COLOMBIA Law and Practice Contributed by: Jaime Trujillo and Natalia Ponce de León, Baker McKenzie
Listed Companies Cash is the form of consideration that has been offered in most public tender offers. Shares in listed compa - nies, bonds and debentures issued by the Colombian government or other sovereign issuers (among other forms of securities) are acceptable, but at least 30% of the consideration must be offered in cash. 6.4 Common Conditions for a Takeover Offer Once a public tender offer is launched (ie, once the offer notice is published), it is irrevocable and can - not be made subject to pre-conditions (except as described below). Thus, any governmental approvals or other applicable conditions will have to be obtained or satisfied prior to launching the tender offer. In a pre-arranged transaction, it is common for the buyer’s obligation to launch the public tender offer to be subject to the satisfaction of pre-conditions such as securing antitrust clearance. In practice, the bidder’s obligation to purchase the shares is subject only to the condition that accept - ances correspond to at least the minimum number of shares specified in the offer notice, and that the shares to be acquired do not exceed the maximum number of shares the bidder offers to acquire in the offer notice. 6.5 Minimum Acceptance Conditions A bidder will be required to acquire at least 5% of the voting capital in a listed company, and the difference between the minimum and maximum offer should be at least 20%. Should the public tender offer fail to receive accept - ances that satisfy this condition, the bidder has the option to either waive the condition or allow the offer to lapse, in which case, the public tender offer would be unsuccessful. 6.6 Requirement to Obtain Financing Private Companies In private transactions, it is indeed an option for bid - ders to incorporate a condition in their offers pertain - ing to the procurement of financing. This stipulation, if included, should be explicitly articulated in the offer.
Additionally, any pertinent details concerning the sta - tus of the financing, such as term sheets, should be clearly stated. By adopting this approach, sellers can gain enhanced assurance regarding the availability of funds, thereby facilitating a smoother transaction process. Listed Companies In public transactions, once a public tender offer is launched it cannot be conditioned on the bidder obtaining financing. On the contrary, bidders will be required to demonstrate certainty of funds by provid - ing a performance guarantee, covering a certain per - centage of the value of the transaction to the BVC. The guarantee can be in the form of cash, a stand- by letter of credit or a bank guarantee, among other options. 6.7 Types of Deal Security Measures Break-Up Fees In private acquisition processes, break-up fees and penalty clauses are rare but not unheard of. In the case of public transactions, break-up fees are more common and are employed to ensure that initial selling shareholders compensate the bidder if a third party launches a competing offer and acquires the relevant shares. In certain instances, the SFC has revised agreed break-up fees to reduce them whenever it considers them excessive. Exclusivity Agreements In Colombia, exclusivity agreements are a more com - mon deal security measure, yet still very heavily nego - tiated. These agreements restrict the seller from nego - tiating with other potential buyers during a specified period. Pandemic Risk Considerations Risks associated with COVID-19 have significantly influenced the drafting of material adverse effect clauses. These clauses now explicitly include new pandemics as adverse material effects. Parties are carefully considering the impact of unforeseen events like pandemics on their transaction’s success and are adjusting contractual language accordingly.
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