ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira, Liron Hacohen and Nataly Margalit, Arnon, Tadmor-Levy
• any commitment to make another purchase of shares in the target company or a merger of the target company within one year; • any intention to make another purchase of shares in the target company within six months; and • any significant plans for the target company, such as delisting, changes to corporate policies, capital changes or changes to the board or management.
limited compared to the acquisition of a private com - pany, as most of the material information is already reported to the stock exchange as part of the public
company’s reporting obligations. 5.4 Standstills or Exclusivity
A buyer negotiating the acquisition of a private com - pany will usually receive exclusivity for a certain period agreed upon by the parties, as a condition for con - ducting the negotiations. For a public company, it is also common to grant exclusivity for a limited period to conduct negotiations and perform due diligence. However, in cases where a tender offer is submitted, or the company wishes to hold an auction, the seller may reach a standstill agreement with a potential buyer to allow flexibility in negotiating with additional bidders. Recently, in the context of public company transactions involving the acquisition of control, “fidu - ciary out” mechanisms have been used, granting the board of directors the authority to terminate an exist - ing deal in light of a superior offer from another buyer. 5.5 Definitive Agreements It is not common for the terms of a tender offer to be documented in a definitive agreement. However, it is permissible to do so. A public company receiving a tender offer to purchase its shares is required to pub - lish a report to the stock exchange detailing the terms of the tender offer. 6. Structuring 6.1 Length of Process for Acquisition/Sale With the exception of a reverse triangular merger (for which the Israeli Companies Law sets out minimum time periods) there are no minimum or maximum time periods for acquiring or selling a business in Israel. If the circumstances permit, the acquisition can sign and close simultaneously. With respect to statutory mergers, the Israeli Compa - nies Law provides that the merger may not be con - summated until the later of: • 50 days following the filing of a merger notice by the merging companies with the Israeli Registrar
5. Negotiation Phase 5.1 Requirement to Disclose a Deal
Israeli securities law requires public companies to disclose any transaction that could materially impact the company or its stock price. For significant asset acquisitions, disclosure is generally required at multi - ple stages, namely: • when negotiations commence; • upon signing a preliminary agreement, or Letter of Intent (LOI); and • upon executing the definitive purchase agreement. However, the company is allowed to delay reporting on the negotiations prior to entering into the LOI, pro - vided that no information about the deal has been publicly disclosed. Public companies that are dual- listed on certain exchanges will be allowed to operate according to the reporting obligations of the exchang - es they are traded on. 5.2 Market Practice on Timing Disclosure on a deal can be delayed if its submission is likely to prevent the completion of the deal or signifi - cantly worsen the terms of the deal, provided that no information about the deal has been published in the media. Companies often tend to use this exception to postpone the disclosure of negotiations they are conducting until they are close to signing a definitive agreement. 5.3 Scope of Due Diligence Buyers usually conduct business, accounting and legal due diligence. The scope of due diligence is determined according to the size and complexity of the deal. When it comes to the acquisition of a public company, the scope of due diligence is typically more
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