BELGIUM Law and Practice Contributed by: Steven De Schrijver and Carl Dotremont, Allegiance Law
6.4 Consideration and Minimum Price Consideration for a bid could be in cash, shares, other securities or a combination thereof. In voluntary bids offering shares or securities, the bidder must pro- vide a cash alternative under certain conditions – for example, where the bidder or a party acting with them acquired more than 1% of the target’s securities in cash within the preceding 12 months. There is also a requirement for the consideration to include liquid securities listed on a regulated market. For voluntary bids, there is no minimum consideration set by regula- tions, but the FSMA mandates that the bid terms allow for a reasonable success rate. Equal consideration for all shareholders is essential and, if shares outside the bid are acquired at a higher price, the bid price auto- matically increases. In a counterbid, the consideration must be at least 5% higher than the previous offer. Mandatory bids must offer consideration at least equal to the higher of the highest price paid for the secu- rities by the bidder in the 12 months preceding the bid’s announcement or the weighted average market price during the 30 days before the triggering event. The FSMA can impose additional conditions or adjust- ments if these rules are violated. Controlling shareholders’ bids require consideration review by an independent expert appointed by the target’s independent directors. If no independent directors exist, the target’s governance body appoints the expert with FSMA approval. The expert evaluates whether the consideration is fair compared to a bid in a competitive market. 6.5 Common Conditions for a Takeover Offer/ Tender Offer The Belgian Takeover Act mandates that a bid must encompass all securities issued by the target and possess terms ensuring its viability and irrevocabil- ity. Although bids can be contingent on competition or regulatory approvals, the FSMA can also approve other objective conditions, including acceptance thresholds, the absence of material adverse events beyond the bidder’s control, restrictions on dividends, and no amendments to the target’s articles of asso- ciation. However, in practice, the FSMA tends to be cautious about imposing conditions that might hinder the bid’s success.
Nevertheless, the Belgian takeover rules outline spe- cific circumstances where there is no obligation for a mandatory bid, even if a person passes the 30% threshold in outstanding voting securities. It is crucial to note that a mandatory bid, being a legal require- ment, cannot be made conditional and is irrevocable once initiated. The procedural rules for a mandatory public takeover bid align with those for a voluntary bid, except in terms of conditionality and price con- siderations. 6.3 Transaction Structures In Belgium, most transactions are share deals, mostly for tax reasons (in the absence of a capital gains tax, see 4.2 Liquidity Event: Transaction Structure ). In 90% of all transactions, the purchase price is entire- ly paid in cash. Payment in shares or loan stock is very uncommon. On the other hand, a deferral of the payment of the purchase price is quite usual, being applied in 57% of all transactions. On average, around 22% of the purchase price is deferred for around 24 months. The use of an escrow account is also typical, being used in around 28% of all transactions. In certain cases, a takeover may take the form of a corporate merger, wherein the merger becomes effec- tive upon approval by the general shareholders’ meet- ing of the companies involved. This structure involves either merging both companies into a new entity or absorbing one company into the other. Opting for a corporate merger offers advantages over a takeover bid, allowing the merging companies to compel all shareholders to participate and become shareholders in the surviving entity. However, drawbacks include the need for co-opera- tion from the target company’s board and limitations on a cash portion of the merger consideration (capped at 10%). Corporate mergers are often preferred when the consideration comprises exclusively new shares in the surviving entity or when – post-takeover – the bidder aims to squeeze out minority shareholders of the target company by making them shareholders of the bidder, leveraging a previously acquired significant shareholding in the target company.
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