SWITZERLAND Law and Practice Contributed by: Frank Gerhard, Andreas Müller and Timo Hasler, Homburger
6.2 Mandatory Offer Threshold A bidder that directly or indirectly acquires equity securities in a Swiss company listed in Switzerland (or a foreign company with primary listing in Switzer - land) and thus, alone or together with parties acting in concert, crosses the threshold of 33⅓% of the tar - get’s voting rights (whether exercisable or not) must submit a mandatory offer for all of the target’s listed equity securities. Acting in concert with the intention to control the target also triggers the mandatory offer rule if the parties acting in concert collectively hold more than 33⅓% of the target’s voting rights. A mandatory offer must be made not later than two months after the crossing of the 33⅓% threshold. In the case of a mandatory offer, the so-called minimum price rule applies: ie, the offer price may not be set below the 60-day VWAP of the shares and the highest price paid by the bidder or any party acting in concert with it for equity securities (including privately negoti - ated (block) trades) in the preceding 12 months. The minimum price rule thus restricts a bidder’s ability to pay a control premium. Generally, the mandatory offer rule is triggered when shares are acquired: eg, a share purchase is consum - mated or shares are delivered after the exercise of call options. Absent particular control arrangements regarding the target, the entering into a share pur - chase agreement as such does not trigger the man - datory offer rule. Exemptions From Mandatory Offers There are exemptions from the obligation to make a mandatory offer if the crossing of the 33⅓% threshold results from a gift, an inheritance, the division of an estate, a matrimonial arrangement or the enforcement of a judgment. The TOB may grant further exemp - tions: eg, if the crossing of the threshold results from a capital reduction, if the threshold is only temporarily exceeded, or if equity securities are acquired in con - nection with a reorganisation of a distressed company. In addition, the shareholders of a company may opt out of the mandatory offer rule (so-called opting out) or increase the threshold to up to 49% (so-called opt - ing up) by amending the company’s articles of incor - poration before or after an IPO.
or not to tender their shares. If such information is received, it must be disclosed in the offer prospectus. 5.4 Standstills or Exclusivity Swiss target companies usually expect a bidder to enter into a standstill agreement for the period until the offer is officially launched. In contrast, a target’s ability to grant exclusivity is limited, as the target board has a fiduciary duty to examine all offers in good faith and must treat all bidders equally, eg, with respect to allowing them to conduct due diligence. 5.5 Definitive Agreements In recommended bids (other than in restructuring and going-private transactions), there is almost always a transaction agreement between the bidder and the target. In some cases, important shareholders of the target are also parties to the transaction agreement, which usually sets out the terms and conditions of the public tender offer and the target’s future manage - ment structure. The target would in turn undertake to support the bid and recommend it to its shareholders, subject to a fiduciary out. 6. Structuring 6.1 Length of Process for Acquisition/Sale A public tender offer takes a minimum of four to six months from the announcement to the settlement and approximately one month longer if there is a com - peting offer. If the deal requires merger control clear - ance or regulatory approvals, it may take considerably longer. The preparatory phase in the run-up to the announcement usually takes one to three additional months. A back-end squeeze-out usually takes four to six months after the completion of the offer. The timing of a private M&A transaction depends almost entirely on the parties, except where merger control clearance or regulatory approvals are required. Depending on its type and complexity, an M&A trans - action may take anything between two months (or less, in exceptional cases) and more than 12 months. In many transactions where no merger control clear - ance, regulatory approvals or third-party consents are required, the parties choose a simultaneous signing and closing.
1263 CHAMBERS.COM
Powered by FlippingBook