JERSEY Law and Practice Contributed by: Paul Burton and David Allen, Maples Group
of large corporate groups, coupled with seasoned merger and acquisition expertise and experience where sponsors have successfully run “buy and build” strategies for multiple funds. The following kinds of transactions are common in a private equity acquisition context. • A take-private or takeover offer involving a bid - der who makes an offer to the listed target’s shareholders to acquire their shares in the target. After the takeover is complete, the bidder and the target remain separate companies, and the target becomes a subsidiary of the bidder. The bidder may compulsorily acquire the remaining shares if it acquires at least 90% of the shares to which the offer relates. • An alternative form of public company acquisition transaction is a Jersey court-sanctioned scheme of arrangement. This is a statutory court process involving a compromise or arrangement between a company and its members. It results in the bidder holding all of the target’s shares. • Jersey also has a statutory merger regime, which may also be used in a takeover situation for cash or equity (and including cross-border mergers if the other relevant jurisdictions permit mergers). In the absence of targeted institutional investor activ - ism, the role of the target and its board of directors in public-to-private transactions is to facilitate transpar - ent and meaningful negotiation to elicit shareholder value in line with the strategic objectives of the target business. 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers If the Takeover Code applies prior to the announce - ment of a bid or a possible bid, all persons privy to confidential information concerning the bid or possi - ble bid, particularly price-sensitive information, must treat that information as secret and may only pass it to another person if it is necessary to do so and if that person is made aware of the need for secrecy. All such persons must conduct themselves in such a manner as to minimise the chances of any leak of information (Rule 2.1 of the Takeover Code).
If the Takeover Code does not apply, Jersey law does not otherwise specify any secrecy or material share - holding disclosure obligations. However, it may be prudent to maintain secrecy for commercial and/or other reasons. In addition, the laws and regulations of other jurisdictions (for example, the rules of the stock exchange on which the target company is admitted to trading) might impose secrecy or disclosure obliga - tions on the bidder and/or target company. 7.3 Mandatory Offer Thresholds Where the Takeover Code applies, a mandatory offer to acquire the entire issued share capital of a target must be made when the bidder (or parties acting in concert) achieves one of the following (Rule 9 of the Takeover Code): • acquires an interest resulting in the bidder holding a stake of 30% or more of target voting rights; or • intends to acquire an interest in shares carry - ing between 30% and 50% of the target’s voting rights, and the bidder (or concert parties) acquires an interest in any other voting shares in the target. 7.4 Consideration Cash consideration is common in Jersey, but there are no restrictions on the form or type of consideration in a voluntary offer. Consideration can therefore include cash, loan notes and shares, among other things. If the Takeover Code applies, the consideration for a mandatory offer must be in cash, or must be accom - panied by a cash alternative and comply with the applicable minimum consideration requirements. There are no other specific minimum price rules that apply to tender offers in relation to Jersey businesses. 7.5 Conditions in Takeovers If the Takeover Code does not apply, Jersey law does not specify any particular obligations or duties in rela - tion to conditions or pre-conditions. However, financ - ing conditions are generally not accepted in private equity-backed takeover offers. If the Takeover Code applies, a voluntary bid can be made subject to the satisfaction of pre-conditions. In such cases, the Panel must be consulted in advance
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