot continue if the inside information or part thereof is leaked to an unauthorized person or the press. In advance of entering into formal negotiations with the target company, an offeror will sometimes, through its advisors, inform the target company that the offeror intends to walk away from the transaction if there is public disclosure of negotiations between the offeror and the target. This would normally supply the requisite business purpose for delaying disclosure. If the target company learns that price sensitive information has leaked prior to the relevant decision or event has become a fact, the target company shall already at that point in time make an announcement regarding the matter (irrespective of whether the information stems from the target company or a third party) Consequently, discussions and negotiations between an offeror and the board of directors of the target company must be disclosed by the target company if the discussions/negotiations are leaked. There is no obligation to disclose or comment on rumours. However, under specific circumstances (e.g. if dubious information is influencing the market) NASDAQ OMX Copenhagen has the authority to order the target to comment on rumours. APPOINTMENT OF FINANCIAL ADVISER There is no explicit obligation to obtain independent financial or legal advice, but it is generally done. It is usual practice for the board of directors of the target company to obtain financial advice (typically in the form of a "fairness opinion") from its financial advisers and even though there is no explicit obligation to do so, the directors may choose to request such a fairness opinion in order to recommend an offer and to be able to document to its shareholders that it has issued such recommendation on a diligent basis. If deemed relevant the board of directors may request to receive a "second fairness opinion" from an independent financial advisor. BREAK FEES Break fees are paid by the target company to the offeror if the offer is unsuccessful. Break fees are not often used, but are probably permissible in Denmark, if in the interest of the target company. takeover guide - denmark (2014) page 5

8 EMPLOYMENT CONSULTATION RIGHTS An offeror is not required to consult its employees or the employees of the target company regarding the tender offer. ANTITRUST The Danish Competition Act establishes a merger control regime pursuant to which, inter alia, an acquisition of shares by way of a public takeover offer will have to be notified to and approved by the Danish Competition and Consumer Authority (the "Authority") if (i) the acquisition leads to the offeror gaining control of the target company and (ii) one of the following turnover thresholds are met: Threshold 1: the involved undertakings have an aggregate annual turnover in Denmark of at least DKK 900 million (approximately EUR 121 million); and at least two of the involved undertakings have an individual annual turnover in Denmark of at least DKK 100 million (approximately EUR 13.5 million). Threshold 2: at least one of the involved undertakings has an individual annual turnover in Denmark of at least DKK 3.8 billion (approximately EUR 510 million); and at least one other involved undertaking has an individual annual worldwide turnover of at least DKK 3.8 billion (approximately EUR 510 million). The calculation of the turnover of the undertakings involved is to a large extent identical to the equivalent calculation under the EU merger control regime. Within 25 working days after the Authority has received a complete notification, the Authority has to approve the merger (concentration) unconditionally or with conditions, or alternatively initiate an in-depth investigation, which may take up to an additional 90 working days (extendable by up to 20 further working days, inter alia, if the parties propose commitments). It should be mentioned that the Faroe Islands and Greenland, which are self-governing parts of the Kingdom of Denmark, have introduced their own merger regimes. THE BREAKTHROUGH RULES OF THE TAKEOVER DIRECTIVE Chapter 14 of the European Takeover Directive contains voluntary rules regarding breakthrough of defences against takeovers and prohibition against frustrating action by the board of directors of the target company. These provisions of the takeover directive are not mandatory. These rules have been implemented into Danish law through an "optional alternative" under which a framework has been adopted in the Danish Companies Act, which individual companies may then adopt by passing a relevant shareholders' resolution at a shareholders' meeting. No Danish listed company has so far adopted breakthrough rules or rules against the taking of frustrating action by the board of directors in a takeover situation, and there is little sign that this will change in the near future. takeover guide - denmark (2014) page 6

9 The Danish framework for allowing implementation by individual companies of the breakthrough rules or the rules regarding prohibition against frustrating action by the board of directors in a takeover situation requires reciprocity meaning that such rules will not apply, if the offeror is itself not subject to similar breakthrough rules or a prohibition against the taking of frustrating action. Until the breakthrough rules and/or the rules prohibiting frustrating action in a takeover situation might become mandatory, these provisions of the Takeover Directive are expected to have very limited relevance with respect to Danish target companies. INSTITUTIONS CONTACT DETAILS IN DENMARK NASDAQ OMX Copenhagen A/S VP SECURITIES SKAT (Danish Tax Authorities) The Danish Competition and Consumer Authority The Financial Supervisory Authority The Danish Business Authority takeover guide - denmark (2014) page 7