BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law
pel all shareholders to participate and become shareholders in the surviving entity. However, drawbacks include the need for co- operation from the target company’s board and limitations on a cash portion of the merger con- sideration (capped at 10%). Corporate mergers are often preferred when the consideration com- prises exclusively new shares in the surviving entity, or post-takeover when the bidder aims to squeeze out minority shareholders of the target company by making them shareholders of the bidder, leveraging a previously acquired signifi- cant shareholding in the target company. 6.4 Consideration and Minimum Price Consideration for a bid could be in cash, shares, other securities, or a combination. In voluntary bids offering shares or securities, the bidder must provide a cash alternative under certain conditions, such as if the bidder or a party act- ing 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 regulations, but the FSMA mandates that the bid terms allow for a reasonable success rate. Equal considera- tion for all shareholders is essential and, if shares outside the bid are acquired at a higher price, the bid price automatically increases. In a coun- terbid, 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 securities 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 adjustments if these rules are violated. Controlling shareholders’ bids require considera- tion review by an independent expert appointed by the target’s independent directors. If no inde- pendent 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 tar- get and possess terms ensuring its viability and irrevocability. While 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 bid - der’s control, restrictions on dividends, and no amendments to the target’s articles of associa- tion. However, in practice, the FSMA tends to be cautious about imposing conditions that might hinder the bid’s success. 6.6 Deal Documentation Agreements With Shareholders In the context of recommended takeovers, it is customary for bidders to establish a mem- orandum 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, specifying commitments from key shareholders, which typically include their agreement to accept the bid and commit to tendering their securities. Additionally, key shareholders agree not to trans-
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