SWITZERLAND Law and Practice Contributed by: Frank Gerhard, Andreas Müller and Timo Hasler, Homburger
If the company is already listed, an opting out or opting up requires the approval of a majority of the minority shareholders, and its consequences have to be disclosed to the shareholders in detail. The TOB reserves the right to void an opting out or opting up if it believes that it would unduly prejudice the rights of In a voluntary offer, a bidder may offer cash, listed or non-listed shares, or non-equity securities as consid - eration. Combined offers of cash and securities, and mix-and-match offers are also possible. In a manda - tory offer only, the bidder must offer a cash alternative if it offers securities as consideration. minority shareholders. 6.3 Consideration Historically, two thirds of all public tender offers have been cash offers, a little more than a fifth have been exchange offers and less than a tenth have been mixed offers. The proportion of cash offers has further increased over the past years. In a private M&A setting, the current economic envi - ronment has to some extent increased the focus on deferred consideration mechanics, such as earn-outs. In addition, valuation uncertainty and overall transac - tion risk is being reduced through the use of specific indemnities and a continuing increase in the use of W&I insurance. 6.4 Common Conditions for a Takeover Offer As a principle, a voluntary tender offer can be made subject to conditions, provided that the conditions are outside the bidder’s control and that it can be ascer - tained objectively whether a condition is satisfied. The following offer conditions are common: • regulatory approval (eg, merger control clearance); • no injunction; • minimum acceptance level (see 6.5 Minimum Acceptance Conditions ); • no material adverse change (MAC) (specific amounts or percentages have to be mentioned – eg, loss or reduction of 10% in earnings before interest and taxes, 5% in turnover or 10% in net equity);
• no major dividends or other changes of capitalisa - tion above a certain threshold; • conditions ensuring control of the target (eg, registration of the bidder in the share register with voting rights, election of target directors); and • issuance and listing of securities offered as consid - eration (see 6.6 Requirement to Obtain Financing ). Bidders usually reserve the right to waive certain conditions. If the bidder’s co-operation is required to satisfy a condition, the bidder must take all neces - sary steps to ensure that the condition is satisfied. Otherwise, the condition is deemed to be satisfied. Unlike voluntary tender offers, mandatory tender offers may only be subject to a very limited set of conditions: • regulatory approval (eg, merger control clearance); • no injunction; and • registration of the bidder in the share register with voting rights. Other conditions, including a MAC condition, are gen - erally not permitted in a mandatory tender offer. 6.5 Minimum Acceptance Conditions As a matter of law, a minimum acceptance condition must be low enough that it can realistically be satis - fied. If a bidder holds no more than a trivial number of target shares at the launch of the bid, the minimum acceptance condition must not be higher than 67%. The TOB has allowed minimum acceptance condi - tions of 70% or more – and up to 98% in a few special cases – where the bidder held a large number or the majority of target shares at the outset. As a rule of thumb, the higher a bidder’s stake pre-bid, the more willing the TOB will be to permit a high acceptance level. Under Swiss law, most shareholder resolutions may be passed by a majority of votes represented at a shareholders’ meeting, but certain important resolu - tions – such as certain changes to the articles of asso - ciation, certain types of capital increases or mergers/ demergers – require a two-thirds majority of the votes represented (and a majority of the capital represented).
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