FRANCE Law and Practice Contributed by: Idris Hebbat, Camille Perrin, Franck Vacher and Nicolas Menard-Durand, C-Level Partners
Financial Markets Authority ( Autorité des Marchés Financiers , or AMF) – with a copy to the issuer – within four trading days. Failure to comply with this disclosure requirement may lead to a suspension of the voting rights attached to the shares exceeding the threshold that should have been disclosed, for a period of up to two years. 7.3 Mandatory Offer Thresholds Under French law, there are two situations in which the obligation to make a mandatory offer for 100% of the shares of a publicly listed company can arise: • when a person or entity, acting alone or in concert with any other party, exceeds 30% of the voting rights or the share capital of the target company; or • if a shareholder who already holds between 30% and 50% of the target’s share capital or voting rights increases its stake by 1% or more within 12 consecutive months. In either case, the mandatory offer price must be at least equal to the highest price paid by the bidder for securities of the target during the 12 months preced - ing the obligation to file such mandatory offer. It should be noted that exemptions and dispensations from the obligation to file a mandatory offer may be granted by the AMF in certain limited circumstances, including the following: • subscription to a capital increase of a company in financial difficulty, subject to the approval of the shareholders’ general meeting; • merger or asset contribution subject to the approv - al of the shareholders’ general meeting; and • the holding of the majority of the company’s voting rights by the requesting party or by a third party, acting alone or in concert, etc. If the required mandatory offer is not filed, voting rights exceeding the 30% threshold will be suspended. 7.4 Consideration In France, cash (rather than stock) is by far the most common consideration for financing an M&A transac - tion. Indeed, offering cash instead of shares enables the buyer to avoid dilution of its own shareholders.
Thus, controlling stakes at the level of the buying com - pany remain unchanged. 7.5 Conditions in Takeovers Takeover bids may be subject to certain conditions precedent. In general, the conditions precedent • if the offer includes stock as consideration, authori - sation of the issuance of new shares of the offeror by its shareholders’ meeting; • reaching a certain threshold of target shareholder participation (in capital ownership or voting rights); and • the success of two tender offers conditional upon each other. However, conditions precedent relating to the obtain - ment of financing by the bidder are not accepted. 7.6 Acquiring Less Than 100% Squeeze-Out Mechanisms A squeeze-out procedure can be launched every time a given shareholder, acting alone or in concert with others, reaches no less than 90% of the target’s vot - ing rights. If the 90% threshold is reached following the closing of a tender offer, the squeeze-out proce - dure can be implemented immediately, provided that the offer prospectus expressly mentions the bidder’s intention to proceed with a squeeze-out. 7.7 Irrevocable Commitments accepted by the AMF are the following: • the obtainment of antitrust approvals; Commitments to tender shares from actual sharehold - ers depend on the way the takeover is structured. Takeovers involving the participation of the sharehold - ers of the target (and especially friendly takeovers) are usually structured in two different ways: • a block of shares sold by the shareholders of the target to the bidder with an immediate transfer of ownership and then the launch of a tender offer by the bidder; or • a tender commitment – in this case, the bidder undertakes to launch a public offer for the target at a price agreed on with one or more shareholders, who will then tender their shares at such price.
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