BELGIUM Law and Practice Contributed by: Steven De Schrijver and Carl Dotremont, Allegiance Law
6.6 Deal Documentation Agreements With Shareholders
terms ensuring its viability and irrevocability. Although bids can be contingent on competition authority or other regulatory approvals, the FSMA may approve additional objective conditions, such as an accept- ance threshold, the absence of a material adverse event beyond the bidder’s control, the withholding of dividends, and no amendments to the target’s arti- cles of association. However, it is noteworthy that the FSMA tends to hesitate when it comes to imposing conditions that could potentially impede the success of the bid in practice. 6.8 Squeeze-Out Mechanisms A holder possessing 95% of a company’s voting secu- rities has the authority to compel all other holders of voting securities to tender their securities through a squeeze-out bid. This bid can be initiated indepen- dently by a person already holding 95% of voting securities or as part of a public takeover bid – volun- tary or mandatory – where the bidder secures 95% of outstanding voting securities. In the context of a public takeover bid, specific condi- tions must be met, including the bidder holding 95% of the share capital with voting rights and voting secu- rities and acquiring at least 90% of the relevant share capital through the bid. If these conditions are met, the bid is reopened for at least 15 business days, com- mencing within three months after the initial accept- ance period. Any untendered securities automatically transfer to the bidder. In a standalone squeeze-out bid, an independent expert must assess the offered price, which can only be in cash. In the event of a summarised squeeze-out bid, non-accepting securities holders have the right to demand acquisition on the same terms. Post-takeover bid, for one year, the bidder and those acting in concert are prohibited from acquiring appli- cable securities on more favourable terms without compensating all previous tendering security holders for the price difference. 6.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer Before initiating a public takeover bid, a bidder is required to formally notify the FSMA of their inten-
In the context of recommended takeovers, it is cus- tomary for bidders to establish a memorandum of understanding (MoU) with key shareholders, and this practice is particularly pronounced given the prevalent ownership structure in many listed Belgian companies. Prior to publicly announcing the bid, bidders engage in negotiations to formalise these agreements. The MoU serves as a comprehensive document, specify- ing commitments from key shareholders, which typi- cally include their agreement to accept the bid and commit to tendering their securities. Additionally, key shareholders agree not to transfer or dispose of their securities before the bid’s closure unless it is part of accepting the bid, and they pledge not to solicit or engage in discussions related to any third-party bid. Importantly, these specific undertakings are man- dated to be disclosed in the prospectus – a crucial step that enhances transparency throughout the entire takeover process. Agreements in Recommended Bids In the event of a recommended bid, the bidder and the target – if endorsed by the target’s board – can mutually agree on various bid-related matters. These agreements, encompassing non-solicitation, exclusiv- ity, break-up fees, treasury share tendering and stand- still obligations, must be disclosed in the prospectus. Although comfort letters and letters of intent are typi- cally favoured over formal agreements, it is advised that the target’s board – even if favourably disposed towards the bidder – maintains a neutral stance to avoid discouraging potential counter-bidders who might present superior prospects or a better price for the target’s security holders. The neutrality of the tar- get’s board is emphasised in letters of intent. The target’s board – adhering to the general rule of acting in the target’s best interest – must objectively assess any counter-bid in the response memorandum. In doing so, it must consider the overall welfare of the target, its security holders, creditors and employees. 6.7 Minimum Acceptance Conditions The Takeover Decree mandates that a bid encompass- es all securities issued by the target and possesses
21 CHAMBERS.COM
Powered by FlippingBook