NETHERLANDS Law and Practice Contributed by: Jan-Willem van Rooij, Anne Brugmans and Jordy Kusters, Loyens & Loeff
A mandatory takeover offer cannot contain any offer conditions. 4.6 Deal Documentation If the offeror and the target company reach an agree- ment on the offer, they conclude a merger protocol or merger agreement (a “purchase agreement” for Dutch companies listed on US stock exchanges). This con- tains the rights and obligations of the offeror and the target company and its management vis-à-vis each other in connection with the tender offer. Pursuant to the merger protocol, the offeror would be obliged to make a public tender offer for all the issued shares in the capital of the target company on the terms and conditions agreed therein and make the offer unconditional if all offer conditions are satis- fied or waived. Some of the obligations of the target company and its management may include: • publishing a position statement in which the man- agement of the target company recommends to the shareholders to tender their shares in the offer; • entering into irrevocable undertakings with the offeror, pursuant to which individual management board members or supervisory board members commit to tender any shares held or controlled by them in the offer; • providing information to the offeror for the offeror to conduct a due diligence review; • convening an extraordinary general meeting of shareholders to put to vote any resolutions required for the tender offer and the pre-wired back-end measures and recommending that the shareholders vote in favour of such resolutions; • using best efforts to avoid an adverse recommen- dation change; • obtaining a fairness opinion; • co-operating in obtaining any required regulatory approvals and making any required notifications; • agreeing to not solicit any competing offers during a certain exclusivity period, and in case of an unso- licited competing offer, allow the offeror to match the competing offer; and • agreeing to a break fee in case of the early termina- tion of the merger protocol by the target company.
In typical Dutch takeover processes, the target com- pany also provides a limited set of representations and warranties, generally related to the number of outstanding shares and other technical company law matters, and confirmations regarding the fulfilment of disclosure requirements. A breach of such representa- tions and warranties may be a cause for termination of the merger protocol, especially if such breach is expected to have material adverse consequences for the target company, the offeror or the transaction. 4.7 Minimum Acceptance Conditions Under Dutch law, control over a legal entity can gen- erally be presumed if someone can exercise 50% + 1 vote in the general meeting of shareholders, or can appoint most of the statutory directors of that entity. Due to the interspersed voting in the general meetings of listed companies, in such companies, having less than 50% of the voting rights may already constitute effective control. As such, the statutory threshold for predominant control in connection with the Dutch mandatory takeover regime is 30%. However, certain resolutions, including resolutions which would be required in connection with the pre- wired back-end measures, and therefore with obtain- ing all the issued shares in the capital of the target company, may require a qualified majority of the votes cast in the general meeting according to Dutch law or the articles of association. This is why the minimum threshold or minimum acceptance often starts at 95% but, depending on certain resolutions being adopted, is lowered to a range between 70–90% of the issued share capital. 4.8 Squeeze-Out Mechanisms If the offeror obtained at least 95% of the issued capital of the target company following a successful tender offer, it has the option to buy out the remain- ing minority shareholders by initiating a compulsory acquisition procedure at the Enterprise Chamber of the Amsterdam Court of Appeal ( Ondernemingskam- er , Enterprise Chamber) to acquire the remaining shares at a fair price. The right to initiate a compulsory acquisition procedure must be exercised within three months following the expiry of the acceptance period of the offer. The fair price will generally be equal to the offer price under the offer.
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