SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen, Leonard Baumann and Lara Pafumi, Loyens & Loeff
The notification obligation also applies when shares are bought or sold in concert and when converting par- ticipation certificates or profit participation certificates into shares, when exercising convertibles or option rights, when there are other changes in the capital of the company and when exercising sale options. The notification duty is triggered by the creation of the right to acquire or dispose of the equity securities – ie, upon conclusion of the binding transaction. In the event of capital increases or decreases, the duty is triggered by the publication in the Swiss Official Gazette of Commerce . The indication of an intended acquisition or disposal, and similar proposals, does not trigger the notification duty as long as there are no legal obligations to execute the transaction imposed on any of the parties. When the notification duty is triggered, the beneficial owners of the equity securities (the party ultimately controlling the voting rights) have to be disclosed. In addition, in the case of parties acting in concert, the aggregate participation, the identity of all members of the group, the form of acting in concert and the representative must be disclosed as well. If a party publicly announces that it considers a pub- lic tender offer without the legal obligation to submit such offer, the Swiss Takeover Board ( Übernahme- kommission ) may at its discretion ask the potential offeror either to publish a public tender offer within a certain deadline (“put up”) or to publicly declare that it will abstain from submitting an offer – and from stakebuilding in excess of the threshold triggering a mandatory offer (see 6.2 Mandatory Offer ) within six months (“shut up”). 6.2 Mandatory Offer Under Swiss public takeover laws, once a direct or indirect shareholding of 33.3% is reached, a manda- tory offer has to be submitted ‒ unless the articles of incorporation of the company provide for a valid opt- ing out. This obligation also arises when the threshold is reached by several persons acting in concert. 6.3 Transaction Structures A public company in Switzerland can be acquired through a public tender offer, a statutory merger, a
share deal through which a controlling shareholding is acquired, or an asset deal whereby the assets and liabilities of the operational business are acquired. In general, the two typical transaction structures are a public tender offer and a statutory merger. Whereas the public tender offer structure is usually seen in an international setting – in case a (reverse) triangular merger does not work – involving a listed Swiss entity, statutory mergers are used more in domestic private M&A transactions. Public tender offers are governed by the Swiss Financial Market Infrastructure Act and the relevant ordinances thereto. Statutory mergers are governed by the Swiss Merger Act. 6.4 Consideration and Minimum Price In voluntary offers, the acquisition may be structured as a cash or stock-for-stock transaction, or a combi- nation thereof. In public tender offers, it is mandatory to offer a cash consideration in the event a stock-for- stock exchange offer is made. In mergers, cash compensation is possible and com- mon, either as a combination of shares and cash (in which case the cash compensation must not exceed one-tenth of the fair market value of the shares), a right to choose between shares or cash compensa- tion, or by agreeing in the merger agreement that only cash compensation is offered. The price offered in a public tender offer has to comply with a strict minimum price rule. The price has to be equal or higher than either: • the stock exchange price that corresponds to the volume-weighted average price (VWAP) during the 60 trading days’ period before the preliminary announcement or the offer prospectus; or • the highest price paid by the bidder (or any per- son acting in concert with the bidder) during the 12-month period before the preliminary announce- ment or the offer prospectus, which takes into account all agreements concluded during that period, independent of the closing of such transac- tion. Contingent value rights are not a common feature in public M&A transactions in Switzerland.
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