SPAIN Law and Practice Contributed by: Ignacio Sanjurjo, Ignacio Echenagusia, Alejandro Espín and Román Cantín, Deloitte Abogados y Asesores Tributarios, S.L.U.
Control is gained when a person: • acquires, directly or indirectly, a percentage of vot - ing rights equal to or greater than 30%; and • appoints, within 24 months of the acquisition, more than half of the members of the board, even if the person’s stake is lower than 30%. A breach of duty pertaining to a takeover bid (ie, failure to make a takeover bid, late submission of a takeo- ver bid, or submission of a takeover bid with material irregularities) entails the following sanctions. • Suspension of the voting rights held in the listed company. • Public sanction by the CNMV for a very serious infringement, including: (a) a fine up to EUR600,000 or 5% of the offend - er’s own resources; (b) suspension or limitation of the transaction or activities that the offender may carry out in the market for up to five years; and (c) publication of the infraction in the official Span - ish gazette. In takeover bids, the consolidation and attribution of shareholding issues are particularly relevant for PE- backed bidders, with respect to the shares of the tar - get company held by affiliated or related funds and portfolio companies. This applies in the following ways. • Mandatory takeover bid: A 30% voting rights threshold applies, regardless of whether they are held by a single person or a group of companies. • Affiliates and other portfolio companies: PE funds typically manage multiple funds or entities, or may have other portfolio companies that hold shares in the target company. During a takeover bid, it is essential to consolidate the shareholdings of all affiliated funds or related entities, and other port - folio companies, to accurately assess the bidder’s overall ownership interest in the target company, identify potential conflicts of interest and ensure compliance with disclosure requirements. This con - solidation may affect whether regulatory thresholds are met.
• Competition and antitrust law risks: Consolidat - ing shareholdings may raise antitrust concerns, particularly if the bidder has significant ownership in related industries or competitors. • SHAs: SHAs between the bidder and other share - holders, such as voting syndicates, must be taken into account given their impact on the calculation of control thresholds and whether the percentage required to launch the takeover bid is achieved. 7.4 Consideration In the majority of takeover bids, consideration is paid in cash, although share-based consideration may also be offered. In mandatory takeover bids, the offer shall be submit - ted at an equitable price, equal to the highest price paid by the bidder for target’s shares within the 12 months prior to submission of the offer. Alternatively, if no previous acquisitions have taken place, the equi - table price shall not be lower than the exclusion price determined by an independent expert. 7.5 Conditions in Takeovers Mandatory takeover bids can only be conditioned on the approval by competition authorities or other supervisory bodies. Voluntary takeover bids may be subject to additional conditions, such as: • approval of resolutions of the general shareholders’ meeting of the listed company; • a minimum number of shareholders’ acceptance; or • other conditions permitted under applicable law, subject to the discretion of the CNMV. Under Spanish law, conditioning the bid on obtaining financing is not admissible, as it would breach the principle of irrevocability of the bid and contravene the bidder’s obligation to: • ensure that it has sufficient financial resources to cover any cash consideration offered in full; and • provide a guarantee or a cash deposit to secure the payment of the consideration for the shares sold within the takeover bid.
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