ROMANIA Law and Practice Contributed by: Ileana Glodeanu, Andreea Cărare, George Ghitu and Delia Dumitrescu, Wolf Theiss
gap between the seller’s interest in limiting its expo - sure and achieving a clean exit and the protection and recourse requirements of the buyer. 6.11 Commonly Litigated Provisions Litigation in connection with private equity transac - tions is not particularly common in the local market. Nonetheless, private equity-backed parties often select arbitration for resolving their transaction dis - putes, so the resulting contentious proceedings remain hidden from the eyes of the market. Notably, various claims are being raised against sellers under the transaction documents in more and more cases. Such claims mostly relate to consideration mechanics, breaches of warranties, indemnifications and leakage amounts. The parties usually reach a set - tlement before moving a step further into litigation. This approach is particularly favoured in the private equity context, where maintaining relationships and achieving a clean exit are important considerations. Public-to-private transactions – meaning acquisitions of listed companies followed by delisting from the Bucharest Stock Exchange – are very rare in Roma - nia and do not form part of a developed transactional practice. While such transactions are permitted by law, they remain uncommon and are very rarely pur - sued by either private equity sponsors or strategic investors. This is largely due to a combination of fac - tors that make Romania an unfavourable environment for public-to-private deals, particularly those involving financial sponsors. • Structural considerations: The Romanian listed company landscape is characterised by highly concentrated ownership, where founders, state- owned entities or strategic anchor shareholders often hold between 50% and 90% of the share capital. The free float is typically minimal, and retail investors or inactive investment vehicles often hold the remainder. This structure leaves little room – or rationale – for private equity or other bidders to 7. Takeovers 7.1 Public-to-Private
acquire control through market offers, and often results in minimal trading activity. • Market dynamics: The Romanian capital market is still relatively shallow. The Bucharest Stock Exchange (main market) hosts fewer than 100 issuers, and the AeRO market – which is a multi - lateral trading facility for SMEs – has an even more fragmented and illiquid profile. There is no active culture of hostile or unsolicited takeovers, and pric - ing inefficiencies are rare. As such, there is limited arbitrage potential for financial sponsors, and few incentives to engage in delisting strategies that would require additional effort without a corre - sponding value upside. • Legal and procedural burdens: Although Romanian law provides for mechanisms such as mandatory takeover offers, voluntary offers and squeeze-out procedures, the process remains highly formal - istic and time-consuming. Regulatory approvals, valuation reports, and strict procedural steps are required to effect a delisting, which increases transaction costs and uncertainty. In addition, the board of the target company has only a limited procedural role, being required to issue a formal opinion on the offer but not having the authority to negotiate terms or structure. There is no fiduciary duty regime comparable to that in common law jurisdictions. Against this backdrop, “relationship agreements” or “transaction agreements” between the bidder and the target (such as co-operation agreements, govern - ance undertakings or negotiated merger frameworks) are not customary in Romanian public M&A prac - tice. Generally, bidders proceed unilaterally through statutory mechanisms, with limited scope for pre-deal arrangements between the seller, the management and the acquirer. There have been a handful of public-to-private trans - actions in the past two decades (eg, Terapia by Advent International in 2003–04, Albalact by Lacta - lis in 2016–17, Azomureș by Ameropa in 2012 and Zentiva by Advent International in 2017–21), but these remain exceptional and non-replicable cases driven by specific industry dynamics or unique shareholder circumstances.
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