BRAZIL Law and Practice Contributed by: André Menescal Guedes, Raissa Freire de Almeida and Bruno Paiva, André Menescal Advogados
Another frequent condition is the achievement of a minimum acceptance threshold, typically ensur- ing that the bidder acquires a controlling interest or reaches the ownership level required to effect a sub- sequent corporate reorganisation. Material adverse change clauses and conditions linked to accuracy of representations are less common, as Brazilian law emphasises offer certainty once the tender offer is announced. The offer price conditions and requirements were addressed in 4.4 Consideration and Minimum Price . In short, all shareholders of the same class must receive equal treatment, and the minimum price for control transactions must match the highest price paid to acquire control within the last 12 months. Regulators generally restrict excessive conditionality that could create uncertainty or mislead investors. As a result, Brazilian tender offers are typically “firm” pro- posals, with limited scope for discretionary withdrawal once announced. 4.6 Deal Documentation It is customary in Brazil for the bidder and the target company (or its controlling shareholders) to enter into a transaction agreement in connection with a takeover offer or business combination. The agreement typi- cally governs process co-ordination, representations and warranties, and the conduct of the target’s busi- ness during the offer period. In the case of a public tender offer, the target’s board may agree to support or recommend the transaction, provided that its fiduciary duties to all shareholders are preserved. The target may also commit to customary non-solicitation, information access and co-operation obligations to facilitate due diligence and regulatory filings. However, these commitments must not unduly restrict competing bids, and the board must remain free to evaluate superior offers. Representations and warranties are generally limited in scope for public companies, focusing on corporate authority, share capital, compliance with disclosure rules and the absence of material litigation. Broader operational or environmental warranties are more
common in private M&A transactions, where due dili- gence is deeper and negotiation more flexible. Break-up fees and exclusivity undertakings may appear in negotiated control transactions but are scrutinised to ensure they do not hinder shareholder decision-making or discourage competing offers. Overall, Brazilian practice balances contractual cer- tainty with regulatory safeguards for market fairness and board independence. 4.7 Minimum Acceptance Conditions In Brazil, the minimum acceptance condition for a tender offer typically corresponds to the acquisition of control, which is understood as the ownership of shares conferring the ability to elect the majority of the board of directors or otherwise direct corporate poli- cies. In practical terms, this usually requires acquiring more than 50% of the voting shares, though control may also be achieved through shareholder agree- ments or voting arrangements. For voluntary tender offers aimed at delisting or acquiring strategic influence, bidders often set a lower acceptance threshold, such as one-third or two-fifths of the voting capital, depending on the purpose of the transaction. In OPAs for delisting (tender offers for cancellation of registration), CVM regulations require acceptance by at least two-thirds of the holders of free-float shares voting at the specific meeting con- vened for that purpose. Minimum acceptance thresholds are used to ensure that the bidder obtains effective control or a sufficient level of influence to implement its intended strategy, avoiding fragmented outcomes that could undermine governance stability. Once the minimum threshold is achieved, the offer can be declared successful and settled in accordance with CVM and B3 procedures. 4.8 Squeeze-Out Mechanisms Brazilian law provides limited mechanisms for forcibly acquiring shares from minority shareholders follow- ing a successful tender offer. There is no automatic squeeze-out procedure equivalent to those in some other jurisdictions. Instead, the controlling sharehold- er must resort to corporate actions governed by the
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