GERMANY Law and Practice Contributed by: Gregor von Bonin, Natascha Doll, Andreas Ruthemeyer, Stefan Schröder and Mirko Masek, Freshfields
mitment or accept a better offer (only) under defined circumstances, balancing deal certainty for the bidder with the shareholders’ and target boards’ desire for flexibility in a competitive situation. 4.13 Securities Regulator’s or Stock Exchange Process Launching a takeover offer in Germany requires pub- lication of an offer document which needs to have been reviewed and approved by the regulator BaFin prior to its publication. BaFin’s Securities Supervision Directorate is responsible for reviewing the offer docu- ment for compliance with the WpÜG and associated regulations. BaFin has a period of 10 to 15 working days to review the draft offer document. BaFin’s review focuses on the completeness and accuracy of the information provided to shareholders and whether the offer complies with the WpÜG’s for- mal and substantive requirements, including whether the offer price adheres to the minimum price rules set forth in the WpÜG (see 4.4 Consideration and Minimum Price ). BaFin also reviews whether the offer period and other timing elements are in line with the strict WpÜG requirements (see 4.14 Timing of the Takeover Offer ). 4.14 Timing of the Takeover Offer A bidder has four weeks from announcing its inten- tion to launch an offer to submit the offer document to BaFin for a 10–15 day review (see 4.13 Securities Regulator’s or Stock Exchange Process ). In certain limited cases, this period can be extended by BaFin to ten weeks. Following approval, the acceptance period runs for four to ten weeks. This can only be extended in limited cases, such as a competing offer being announced. With the exception of regulatory approvals, which can have a longer back-stop date, all conditions must be met during the tender period for settlement to occur shortly after. The tender or acceptance period can only be extend- ed in very limited circumstances, such as in case of a (permitted) change of the offer terms during the last two weeks. Such a change is essentially only permit- ted in the case of an increase of the offer price or the
waiver of a condition or to match the tender period of the competing offer. If the tender offer is successful, shareholders who have not accepted the offer in the initial tender period have an additional two-week peri- od after the results are published to decide whether to tender after all (“additional tender period”). 4.15 Privately Held Companies Privately held companies are commonly acquired following either an auction process or bilateral nego- tiations on the basis of a share or asset purchase agreement. An auction process is typically used by the seller when strong interest from multiple buyers is expected. Bilateral negotiation, conversely, is more common when dealing with a strategic buyer and/or for the formation of a joint venture. Acquisitions are generally structured as share deals or asset deals, depending on tax, liability, and regulatory considerations. Key considerations in such acquisi- tions revolve around transaction structure, manage- ment retention, and the form of consideration. Cash transactions remain the norm, providing a clean exit and immediate liquidity. Stock-for-stock and hybrid models (such as earn-outs or vendor reinvestment) are less frequent but do occur. Transaction terms typically involve representations and warranties (called guarantees in the German con- text, which have become slightly more buyer-friendly recently, covering fundamentals, operational, and compliance matters), liability limits, and sometimes uncapped indemnities for identified risks such as tax, pension, or environmental liabilities. Warranty and Indemnity (W&I) insurance is often used to smooth negotiation over liability caps. Escrows are less com- mon but can address long time limits – eg, regarding tax audits. 5. Overview of Regulatory Requirements 5.1 Regulations Applicable to Energy and Infrastructure Companies While establishing a new company in Germany involves few formalities, operating in the energy and infrastructure sectors is subject to comprehensive
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