BELGIUM Law and Practice Contributed by: Thomas Lenné, Mathias Hendrickx, Valentijn de Boe and Bram Devlies, Loyens & Loeff
securities (exchange offer) or a combination of both. In case of an exchange offer within the framework of a mandatory bid or a voluntary bid by a controlling shareholder, a cash alternative may have to be pro- vided by the bidder under certain conditions. In principle the bidder is free to determine the offer price in case of a voluntary bid, as long as it is set at such a level that reasonably allows the bid to succeed. If, however, a voluntary bid is launched by a control- ling shareholder, the price will have to be supported by an independent valuation report. In mandatory bids, the offer price must at least be equal to or exceed: • the highest price paid by the bidder or a person acting in concert in the course of a 12-month period prior to the announcement of the bid; and • the weighted average price on the most liquid market in the course of a 30-day period prior to the date on which the obligation to issue a bid has arisen. Belgian takeover law further prohibits differentiation in price within the context of a voluntary bid. If the bid relates to different categories of securities, the prices offered for these securities may, however, be differentiated, provided they are based on the intrinsic characteristics of the respective securities. Finally, as mentioned previously (see 4.3 Transaction Structures ) cash is to some extent permissible within the context of a legal merger. 4.5 Common Conditions for a Takeover Offer/ Tender Offer Voluntary bids may be made subject to the satisfac- tion of pre-conditions, which must be compliant with all offer rules and must be of such a nature that the bid can reasonably be expected to succeed. Pre-con- ditions to a voluntary bid will be subject to approval by the FSMA and must be specific and objective, to avoid their satisfaction being dependent solely on the bidder’s discretion. Mandatory bids must, however, be unconditional, albeit that they may be made subject to merger control clearance. Minimum levels of acceptance, material adverse change or effect, competition clearance and regula-
tory approval conditions are often used in voluntary bids. 4.6 Deal Documentation In Belgium, most takeover offers are recommended given the historical presence of large reference share- holders in Belgian listed companies. Therefore, a bid- der and a target company often enter into offer-related arrangements prior to a bid. Such agreements may contain the following: • in case of a friendly bid, the board of the target company may grant a potential bidder access to (non-public) information; • process letters whereby the target board and the bidder agree on the manner in which due diligence may be carried out in respect of the target; • supporting and recommending the offer; • confidentiality agreements; • standstill commitment by the target board to refrain from taking any action affecting the securities of the target; or • non-solicitation clauses. All of the above is subject to the restrictions imposed by MAR and in particular the prohibition on disclosure of inside information, market manipulation and insider dealing. These restrictions limit the information that can be provided by the target company. Public companies usually do not grant (extensive) rep- resentations and warranties. 4.7 Minimum Acceptance Conditions As set out in 4.5 Common Conditions for a Takeo- ver Offer/Tender Offer , minimum acceptance condi- tions are permitted by the FSMA and are common in voluntary public tender offers. These conditions will be tested against the requirement that they may not impede the reasonable likelihood of success of the takeover offer. In practice, the level is typically set between 75% and 90%, but in certain cases the
FSMA has accepted a 95% threshold. 4.8 Squeeze-Out Mechanisms
Following the closing of the acceptance period within an offer, the bid may be reopened to squeeze out minority shareholders if certain thresholds are met. As
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