NETHERLANDS Law and Practice Contributed by: Herald Jongen, Maarten de Boorder, Samuel Garcia Nelen and Jelmer Kalisvaart, Greenberg Traurig, LLP
• has the necessary financial resources to complete the offer by paying the consideration in cash; or • has taken every reasonable measure to provide any other kind of consideration. In addition, the offeror must make a public announcement as soon as it has secured certainty of funds. In private M&A transactions, obtaining the financing required for the transaction is frequently included as a condition precedent. 6.10 Types of Deal Protection Measures A target company’s management and supervisory directors are required to act in the best interests of the company. Any deal protection measures a target company can grant should therefore be proportional and reasonable. Deal protection measures such as arrangements for break-up fees, matching rights, no- shop provisions, exclusivity and information rights can be granted by a target company; however, such deal protection measures are to be considered by the target company in relation to all other circumstances to determine if the total package of deal protection measures is permissible. The target company typically requires a “fiduciary out” in addition to such measures, and the measures may not entirely exclude the possibility for a target com- pany to engage with a third-party bidder if that third party has a superior offer. All circumstances should be considered to determine if the total package of deal protection measures is permissible. A break-up fee of around 1% of the target’s equity value in a Dutch public offer is generally accepted; however, in certain cases, higher break fees may be agreed upon. 6.11 Additional Governance Rights If a bidder does not intend to acquire 100% own- ership of a target, it may strengthen its governance rights by, for example, entering into a shareholders’ or voting agreement with another major shareholder or concluding a relationship agreement with the target company. Such agreements typically include provi- sions regarding governance rights and may include a nomination right for one or more members of the supervisory board. They may also include share trans- fer restrictions or orderly market arrangements.
An agreement between shareholders may trigger a mandatory offer if the shareholders are deemed to act in concert and can jointly exercise at least 30% of the voting rights at the general meeting of a Dutch-listed company (see 6.2 Mandatory Offer Threshold ). 6.12 Irrevocable Commitments It is common for a bidder to approach, and subse- quently to enter into irrevocable commitments with, one or more principal shareholders that hold a sub- stantial interest in the target. Irrevocable undertakings generally require the shareholder to offer its shares in the offer and to vote in favour of certain resolu- tions that will be put on the agenda during the general meeting of the target company prior to the end of the tender period. Irrevocable undertakings usually pro- vide deal certainty. However, a shareholder will typi- cally only agree to commit to an irrevocable undertak- ing if it may terminate the irrevocable commitment in the event of a superior competing offer. There are no statutory rules on the timing of the sign- ing of irrevocable commitments. However, such com- mitments are generally negotiated concurrently with the (final) negotiations on the merger protocol and signed (just) prior to the initial public announcement. To prevent the qualification of entering an irrevocable commitment as acting in concert, which would trigger the obligation to launch a mandatory offer, the Dutch offer rules provide for a safe harbour provision (subject to certain conditions). Finally, the Market Abuse Regulation (MAR or Europe- se Marktmisbruikverordening ) provides for rules on market sounding, including approaching sharehold- ers in the context of a public offer. 6.13 Securities Regulator’s or Stock Exchange Process In a public M&A transaction, the offer rules mandate a public announcement once the bidder and the target company have reached (conditional) agreement on the offer. After this initial announcement, it generally takes two to three months to obtain approval from the AFM for the offer memorandum and to formally launch the offer. The offer period must be eight to ten weeks, with an optional extension of two to ten weeks.
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