LUXEMBOURG Law and Practice Contributed by: Johan Terblanche, Baptiste Aubry and Michelle Barry, Maples Group
7.5 Conditions in Takeovers In a private equity-backed takeover offer, the per - centage of shares a bidder is willing to acquire is not restricted under Luxembourg law (except for man - datory offers, as explained in 7.3 Mandatory Offer Thresholds ); therefore, a bidder may specify in its offer the minimum percentage of shares that it is seek - ing to acquire. Other offer conditions may be set out, and often are, especially when clearance from com - petition authorities is required. However, a takeover offer may not be conditional upon the bidder obtaining financing; a buyer therefore needs to ensure that financing is in place. The most common security measures sought by bidders are break fees, which are permitted and not specifically regulated under Luxembourg law (with the exception of the provisions on penalties, as mentioned in 6.6 Break Fees ). However, the board of directors of the target company should consider carefully before agreeing to accept break fees, as it could be deemed as not being in the best corporate interest of the tar - get company unless, in the circumstances in which the break fees are triggered, the termination of the agreement is also in the best corporate interest of the target company. 7.6 Acquiring Less Than 100% If a bidder does not seek or ultimately obtain 100% ownership of a target, then the main additional gov - ernance right a private equity bidder could seek out - side of its shareholding is the right to present a list of candidates for board-level director positions at the shareholders’ meetings. A bidder willing to acquire the entire ownership of a target can force the other shareholders to sell their shares to the bidder when the bidder has acquired at least 95% of the capital carrying voting rights and 95% of the voting rights of the target. However, if a target has issued more than one class of securities, then the “squeeze-out” right applies individually to each class of securities. Thresholds vary according to the type of entity, but typically for an SA and a SARL, which are the most common forms of targets, the threshold for the bidder
and after the acquisition process in order to provide clarity and protection for both parties involved. 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers In a Luxembourg société à responsabilité limité e (limited liability company), all shareholders must be disclosed to the publicly accessible Registre de Com- merce et des Sociétés de Luxembourg . In a Luxem - bourg public limited company (SA), no shareholders need to be disclosed. Pan-European reporting obliga - tions need to be met and, as mentioned in 2.1 Impact on Funds and Transactions , there is a new obligation to disclose the beneficial owner(s) of all Luxembourg entities. In addition, for public companies incorporated in Lux - embourg and listed in Luxembourg or any other EU member state, any shareholder having an entitlement to vote must notify both the company issuing the shares and the CSSF of any acquisition, transfer or similar operation concerning such shares or rights that causes that shareholder’s holding to reach, exceed or fall below the thresholds of 5%, 10%, 15%, 20%, 25%, 33.33% (one-third), 50% and 66.66% (two- thirds). 7.3 Mandatory Offer Thresholds As in most other EU countries, Luxembourg has adopted and imposed a mandatory offer threshold, which provides that any person reaching or exceed - ing a total of 33.3% (one-third) of the voting rights of a listed company, further to an acquisition, transfer or similar operation, has to make a mandatory offer to acquire all the remaining shares of that company at a price at least equivalent to the highest price paid by that person for the same shares over the period of 12 months immediately prior to this mandatory offer. 7.4 Consideration The vast majority of private equity transactions involv - ing Luxembourg funds and holding entities are cash transactions, but share deals are not uncommon. If the consideration consists of securities that are not admitted to trading on a regulated market, the con - sideration shall also include a cash alternative. There are no minimum price rules applicable to tender offers in Luxembourg.
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