CROATIA Law and Practice Contributed by: Iva Basarić, Marija Gregorić and Matija Skender, Babic & Partners
buyers/bidders. Otherwise, it is rather common for the data room to be populated with documents requested by the potential buyer. There have been no major changes to the scope of due diligence as a result of the COVID-19 pandemic, although perhaps more emphasis has been placed on force majeure and material adverse change clauses in the review of commercial agreements and insurance policies specifically. 5.4 Standstills or Exclusivity Exclusivity is rather frequently demanded and agreed in private deals where there is only one potential buyer, or in a bidding process with respect to the successful potential buyer. 5.5 Definitive Agreements In private M&A deals, the parties will negotiate the terms of the transaction and reflect those agreed terms in the definitive agreements. When it comes to the acquisition of publicly traded companies and publication of the takeover bid, the deal is essentially made on the basis of the terms pro - vided unilaterally in the takeover bid, without negotia - tions with the shareholders. In such cases, the defini - tive agreement is made based on the acceptance of the takeover bid and subject to the terms provided in the takeover bid. 6. Structuring 6.1 Length of Process for Acquisition/Sale The total length of the process for the acquisition/ sale of Croatian target companies depends on fac - tors such as the size of the deal, whether financing is required to close the transaction, whether any regula - tory approvals (and especially merger clearance) are required to close the transaction, etc. In private M&A, smaller deals tend to close within several months, while larger deals (especially where there are condi - tions precedent whose fulfilment cannot be waived and/or that are dependent on third parties) may take up to a year to complete.
Transactions that are subject to the Croatian Takeover Act typically take several months to complete, due to different deadlines imposed under the Croatian Takeover Act (such as a 30-day deadline to file an application to approve the publication of the bid, a 30-day deadline for the regulator to approve the bid, a subsequent seven-day deadline to publish the bid, and the period of validity of the bid, which cannot be less than 28 days or more than 60 days). 6.2 Mandatory Offer Threshold Croatia does have a mandatory offer threshold in place, under which a natural person or legal entity that has directly or indirectly (and solely or jointly) acquired more than 25% of the voting shares of a joint stock company seated in Croatia and traded on a regulated market in Croatia or another EU member state (if not traded on a regulated market in Croatia) is required to publish a mandatory takeover bid and undertake the mandatory takeover procedure in accordance with the Cash is predominantly used as consideration in M&A transactions in Croatia (with only a limited number of transactions using shares as consideration, either par - tially or in whole). Deferred payments and earn-outs are typically discussed as means of bridging the value gaps where there is a high valuation uncertainty. In transactions where the Croatian Takeover Act applies, consideration under the takeover bid must be offered in cash (excluding crypto-assets) or securities, or as a combination of cash and securities, in which case the acquirer is authorised to freely decide on the ratio between the cash and securities offered. If the acquirer offers consideration in the form of securities, or a combination of cash and securities, the Croatian Takeover Act requires them to offer cash considera - tion as an alternative. Croatian Takeover Act. 6.3 Consideration 6.4 Common Conditions for a Takeover Offer In principle, mandatory takeover bids are not allowed to be made subject to the fulfilment of particular con - ditions (other than those mandated under the law, such as merger clearance). By way of exception, the acquirer is allowed to provide in the takeover offer
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