NETHERLANDS Law and Practice Contributed by: Herald Jongen, Maarten de Boorder, Samuel Garcia Nelen and Jelmer Kalisvaart, Greenberg Traurig, LLP
pany’s boards commit to endorsing and backing the offer as well as co-operating with it, while the bidder consents to launching the public offer. Furthermore, the merger protocol often includes provisions relating to: • conditions for initiating and completing the offer; • interim operating covenants; • regulatory approvals; • break fees; The representations and warranties given by public companies are typically more limited in scope com- pared to those given by private companies. Publicly traded companies must adhere to various disclosure requirements, making a lot of information already publicly accessible. Reference is often made to the public filings as the basis for the representations and warranties. 6.7 Minimum Acceptance Conditions For tender offers, there is typically a threshold of at least 95% of the shares that are tendered under the offer. This threshold of 95% is a typical minimum acceptance condition for tender offers, because a bid- der can subsequently initiate statutory squeeze-out proceedings to acquire the remaining minority shares. Furthermore, it is market practice to agree that the 95% threshold will be lowered (eg, to 80%) if the gen- eral meeting of the target has passed resolutions to initiate alternative squeeze-out measures. This allows the bidder to acquire full control of the business of the target company after settlement of the offer, even if they acquired less than 95% of the target’s shares. 6.8 Squeeze-Out Mechanisms • “no-shop” provisions; and • non-financial covenants. Under Dutch law, a shareholder (eg, the bidder fol- lowing a successful tender offer) holding 95% of the target’s issued share capital has a statutory squeeze- out mechanism at his or her disposal. Such share- holder can request the Enterprise Chamber to force the remaining shareholders that have not tendered following a successful tender offer to sell their shares to the majority shareholder. Similarly, any minority shareholder that is being squeezed out has the right to ask the majority shareholder (assuming such major-
ity shareholder holds 95% or more of the shares) for a sell-out – ie, require the majority shareholder to pur- chase their shares. It is market practice for the bidder and the target to agree that, if the bidder fails to reach the acceptance level of 95% but exceeds a certain lower acceptance level (typically 80%), the target’s board will co-oper- ate with so-called alternative squeeze-out measures (subject to shareholder approval). These alternative possibilities allow for a squeeze-out of minority share- holders if a bidder, following a successful tender offer, holds less than 95% of the target’s issued share capi- tal. Transaction structures that are regularly seen include: • the triangular merger of the target into a subsidiary of the bidder, with the subsequent liquidation of the entity in which the non-tendering shareholders have received securities; • a sale and transfer of all assets and liabilities of the target to a subsidiary of the bidder, with the subse- quent liquidation of the target; and • a combination of an asset sale and a (triangular) merger. To mitigate any concerns over the efficacy of alterna- tive squeeze-out measures, and to enhance deal cer- tainty, there is a consistent trend in public takeovers in the Netherlands to “pre-wire” any alternative squeeze- out measures. “Pre-wired” in such case means that the decision to implement an alternative squeeze-out measure is put to a vote at the general meeting of the target prior to closing the offer (subject to the bid- der having acquired less than 95%, but at least the alternative percentage, of the target company’s issued share capital following completion of the public offer). 6.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer A public offer cannot be conditional on obtaining the required financing. Ultimately, by the time the request for approval of the offer memorandum is filed with the AFM, the bidder must procure and demonstrate that it either:
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