SOUTH AFRICA Law and Practice Contributed by: Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
the transaction, and the terms of the agreement will vary from transaction to transaction. “Hostile” Transactions In non-consensual or “hostile” transactions, the terms of the offer will usually be set out in a “firm inten - tion letter” addressed to the target board, which will trigger an obligation by the target board to publish a firm intention announcement (see 5.1 Requirement to Disclose a Deal as regards firm intention announce - ments). 6. Structuring 6.1 Length of Process for Acquisition/Sale The time that it takes to complete a transaction in SA varies from case to case and is dependent on a number of factors. These include the nature of the transaction (including whether it is a public market transaction or a private transaction), the complexity of the transaction, whether the transaction is “friendly” or “hostile”, whether any regulatory approvals are required and the extent of the ability of third parties to intervene in the regulatory process. In the public/listed and regulated environment, the Takeover Regulations stipulate a regulatory timetable for offers. The timetable is triggered by the delivery of a firm intention letter to the board of a target company, and thereafter proceeds as follows. • Publication of firm intention announcement – the board of the target company has primary responsi - bility for publishing a firm intention announcement immediately after the receipt of the firm intention letter. • Posting of circular/s – the bidder’s offer circular or the combined offer circular (for a “friendly” bid) must be posted within 20 business days after the publication of the firm intention announcement. • Day 0 (opening date) - the opening date of the offer is the date the bidder posts its offer circular, or the combined offer circular is posted by the offeror and the offeree (the offer must remain open for at least 30 business days after the opening date). • Business day 20 – in the case of a “hostile” bid, the independent board of the target must post the
offeree response circular within 20 business days of the opening date (as mentioned above, in the case of a “friendly” bid, there is ordinarily a com - bined offer circular and there is no need for the independent board of the target to post an offeree response circular). • Day 45 – on the 45th business day after the open - ing date, an announcement must be made that the offer is either unconditional as to acceptances or has been terminated. Regardless of the above regulatory timetable, the timelines of transactions will often depend on and be driven by the extent of the regulatory approvals required. Most delays to transactions are caused by the competition approval process, which usually takes about 60 business days for intermediate mergers and three to four months (or even longer) for large merg - ers. The timelines may also be impacted by any court applications or injunctive proceedings which may arise pursuant to prescribed shareholder approvals that are required for a transaction, or the exercise by a dissenting shareholder of appraisal rights. 6.2 Mandatory Offer Threshold The requirement to make a mandatory offer is trig - gered when a person, alone or together with any per - son acting in concert with it, acquires voting shares in a target equal to or over 35% of the total issued voting shares in that company. The obligation to extend a mandatory offer is triggered if, before the acquisition, the offeror(s) was/were able to exercise less than 35% of the voting rights attached to the securities of the target company and, as a result of the acquisition, the offeror(s) is/are then able to exercise at least 35% of the voting rights attached to the securities of the target company. Within one business day after the date of acquisition of at least 35% of the target’s voting shares, the per - son who has acquired such shares must issue a notice to the remaining shareholders of the target containing an offer to acquire any and all of the target’s remain - ing shares. The requirement to make a mandatory offer which arises from the issue of shares by a target company
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