NIGERIA Law and Practice Contributed by: Tosin Ajose, Izuchukwu Ubadinma, Deborah Leshi and Precious Omope, DealHQ Partners
4.8 Squeeze-Out Mechanisms In Nigeria, a squeeze-out following a successful tender offer allows an acquirer to compel remaining minority shareholders to sell their shares once certain ownership thresholds are met. Under the CAMA, the offer must be approved by hold- ers of at least 90% of the total value of shares (exclud- ing those already held by the acquirer) in order to ini- tiate a squeeze-out. Once this threshold is reached, the acquirer may notify dissenting shareholders of its intention to acquire their shares on the same terms as the tender offer. Dissenting shareholders may either accept the offer price or apply to the Federal High Court to determine fair value for their shares. If the acquirer already held more than 10% of the target company’s shares at the time of the offer, the squeeze-out requires approval by at least 75% of shareholders in headcount and 90% in value, ensur- ing that all affected shareholders are treated equally. The law provides robust safeguards, allowing minority shareholders to petition the court for unfair treatment, seek a compulsory buyout at fair value, or request regulatory intervention by the CAC. 4.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer There is no express statutory requirement for an offeror to have “certain funds” (that is, fully executed financing documents or bank-certified proof of funds) before launching a takeover offer. However, the SEC requires an offeror to demonstrate adequate finan- cial capability to complete the proposed acquisition, which may include: • evidence of available funds in the bidder’s bank accounts; • escrow of a percentage of the purchase price with a licensed financial institution; or • a letter of commitment from a lender or financier confirming that funding will be available to com- plete the offer. Certain sector-specific regulators, such as the NUPRC and the NERC, may conduct additional due diligence on the acquirer’s financial capability before approving the transaction.
completion procedures, and are essential to allocate risks and guide the conduct of the parties throughout the process. M&A transactions typically begin with preliminary doc- uments such as a letter of intent, term sheet, exclu- sivity agreement, and non-disclosure or confidential- ity agreement. These outline key commercial terms, ensure confidentiality and provide a roadmap for negotiation before the execution of definitive agree- ments such as a share purchase agreement or asset purchase agreement. For takeover offers, the key transaction document is the Offer Document submitted to the SEC, setting out the offer terms, consideration structure and pro- cedural requirements, and usually accompanied by a financial adviser’s appointment letter and related disclosures. Beyond recommending the offer, the target company’s other obligations may include granting due diligence access, assisting with regulatory filings, complying with exclusivity or non-solicitation clauses, and tak- ing reasonable steps to secure shareholder and court approvals. Given that statutory disclosure obligations under the Investment and Securities Act (ISA) and SEC rules already provide substantial investor pro- tection, public companies generally provide limited representations and warranties, typically restricted to corporate authority, ownership of shares and compli- ance with applicable law. 4.7 Minimum Acceptance Conditions Nigeria does not prescribe a fixed statutory minimum acceptance condition for tender or takeover offers. Instead, the ISA and SEC Rules focus on the threshold that triggers a mandatory offer: when a person (acting alone or in concert) acquires 30% or more of the vot- ing rights in a public company, they must make a man- datory takeover offer to all remaining shareholders. However, bidders often include minimum acceptance conditions in their offer documents. These conditions are commercially determined and are designed to ensure that the acquirer obtains adequate control of the target company to implement strategic or struc- tural changes.
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