PHILIPPINES Law and Practice Contributed by: Rose Marie M. King-Dominguez, Melyjane G. Bertillo-Ancheta and Franco Aristotle G. Larcina, SyCip Salazar Hernandez & Gatmaitan
which is the SEC-prescribed form for the tender offer report. The terms and conditions may be subject to the comments of the SEC. 6. Structuring 6.1 Length of Process for Acquisition/Sale The period for completing an M&A transaction depends on the project and the industry involved. Apart from the time needed to complete negotiation and documentation, some time may be spent on due diligence. Local targets are not all typically ready for a diligence exercise. Where the target entity is in a sector that is heavily regulated, parties need to take into account more diligence time as well as possibly time to seek approvals from government agencies for the transaction. On average, simple M&A transactions with few closing conditions could be completed in two months. Acqui - sitions that involve public companies and the trigger - ing of a mandatory tender offer requirement may need three to four months to complete. Those that require merger notification to the PCC would require at least 45 days, as this is the minimum merger review period and assumes that the Commission will not issue any requests for information and does not proceed to a Phase 2 review. Typically, and provided the PCC does not proceed to a Phase 2 review, securing a merger clearance with the Commission takes around 60 to 90 days from filing the merger notices. 6.2 Mandatory Offer Threshold The rules on mandatory tender offers are set out in the SRC and its implementing regulations. Under the regulations: • any person, or group of persons acting in concert, who intends to acquire 35% of the outstand - ing voting shares or sufficient outstanding voting shares to gain control of the board in a public com - pany in one or more transactions within a period of 12 months is required to disclose their intention and contemporaneously make a tender offer for
the percentage sought to all holders of securities within that period; • any person, or group of persons acting in concert, who intends to acquire 35% of the outstand - ing voting shares or sufficient outstanding voting shares to gain control of the board in a public company directly from one or more stockholders is required to make a tender offer for all the out - standing voting shares; the sale of shares pursuant to the private transaction or block sale will not be completed prior to the closing and completion of the tender offer; and • if any acquisition would result in ownership of over 50% of the total outstanding equity securities of a public company, the acquirer will be required to make a tender offer, under the regulations, for all the outstanding equity securities to all remaining stockholders of the company at a price supported by a fairness opinion of an independent financial adviser or equivalent third party; the acquirer in such a tender offer will be required to accept all securities tendered. Any person, or group of persons acting in concert, who intends to acquire 15% of equity securities in a public company in one or more transactions within 12 months must file a declaration to that effect with the SEC. 6.3 Consideration Cash consideration for M&A transactions is more common than shares or other property. If there is a valuation gap between the parties, they may agree to tie a portion of the consideration to certain performance-based conditions (eg, hitting EBITDA targets or other financial metrics). The por - tion of the consideration that is initially withheld can be placed in escrow pending the fulfilment of certain conditions or can be paid in tranches once the condi - tions are met. However, parties may need to deal with issues relating to overpayment of taxes if the withheld amount is not released to the vendee due to condi - tions for its release not being satisfied. Another tool that can be used to bridge valuation gaps is to do a partial acquisition upfront and agree on put options or call options for the remainder of the shares,
1001 CHAMBERS.COM
Powered by FlippingBook