GERMANY Law and Practice Contributed by: Marc Löbbe, Michaela Balke, Oliver Schröder and Martin Kolbinger, SZA Schilling, Zutt & Anschütz
6.2 Mandatory Offer Threshold An investor who acquires 30% or more of the voting shares of a company that is listed on an organised market is required to issue a mandatory offer to all other shareholders. The bidder may apply to BaFin to be exempted from the obligation, but such exemp - tions are only granted in extraordinary cases. 6.3 Consideration Consideration is determined by market dynamics in the private M&A field. In a competitive landscape, locked-box deals with a pre-determined fixed pur - chase price had become common, but with a shift to more balanced negotiating positions classic purchase price adjustments are increasingly accepted. Earn-out constructs have also become more common due to valuation difficulties in the context of ongoing eco - nomic disruptions, but are difficult to structure. In contrast, consideration in public transactions seek - ing control (or in mandatory offers) is heavily regulated. In principle, both cash and shares (or a mix of both) can be used as consideration. If the bidder uses shares, these must be liquid and listed on an organised mar - ket, and the owners of voting shares in the target must be offered voting shares as consideration. Moreover, if the bidder acquires 5% or more of the target shares for a cash consideration during the six months before the announcement of the takeover offer, a cash con - sideration must be offered to all shareholders of the target; a consideration in shares can be offered as an alternative. When shares are publicly offered, equiva - lent disclosure and prospectus requirements apply, as in other public share offerings, and the German Securities Prospectus Act ( Wertpapierprospektgesetz ) must be adhered to. The bidder is obliged to offer consideration of an “adequate” value. Such consideration is required be at least equal to both: • the value of the highest consideration paid or agreed to by the bidder, a person acting in con - cert with the bidder or any of their subsidiaries for the acquisition of shares in the target within the six-month period prior to the announcement of the takeover; and
• the weighted average price of such shares on the stock exchange during the last three months before the announcement of the takeover. In addition, most favoured treatment rules apply: if the bidder acquires shares at a higher price during the offer period or within 12 months after the end of the offer period, the higher price is to be paid to all shareholders who accept the takeover offer. 6.4 Common Conditions for a Takeover Offer Mandatory offers cannot be made subject to con - ditions (except where the conditions concern legal requirements for the takeover, such as merger control or FDI clearance). With regard to voluntary takeover offers, less rigid rules apply and bidders are generally free to define conditions that must be met for the offer to become effective, unless the satisfaction of these conditions is under their control (an offer made subject to revoca - tion or withdrawal is inadmissible). Permissible condi - tions can comprise minimum acceptance conditions (ie, a certain percentage of shares must be tendered before the offer becomes effective) or MAC clauses, and regulatory clearance always remains a permis - sible condition. 6.5 Minimum Acceptance Conditions Minimum acceptance conditions are generally permis - sible in the public M&A context and often relate to the acquisition of 50% or 75% of voting rights. In general, the resolutions of the shareholders’ meet - ings of a German stock corporation are taken with a simple majority that exceeds 50% of the votes. How - ever, for some important measures, particularly all measures that require an amendment of the articles of association, a majority that exceeds 75% of the share capital represented in the shareholders’ meet - ing is required. Even higher majorities are required for some meas - ures, particularly regarding a squeeze-out of minority shareholders (see 6.10 Squeeze-Out Mechanisms ). Therefore, in some cases, bidders may consider even higher minimum acceptance thresholds than those previously covered.
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