SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen, Leonard Baumann and Lara Pafumi, Loyens & Loeff
6.5 Common Conditions for a Takeover Offer/ Tender Offer Offer conditions are permitted for voluntary offers if: • the bidder has a justified interest; • the satisfaction of a condition cannot be (substan- tially) influenced by the bidder; and • the bidder must pay compensation due to the type of the condition – in which case, it has to imple- ment all reasonable measures to ensure that the condition is satisfied. The following types of conditions are common in Swiss public M&A transactions: • conditions to secure the acquisition of control (minimum acceptance levels); • conditions to protect the substance of the tar- get company, including material adverse change clauses; and • conditions to secure the completion of the trans- action, such as approvals by authorities, amend- ments to articles of incorporation, entry in the shareholders’ register and/or control over the board. If a bidder is subject to a mandatory offer (see 6.2 Mandatory Offer ), offer conditions are limited to regu- latory approvals and registration as shareholder in the share register. 6.6 Deal Documentation In Switzerland, it is common to enter into a transac- tion agreement between the bidder and the target in connection with a takeover, which is supported by the board of directors of the target company. The transaction agreement would typically contain the following undertakings of the target company: • co-operation undertakings with regard to access to information, the publication of financial state- ments and notice of relevant events/violation of covenants/actions threatening the completion of the transaction; • recommendation to the shareholders (with fiduci- ary-outs) and non-solicitation of other offers (no- shop undertakings);
• future management structure; • information obligation with regard to competing offers or related enquiries; • joint press releases; • obtaining a fairness opinion; • fulfilment of specific offer conditions; • reasonable best efforts to solicit the tender of the shares; • compliance with takeover regulations; • convocation of a shareholders’ meeting to elect new board members appointed by the bidder; • registration of the bidder in the share register after completion; • conduct of business undertakings; and • payment of a break fee if certain covenants, laws, regulations or conditions are violated. It is also common to include representations and war- ranties in a transaction agreement. These are normally limited to fundamental representations and warran- ties (due incorporation, accuracy of information, valid issuance of shares and no violation of any contractual or constitutional obligations). In the case of mergers, it is mandatory to enter into a merger agreement between the merging entities, and the Swiss Merger Act prescribes a mandatory mini- mum content. There are no specific obligations of the target company, and it is not common to provide any representations and warranties. 6.7 Minimum Acceptance Conditions Minimum acceptance conditions prescribing that the bidder (after the expiry of the offer period) directly or indirectly owns a certain number of target company shares are permitted and common in voluntary public tender offers (see 6.2 Mandatory Offer ). In principle, a threshold of 66.6% of the outstanding target shares is usually accepted by the Swiss Takeover Board. How- ever, there is no specific control threshold for mini- mum acceptance conditions, as long as such thresh- olds are not unreasonably high. Based on case law of the Swiss Takeover Board, the following general rules apply, subject to a case-by-case analysis: • thresholds of 50% are reasonable for partial offer- ings;
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