MALTA Law and Practice Contributed by: George Bugeja, Stuart Firman, Nicholas Curmi and Luke Hili, Ganado Advocates
6.3 Consideration In Malta, acquisitions of private target companies are typically completed for cash consideration. That said, alternative structures – such as earn-out mechanisms and equity rollovers – are increasingly common, par- ticularly in private equity-driven or founder-led trans- actions where alignment on future performance is key. In the context of a takeover offer carried out pursuant to the Maltese Capital Markets Rules, an offeror may offer cash or shares, or a combination of both, but it may only offer shares subject to the requirement to offer cash consideration as an alternative in all cases. All-cash offers are more common, however. An independent expert’s report (containing an evalu - ation of the consideration being offered) must also be provided in all cases. Additionally, while the con- sideration offered for a voluntary bid may be freely determined by the offeror (subject to the overarch - ing requirement to offer cash as an alternative in all cases), the consideration offered in the context of a mandatory bid must be “equitable” and calculated from the date of announcement of the mandatory bid in accordance with set criteria provided in the Maltese Capital Markets Rules (which, among other criteria, generally link the setting of the price to the histori- cal weighted average price of the shares or the price actually paid the offeror (or persons acting in concert) for shares in the six months preceding the offer). In a recent transaction relating to a prospective takeover of one of Malta’s largest banks, the MFSA (being the competent authority for the purposes of the Takeover Directive) granted a derogation from the requirement that the equitable price be calcu- lated as from the date of announcement of the offer in the context of a potential mandatory bid, thereby allowing the bidder to fix the price of the mandatory bid months prior to launch of the bid itself. Maltese law does not allow the acceptance period of a bid to extend beyond ten weeks (and any cash considera- tion must be paid within 30 days of the closing of the acceptance period), and banking regulatory approvals were expected to take many months to obtain, mean- ing that a takeover bid could not be launched subject to regulatory approval. The deal was therefore struc- tured as an irrevocable commitment from the majority
shareholder to sell its shares for a specified price upon regulatory approval eventually being obtained, which acquisition would in turn trigger the mandatory bid requirement. The allowance from the regulator in this case afforded the bidder certainty in advance on the price that would be eventually offered to the minority shareholders following the mandatory bid. It further afforded the minority shareholders the protection of the equitable price methodology and appears to have steered the bidder away from the voluntary bid option (which would have allowed the bidder to retain con- trol/certainty over pricing but without the same price “control” protection), ensuring transparency to the market at an early stage and market stability for the duration of the interim period until regulatory approval is obtained. 6.4 Common Conditions for a Takeover Offer Common conditions for a takeover offer include, but are not limited to, the granting of any antitrust and/ or regulatory approvals necessary for the transaction to go through (provided that it is possible in practice to obtain the relevant approvals within the maximum ten-week acceptance period for the offer under local rules; if not, alternative structuring options would need to be considered), and the non-occurrence of material adverse events which could have an impact on the target’s financial position and/or operations. The MFSA does not typically restrict the use of condi- tions in the context of a takeover offer, except in so far as these might run counter to the requirements of the Maltese Capital Markets Rules. 6.5 Minimum Acceptance Conditions Offers are typically conditional on a minimum accept - ance threshold of 90% of the voting rights of a com- pany, as this would enable the offeror to initiate a squeeze-out of the minority shareholders (subject to the issue raised in 6.10 Squeeze-Out Mechanisms ). 6.6 Requirement to Obtain Financing Parties to a transaction involving a private/public target company in Malta are at liberty to subject an acquisition to conditions, including, among others, the condition of obtaining financing.
800 CHAMBERS.COM
Powered by FlippingBook