NETHERLANDS Law and Practice Contributed by: Maarten de Boorder, Samuel Garcia Nelen, Jelmer Kalisvaart and Bas Vletter, Greenberg Traurig, LLP
Finally, the adoption of certain general meeting resolu - tions (eg, dismissal or appointment of directors) that will become effective upon settlement of the offer is generally included as an offer condition. In contrast to a voluntary public offer, the completion of a mandatory offer may not be made subject to any conditions. 6.5 Minimum Acceptance Conditions A common condition for a takeover offer is that at least 95% of the shares are tendered under the offer. This threshold of at least 95% of the shares is used because a bidder can subsequently initiate statutory squeeze-out proceedings to acquire the remaining minority shares (see 6.10 Squeeze-Out Mechanisms ). In addition, it is market practice to agree that the 95% threshold will be lowered (eg, to 80%) if the general meeting of the target has passed resolutions to initiate alternative squeeze-out measures (see 6.10 Squeeze- Out Mechanisms ). This allows the bidder to acquire full control of the business of the target company after settlement of the offer, even if they acquired less than 95% of the target’s shares. 6.6 Requirement to Obtain Financing A public offer cannot be conditional on obtaining the required financing. Ultimately on the date that approv - al of the offer memorandum by the AFM is requested, the bidder must ensure that it can dispose of the funds required for the offer or has taken all necessary action to provide any non-cash consideration. In addition, the bidder must make a public announcement as soon as it has secured certainty of funds. In private M&A transactions, it is permitted to include obtaining financing as a condition precedent. 6.7 Types of Deal Security Measures A bidder may implement deal protection measures, including arrangements for a break fee, matching rights, no-shop provisions, exclusivity, and informa - tion rights. However, the target’s management and supervisory directors are required to act in the best interests of the company. Any deal protection meas - ures should therefore be proportional and reasonable. The target company typically requires a “fiduciary out”
in addition to such measures, and the measures may not entirely exclude the possibility for a target com - pany to engage with a third-party bidder if that third party has a superior offer. All circumstances should be considered to determine if the total package of deal protection measures is permissible. A break fee of around 1% of the target’s equity value in a Dutch public offer is generally accepted; however, in certain cases higher break fees may be agreed upon. 6.8 Additional Governance Rights If a bidder does not intend to acquire 100% own - ership of a target, it may strengthen its governance rights by, for example, entering into a shareholders’ or voting agreement with another major shareholder or concluding a relationship agreement with the target company. Such agreements typically include provi - sions regarding governance rights, and may include a nomination right for one or more members of the supervisory board. They may also include share trans - fer restrictions or orderly market arrangements. An agreement between shareholders may trigger a mandatory offer if the shareholders are deemed to act in concert and can jointly exercise at least 30% of the voting rights at the general meeting of a Dutch-listed company (see 6.2 Mandatory Offer Threshold ). 6.9 Voting by Proxy In the Netherlands, it is possible for shareholders to Under Dutch law, a shareholder (eg, the bidder follow - ing a successful tender offer) holding 95% of the tar - get’s issued share capital may request the Enterprise Chamber to force the remaining minority sharehold - ers to sell their shares to the majority shareholder (a statutory squeeze-out). Similarly, the remaining minor - ity shareholders (assuming such majority shareholder holds 95% or more) have the right to require the major - ity shareholder to purchase their shares (a sell-out). It is market practice for the bidder and the target to agree that if the bidder fails to reach the acceptance level of 95% but exceeds a certain lower acceptance level (typically 80%), the target’s board will co-oper - ate with so-called alternative squeeze-out measures vote by proxy during a general meeting. 6.10 Squeeze-Out Mechanisms
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