COLOMBIA Law and Practice Contributed by: Jaime Trujillo and Natalia Ponce de León, Baker McKenzie
obligations as well as break-up fees as deal protec - tion.
intends to acquire an additional 5% or more of the voting shares of a listed company; • any person (or group of persons constituting the same beneficial owner) has acquired voting shares representing 25% (or representing more than 5% if the buyer already owns 25% or more) or more of a listed entity company as a result of a merger, in Colombia or abroad (in which case an “ex- post” public tender offer must be launched within three months of the transaction, unless the buyer divests the relevant shares within three months of the merger); • any person (or group of persons constituting the same beneficial owner) holds more than 90% of the shares of the public company, if: (i) this thresh - old was reached by other means than a public tender offer for all of the shares in the company; and (ii) the minority shareholders owning at least 1% of the voting shares of the target company request the launch of a public tender offer (in which case the public tender offer must be launched within three months of the date on which the 90% threshold was exceeded); or • the shareholders of the listed company decide to delist the company by a majority shareholder vote (as opposed to a unanimous shareholder vote). Cash is usually preferred over shares as considera - tion in private companies. In a deal environment or industry with high valuation uncertainty, some of the common tools used to bridge value gaps may be: • spinning-off disputed assets or defining the trans - action’s perimeter more narrowly from the outset; or 6.3 Consideration Private Companies • in private company deals incorporating earn-outs or deferred payment mechanisms into acquisi - tion agreements, assuring the acquiring party that the company will achieve certain financial targets, while also providing the seller with potential addi - tional compensation. These approaches can help align the interests of both parties and facilitate a smoother transaction.
6. Structuring 6.1 Length of Process for Acquisition/Sale Private Companies The duration of an M&A transaction is influenced by various factors such as the length of a due diligence process, third-party consents, regulatory approvals, sophistication of the parties, and whether the transac - tion is handled as an auction process or by means of bilateral negotiations. Overall, there is not a specific timeframe to complete a transaction. However, should express antitrust clear - ance be necessary (as opposed to a fast-track filing or no filing), the time required for completion can be extended by an additional five to eight months. Transactions are generally taking longer to complete due to heightened regulatory scrutiny and/or bureau - cracy. Listed Companies Once regulatory authorisations (such as antitrust clearance) are granted, the timeline to apply for authorisation to launch a public tender offer, launch it and settle it usually ranges from one to three months. 6.2 Mandatory Offer Threshold Private Companies There is no obligatory threshold for offers unless specified within a bidding process established by a particular seller. Listed Companies Public tender offers are mandatory in Colombia in the following scenarios: • any person (or group of persons constituting the same beneficial owner) intends to acquire shares representing 25% or more of the voting shares of a listed company; • any person (or group of persons constituting the same beneficial owner) who already owns 25% or more of the voting shares of the relevant company,
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