PARAGUAY Law and Practice Contributed by: Mauro Mascareño, Carlos Vargas and Rodrigo Gómez Sánchez, Mascareño Vargas – Asesores
6.4 Consideration and Minimum Price Acquisitions of public companies in the technol- ogy industry typically involve cash transactions, although stock-for-stock deals may happen when a foreign buyer is involved. There is no minimum price requirement for a takeover offer, but contingent value rights and other mechanisms are used to address valuation uncertainties. 6.5 Common Conditions for a Takeover Offer/Tender Offer Typical conditions for a takeover offer include the following: • regulatory approval, if applicable; • a minimum control stake threshold, usually 51% or more; and • no material adverse changes in the target’s financial position. Paraguayan regulators typically allow reason- able flexibility in applying conditions, and usu- ally approve transactions if the origin of funds complies with all relevant mutual legal assis- tance (MLA) regulations and the conditions do not violate antitrust regulations. All bonds or securities in the market must be cancelled before the company can withdraw from public offering. 6.6 Deal Documentation In Paraguay, it is customary for parties to enter into a transaction agreement regarding a ten- der offer. The target company’s board is usually not involved, and negotiations take place at the shareholder level. Additionally, sellers and the company typically provide detailed representations and warran-
A merger, on the other hand, is considered a material event. Further, the company must update its ulti- mate beneficial owner (UBO) and legal entities records. The UBO record contains information about the individuals who ultimately own or con- trol the company, while the legal entities record includes details about the company’s structure and ownership. On a regular basis – ie, every quarter – the com- pany is mandated to file and publicly disclose its financial statements, including all holders with more than 10% of the shares or the votes. This regularity, a testament to the transparency of the Paraguayan market, ensures stakeholders are consistently informed. The acquirer is not required to disclose its inten- tions regarding the company, and importantly, there is no “put up or shut up” rule, providing a level of flexibility in the Paraguayan market. 6.2 Mandatory Offer Paraguay does not have a mandatory offer threshold for acquiring a public company. The process for acquiring control is typically gov- erned by the company’s by-laws and share- holder agreements, if any. 6.3 Transaction Structures Public company acquisitions in Paraguay are typically structured as tender offers, and merg- ers are less commonly used for public com- panies due to the corporate process of local merger regulations. Tender offers allow for a cleaner and faster acquisition process and are often preferred.
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