LUXEMBOURG Law and Practice Contributed by: Ana Nicoleta Andreiana, Christophe Boyer, Noémi Gémesi and Tom Hamen, Loyens & Loeff
Unlike mandatory tender offers, no specific require- ments apply to price and relevant payment mecha- nisms for voluntary tender offers. The bidder is free to offer any type of consideration (as long as the general principles of the Takeover Law are observed). It is up to the shareholders to decide on the merits of the offer. If shares are acquired at a higher price during the offer period, the offer price must be adjusted. In deals with valuation uncertainty, parties may use contingent value rights (CVRs) or earn-outs to bridge value gaps and align interests. CVRs are more com- mon in distressed/restructuring scenarios rather than going concern acquisitions. 4.5 Common Conditions for a Takeover Offer/ Tender Offer Both mandatory and voluntary bids are subject to the same rules governing, among other things: • the information to be provided; • the disclosures to be made; • timing; and • regulatory approvals. A major difference is that the consideration to be offered as part of the mandatory tender offer must be fair. The CSSF, as part of its supervisory powers, is entrusted with assessing the fairness of the price. The Takeover Law sets forth a series of criteria and rules applicable to such assessment. Another difference is that voluntary offers can be subject to conditions. These must be clearly defined and approved by the CSSF, and typically include: • minimum acceptance thresholds; • regulatory clearances; and • material adverse changes clauses. However, a takeover offer may not be conditional upon the bidder obtaining financing; a buyer therefore needs to ensure that financing is in place. 4.6 Deal Documentation In Luxembourg public M&A, it is standard practice to enter into a transaction agreement in friendly deals. Beyond the board’s recommendation, targets may
agree to exclusivity, non-solicitation, and break fees, subject to fiduciary duties. Public companies typically provide limited representa- tions, mainly around authority and compliance. Broad- er warranties are rare and more common in private transactions. 4.7 Minimum Acceptance Conditions Typical thresholds include: • 50% + 1 – grants simple majority control at share- holder meetings; • 66⅔% – grants control over special resolutions at shareholder meetings (eg, mergers, or changes to articles); and • 95% – allows for a squeeze-out of minority share- holders. 4.8 Squeeze-Out Mechanisms Article 16 of the Takeover Law provides for a squeeze- out right. In the event a shareholder or a number of sharehold- ers acting in concert cumulatively hold(s) or acquire(s) 95% of the voting rights in an in-scope Luxembourg company, such shareholder(s) may force the minority shareholder(s) holding the remainder of the shares to sell them to the majority shareholder(s) (the Squeeze- Out Right). The Squeeze-Out Right foreseen under the Takeover Law can only be exercised following a takeover offer under the Takeover Law and only within a maximum of three months following the end of the acceptance period of that takeover offer. The competent authority to supervise the squeeze-out procedure is the CSSF. 4.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer Luxembourg requires bidders to have committed financing (“certain funds”) in place before launching a public offer. The bidder (and not the financing bank) must demonstrate the ability to fully fund the offer, and this is verified by the CSSF as part of the offer documentation.
262 CHAMBERS.COM
Powered by FlippingBook