NETHERLANDS Law and Practice Contributed by: Herald Jongen, Maarten de Boorder, Samuel Garcia Nelen and Jelmer Kalisvaart, Greenberg Traurig, LLP
To mitigate any concerns over the efficacy of alternative squeeze-out measures, and to enhance deal certainty, there is a consistent trend in public takeovers in the Netherlands to “prewire” any alternative squeeze-out measures. “Pre-wired” in such case means that the deci- sion to implement an alternative squeeze-out measure is put to a vote at the general meeting of the target prior to closing the offer (subject to the bidder having acquired less than 95%, but at least the alternative percentage, of the target company’s issued share capital following com- pletion of the public offer). 6.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer A public offer cannot be conditional on obtaining the required financing. Ultimately, by the time the request for approval of the offer memorandum is filed with the AFM, the bidder must have pro- cured and demonstrated that it either (i) has the necessary financial resources to complete the offer by paying the consideration in cash or (ii) has taken every reasonable measure to provide any other kind of consideration. In addition, the offeror must make a public announcement as soon as it has secured certainty of funds. In private M&A transactions, obtaining the financing required for the transaction is frequent- ly included as a condition precedent. 6.10 Types of Deal Protection Measures A target company’s management and superviso- ry directors are required to act in the best inter- ests of the company. Any deal protection meas- ures that a target company can grant should, therefore, be proportional and reasonable. Deal protection measures such as arrangements for break-up fees, matching rights, no-shop provi- sions, exclusivity and information rights can be granted by a target company; however, such
deal protection measures are to be considered by the target company in relation to all other cir- cumstances to determine if the total package of deal protection measures is permissible. The target company typically requires a “fiduci- ary out” in addition to such measures, and the measures may not entirely exclude the possibil- ity of a target company engaging with a third- party bidder if that third party has a superior offer. All circumstances should be considered to determine if the total package of deal protec- tion measures is permissible. A break-up fee of around 1% of the target’s equity value in a Dutch public offer is generally accepted; however, in certain cases, higher break fees may be agreed upon. 6.11 Additional Governance Rights If a bidder does not intend to acquire 100% ownership of a target, it may strengthen its gov- ernance rights by, for example, entering into a shareholders’ or voting agreement with another major shareholder or concluding a relationship agreement with the target company. Such agree- ments typically include provisions regarding governance rights and may include a nomination right for one or more members of the supervi- sory board. They may also include share transfer restrictions or orderly market arrangements. An agreement between shareholders may trigger a mandatory offer if the shareholders are deemed to act in concert and can jointly exercise at least 30% of the voting rights at the general meeting of a Dutch-listed company (see 6.2 Mandatory Offer Threshold ). 6.12 Irrevocable Commitments It is common for a bidder to approach, and sub- sequently to enter into irrevocable commitments with, one or more principal shareholders that
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