BELGIUM Law and Practice Contributed by: Thomas Lenné, Mathias Hendrickx, Valentijn de Boe and Bram Devlies, Loyens & Loeff
an extension of a takeover bid, the bidder who holds 95% of the securities with voting rights and 95% of the capital with voting rights may squeeze out the remaining shareholders at the bid price on the condi- tion, in case of a voluntary bid, that the bidder has acquired through acceptance of the bid at least 90% of the capital with voting rights covered by the bid. If these squeeze-out conditions are met, the bid will be reopened at the same price for at least 15 business days, commencing within three months following the expiry of the original acceptance period of the bid. The securities that are not tendered to the bidder at the expiry of the reopened bid are deemed automatically acquired by the bidder. Apart from the squeeze-out mechanism, a public takeover bid must be reopened if the bidder: • holds 90% or more of the voting securities of the target following the acceptance period (together with its affiliates); • requests the delisting of the target within a period of three months from the end of the acceptance period; and • has committed to acquiring securities in the target against a higher price than offered during the bid, before the end of the bid period. 4.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer In a cash offer, all funds necessary to settle the price must be deposited with, or be covered by, an irrevo- cable and unconditional credit facility from a credit institution established in Belgium (that is, a Belgian or foreign credit institution licensed in Belgium). The funds must be blocked and may be used exclusively for the payment of the securities acquired under the bid. In an exchange offer, the bidder must either already own the securities to be delivered as consideration or have the authority to issue or acquire the same in sufficient number. If the bidder is not the issuer and has no right to acquire the securities, it must be in a position, in fact or by law, to procure that the relevant entity issues the securities.
Evidence of compliance with this condition must be provided to the FSMA. 4.10 Types of Deal Protection Measures Under Belgian law, a target and bidder may agree on break fees, provided that such arrangement meets the corporate interest test at the level of the target. This and other considerations have led legal scholars to contest the validity of break fees, but there can be cir- cumstances in which a break fee may be justified – for example, if the takeover is of major strategic impor- tance or the target is in financial difficulties. Reverse break fees, whereby the potential bidder agrees to pay a break fee in case the bid is not successful, have also made their appearance in Belgian public M&A. The board of the target could further validly grant exclusivity to a bidder within the framework of a vol- untary bid. The target board should, however, take care to always act in the corporate interest of the target, which means that it must objectively assess and render an opinion on potential competing bids by (non-preferred) bidders. 4.11 Additional Governance Rights In case a bidder is unable to obtain 100% of the own- ership of a target company, a bidder may nevertheless enjoy several governance rights: • if the bidder holds more than 50% of the voting rights, the bidder is deemed to control the com- pany alone, as it may pass shareholders’ resolu- tions unless an enhanced majority is required by the BCAC; or • if the bidder holds more than 75% of the voting rights, it may amend the target’s articles of asso- ciation – eg, capital increases, or proceeding with a legal merger (at this point, the control of the target is more or less absolute). 4.12 Irrevocable Commitments To support a preferred bidder, reference shareholders can enter into irrevocable undertakings to tender their shares into the preferred bid. Although Belgian law is unclear on the binding nature and validity of such undertakings, they are common practice. It should be noted, however, that “hard” irrevocable undertakings – ie, irrevocable undertakings that cannot be revoked
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