ROMANIA Law and Practice Contributed by: Luiza Ionescu, Andreea Paraschiv, Amanda Csaki and Cezara Mitea, Stratulat Albulescu Attorneys at Law
4. Acquisitions of Public (Exchange- Listed) Energy and Infrastructure Companies 4.1 Stakebuilding It is legally permissible and possible for a potential bidder to acquire a stake prior to announcing a formal offer. However, this is constrained by insider trading rules and the mandatory bid threshold. The reporting threshold is triggered when a person’s direct or indirect holding of voting rights reaches, exceeds, or falls below 5%, 10%, 15%, 20%, 25%, 33%, 50% and 75%, and such shareholding changes must be reported within four trading days from the date on which the threshold is reached or crossed. The initial major shareholding notifications do not typi- cally require a detailed statement of purpose. How- ever, the bidder’s strategic plans and intentions are a mandatory and detailed component of the formal public takeover offer document itself. The target com- pany’s board is then required to issue a formal opinion on these stated plans. The Romanian legal framework does not have a for- mal, fixed-deadline “put up or shut up” rule. However, in the event of a market leak or significant rumour, regulators may require the potential bidder to make a clarifying announcement to prevent market abuse, which can create a de facto “put up or shut up” situ- ation. 4.2 Mandatory Offer A mandatory offer is triggered when any person, act- ing alone or in concert, acquires securities that result in holding more than 33% of the voting rights in a pub- lic company. Exemptions include holdings obtained during a privatisation process, in enforcement pro- ceedings, through intra-group transfers, or after a prior voluntary offer made to all shareholders. 4.3 Transaction Structures The most common structure for acquiring a public company in Romania is a public takeover offer. Gen- erally, typical transaction structures for an acquisition of a public company in Romania include the acquisi- tion of a controlling interest followed by a mandatory takeover bid, a voluntary takeover bid or a merger.
Although mergers are available in Romania as an option for an acquisition of a public company, such form of acquisition is less customary, as the process is more complex due to the applicable regulatory requirements. 4.4 Consideration and Minimum Price In Romania, cash consideration is by far the most typical form of payment in acquisitions of public com- panies, including those in the E&I sector. Stock-for- stock transactions are legally possible but relatively uncommon in practice due to valuation complexity, regulatory approval requirements, and the need for the offered securities to be of an equivalent, liquid, and publicly tradable nature. There is a strict minimum price requirement for all public takeover offers. For a voluntary offer, the price must be the highest of: • the highest price paid by the bidder (or persons acting in concert) in the 12 months preceding the offer; • the weighted average trading price during those 12 months; and • the net asset value per share from the company’s latest financial statements. For a mandatory offer, the price must be no lower than the highest price paid by the bidder (or any persons acting in concert with it) for the shares of the target during the 12 months preceding the submission of the offer documentation. The use of contingent value rights or similar mecha- nisms is rare in Romanian public M&A transactions. This is mainly because takeover offers must provide equal treatment to all shareholders and offer a uni- form, fixed price, making contingent or variable pric- ing structures impractical (such mechanisms are more typical in private M&A transactions). 4.5 Common Conditions for a Takeover Offer/ Tender Offer It is generally understood that a mandatory takeover offer cannot be made subject to conditions other than statutory requirements, such as obtaining regulatory approvals. A voluntary offer, on the other hand, may be subject to objectively justified conditions, most commonly relating to the attainment of a minimum
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