GERMANY Law and Practice Contributed by: Georg Linde and Kamyar Abrar, Willkie Farr & Gallagher LLP
7.4 Consideration In German public tender offers, cash is the predomi - nant form of consideration – particularly in transac - tions involving private equity sponsors – due to its simplicity, speed, and appeal to shareholders, as well as its alignment with regulatory requirements. Share- for-share exchanges are rare and typically confined to strategic or corporate transactions. German takeover law imposes strict minimum price rules under the WpÜG. The offer price must equal or exceed: • the highest price paid by the bidder (or any person acting in concert) for shares in the target within the six months preceding the offer announcement; and • the three-month volume-weighted average stock exchange price prior to announcement. Should a bidder opt to include shares or other non- cash instruments as consideration, a cash alternative must be provided to ensure equal treatment. These rules serve to safeguard minority shareholder interests and prevent coercive pricing strategies. For private equity acquirers, careful monitoring of pre-announce - ment acquisitions is crucial, as even small share pur - chases at a premium can set the floor for the final offer price. 7.5 Conditions in Takeovers In Germany, private equity-backed takeover offers can include certain conditions, but these are subject to strict legal limitations under the WPÜG. The law requires that any conditions attached to a public ten - der offer must be objective, clearly defined, and not subject solely to the bidder’s discretion. The condi - tions must be capable of being verified and fulfilled (or not fulfilled) based on observable, independent events. One important restriction is that a tender offer cannot be conditional on the bidder obtaining financing. Ger - man law mandates that a bidder must have secured firm and unconditional financing before the offer is launched. Typically, this involves presenting a writ - ten confirmation from a financing bank or institution, ensuring that the bidder is in a position to fully settle the offer consideration if the transaction succeeds.
when a shareholder acquires or disposes of voting rights in a listed company. The relevant thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50%, and 75%. Any crossing of these thresholds must be disclosed without undue delay, and no later than four trading days, to both the target company and the German Federal Financial Supervisory Authority ( Bundesan- stalt für Finanzdienstleistungsaufsicht – BaFin ) with - out undue delay, within four trading days at the latest. For private equity-backed bidders preparing a tender offer, strict compliance with these disclosure require - ments is essential. Voting rights aggregation includes not only directly held shares but also shares held via subsidiaries, controlled undertakings, or persons act - ing in concert. Notably, the “acting in concert” doc - trine may trigger disclosure even where individual shareholdings remain below the threshold, making accurate coordination and attribution critical, espe - cially in syndicate or co-investment structures. Non-compliance may result in substantial fines and temporary suspension of voting rights, potentially Under the German Securities Acquisition and Takeo - ver Act ( Wertpapiererwerbs- und Übernahmegesetz – WpÜG ), any party that directly or indirectly acquires 30% or more of the voting rights in a listed German company is obliged to launch a mandatory public offer to all remaining shareholders. This mechanism is intended to protect minority shareholders by provid - ing them with an opportunity to sell their shares in the event of a change of control. For private equity bidders, the 30% threshold calcula - tion includes not only direct holdings but also attrib - uted voting rights from affiliated entities, co-investing funds, or commonly controlled portfolio companies. Consequently, careful structuring and legal analysis are required to prevent inadvertent triggering of the mandatory offer requirement. Strategic coordination between parallel investment vehicles within a private equity group is particularly sensitive in this context. undermining transaction certainty. 7.3 Mandatory Offer Thresholds
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