SWITZERLAND Law and Practice Contributed by: Frank Gerhard, Andreas Müller and Timo Hasler, Homburger
With 90% of all outstanding shares, a bidder may carry out a squeeze-out merger and with 98% of all outstanding shares, a bidder may squeeze out the remaining shareholders after a public tender offer by means of a court order (see 6.10 Squeeze-Out Mechanisms ). 6.6 Requirement to Obtain Financing The TOB does not permit financing conditions in a cash bid. To the extent that securities are offered as consideration, an offer can be conditional upon the issuance and listing of such securities, but only if the bidder has taken all necessary steps to ensure that the condition will be satisfied. In terms of process, the offer prospectus, which is published at the launch of the offer, must set out the details of the financing and its sources, and must con - tain a confirmation by the Independent Review Body that the financing is available (see 7.2 Type of Dis- closure Required ). As a result of that and as a practi - cal matter, the funding must be in place a significant amount of time prior to the launch of an offer. 6.7 Types of Deal Security Measures There are various means of fostering deal security in Swiss takeover law and practice. Friendly Takeovers In a friendly takeover, the target often undertakes not to solicit or recommend other offers (“no-shop clause”). While the predominant view is that no-shop clauses are generally permitted, they are subject to limitations: • firstly, the target board must still be able to negoti - ate with unsolicited rival bidders, which is why a “no-talk clause” would likely be inadmissible; • secondly, the target board must provide all bidders the same amount of information (whether solicited or unsolicited); and • thirdly, the target board must be able to advise the target shareholders of the merits of a rival bid and to recommend the rival bid if it determines that this is in the interest of the company (so-called fiduci - ary out).
There is no need to agree on a matching right, as any bidder has that right by operation of law. Break-Up Fees Break-up fees are generally considered to be permit - ted to the extent that they cover the bidder’s costs and expenses. It is not court-tested whether punitive break-up fees (eg, with the aim to frustrate any com - peting bids) are permissible, but the TOB would likely not accept it. In transactions requiring shareholder approval (eg, a statutory merger), a break-up fee must not coerce shareholders to approve the transaction. Usually, a break-up fee is payable if the offer is unsuc - cessful due to the target breaching any laws and regu - lations applying to the offer, the target’s failure to sat - isfy the offer conditions, or the successful completion of a competing bid. While break-up fees payable by the target are often agreed in friendly deals, reverse break-up fees payable by the bidder are relatively rare and are more often seen in private M&A transactions. Shareholder Approvals In transactions requiring shareholder approval, the tar - get customarily agrees to solicit the necessary share - holder approvals. Procuring Tender Undertakings Last but not least, it is common for a bidder to procure tender undertakings from large shareholders of the target (see 6.11 Irrevocable Commitments ). No-MAC Conditions In respect of private M&A, “No-MAC” conditions (whereby the buyer could walk away from the trans - action in the event of a material adverse change at the level of the target) remain relatively uncommon in Swiss deals (and, if included, generally contain an exclusion for, among others, deteriorations in macro - economic conditions). 6.8 Additional Governance Rights A bidder may obtain additional governance rights with respect to a target through a shareholders’ agree - ment with target shareholders that will not tender their shares to the bidder. If such arrangements are entered into before or during a public tender offer, however, the mandatory offer rule may be triggered (see 6.2
1265 CHAMBERS.COM
Powered by FlippingBook