DENMARK Law and Practice Contributed by: Dan Moalem, Jacob Bier, Thomas Enevoldsen and Poul Guo, Moalem Weitemeyer
6.2 Mandatory Offer Threshold Public Companies
tors like tech and defence, earn-out mechanisms are frequently used to bridge value gaps. Earn-outs link part of the purchase price to future financial perfor - mance, such as revenue or EBITDA targets, thereby allocating risk between the parties. In the pharma or healthcare sector financial measurements are often replaced by inserting certain milestones linked to development phases or clinical trials. Mandatory Offer Requirements In public takeovers, the bidder may offer cash, shares or a combination thereof. However, in a mandatory offer, a cash alternative must be included if the shares offered as consideration are not liquid securities listed on a regulated market, or if the bidder has acquired 5% or more of the target’s shares for cash within the six months preceding the offer. 6.4 Common Conditions for a Takeover Offer Mandatory offers must be unconditional, whereas vol - untary offers may include conditions, provided those conditions are not within the sole control of the bidder. Typical conditions are minimum acceptance threshold and receipt of required regulatory approvals. 6.5 Minimum Acceptance Conditions 90% Threshold for Squeeze-Out Most bidders seek an acceptance level of more than 90% of the share capital and voting rights. Reaching this threshold allows the bidder to initiate a compul - sory squeeze-out of remaining minority shareholders under Danish company law and to subsequently de- That said, some bidders may set a lower minimum acceptance condition, often above 50% of the voting rights, to secure majority control. A simple majority allows the bidder to control general meeting deci - sions, appoint board members, and exercise deci - sive influence over the company’s strategy, even if a squeeze-out is not immediately available. An impor - tant structural consideration in this regard is that, if a bidder acquires between one third and 50% of the voting rights through a voluntary offer, a subsequent mandatory offer obligation is triggered. To avoid this, bidders typically set the minimum acceptance con - dition at above 50%. Under Danish company law, list the company. Lower Thresholds
Pursuant to the Danish Capital Markets Act and Take Over Order a mandatory offer is triggered when an investor (or investors acting in concert) gains a con - trolling influence in the publicly listed company, which is defined as more than 33% of the voting rights, unless special circumstances dictate that this does not constitute controlling influence – for example if a shareholder with more than 50% is present. When a controlling influence is obtained, the offeror shall make an unconditional offer for all remaining shares in accordance with the best-price rule. Private Companies In private M&A, no mandatory offer threshold exists. However, if more than 90% of the shares are held by one shareholder in a limited liability company (“A/S” or “ApS”), any minority shareholder will be entitled to demand a redemption of their shares by the majority shareholder. In Denmark, cash is by far the most common form of consideration in M&A transactions, particularly in private deals. Danish private equity sponsors and strategic buyers typically prefer clean cash exits, and sellers often expect full cash consideration at closing. Share Consideration 6.3 Consideration Cash Consideration In public takeovers, cash is also prevalent, although share consideration or mixed offers may be used in larger or cross-border transactions. Rollover Equity Rollover equity is common in private equity transac - tions, where management or one or more of the sellers reinvests part of its proceeds into the acquiring struc - ture. This is prevalent in buy-and-build cases, where the sponsor typically requires a reinvestment element as part of the purchase price. This aligns interests post-closing, supports value creation, and reduces the buyer’s upfront cash outlay. Earn-Out Mechanisms In deal environments characterised by valuation uncertainty such as growth companies or volatile sec -
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