BRAZIL Law and Practice Contributed by: Felipe Barreto Veiga, Rafael Teixeira, Gabriel Abdalla and Pablo Arana, BVA – Barreto Veiga Advogados
6.3 Consideration On the one hand, cash consideration remains more common in Brazil, particularly in private transactions. To bridge valuation gaps – especially in sectors with higher volatility – parties frequently use: • earn-outs; • seller (vendor) financing/vendor loans; • deferred or staged payments; • escrow arrangements; • locked-box pricing mechanisms (and, where appropriate, completion accounts); and • equity rollovers (including partial reinvestments by founders/management). On the other hand, transactions involving shares as the sole form of consideration are becoming increas - ingly common. Private equity deals often employ this type of structure. 6.4 Common Conditions for a Takeover Offer Common conditions include: • CADE clearance, where applicable; • sector-specific regulatory approvals, as applicable; • minimum acceptance thresholds consistent with the transaction objective; • no material adverse change (within market-stand - ard parameters); and • no material breach of representations and cov - enants, where relevant. CVM rules and practice generally limit conditions that would render the offer unduly discretionary, uncertain, or inconsistent with investor protection and orderly market principles. 6.5 Minimum Acceptance Conditions Minimum acceptance conditions vary depending on the intended outcome. For a change of control, a bid - der will typically target a threshold sufficient to secure control of voting rights, which in practice generally means a majority of voting shares, depending on the issuer’s ownership structure and governance. For delisting or other transactions affecting listing sta - tus and liquidity, higher acceptance thresholds may
ties seek to manage stakebuilding risk and market disruption during negotiations. 5.5 Definitive Agreements In negotiated public transactions, tender offer terms and conditions are often documented in a definitive transaction agreement between the bidder and the target (and/or, where applicable, the controlling share - holder), and then implemented through the tender offer documentation, in compliance with applicable CVM rules. Regarding private deals, tender offer terms and condi - tions are normally set forth in NBOs, term sheets and/ or MOUs. The definitive agreement may or may not follow these terms, depending on the results of the due diligence. 6. Structuring 6.1 Length of Process for Acquisition/Sale For private M&A transactions, the timeline typically ranges from three to six months, depending on com - plexity, diligence scope, regulatory approvals and financing. More complex deals – particularly those involving multiple jurisdictions, carve-outs or heavy regulatory overlays – may take longer. Public-company transactions often require additional time, especially where CADE review and/or tender offer procedures apply, and where disclosure, gov - ernance and process requirements increase the length of the interim period. 6.2 Mandatory Offer Threshold The acquisition of control of a publicly held compa - ny triggers a mandatory tender offer to acquire the remaining voting shares, under the Brazilian Corpora - tions Law and applicable CVM regulations. In addition, bylaws may include poison pill provisions that create further tender-offer triggers at specified ownership thresholds, subject to market practice and enforceability considerations.
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