SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen and Leonard Baumann, Loyens & Loeff
when the threshold is reached by several per- sons 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 share- holding is acquired, or an asset deal whereby the assets and liabilities of the operational busi- ness are acquired. In general, the two typical transaction structures are a public tender offer or 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 struc- tured as a cash or stock-for-stock transaction or a combination 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, a cash compensation is possible and common 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 compensation, or by agreeing in the merger agreement that only a cash compen- sation 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 person acting in concert with the bidder) dur- ing the 12-month period before the prelimi- nary announcement or the offer prospectus, which takes into account all agreements concluded during that period, independent of the closing of such transaction. Contingent value rights are not a common fea- ture in public M&A transactions in Switzerland. 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 (sub- stantially) influenced by the bidder; and • the bidder must pay a compensation due to the type of the condition – in which case, has to implement 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 target company, including material adverse change clauses; and • conditions to secure the completion of the transaction, such as approvals by authori- ties, amendments to articles of incorporation, entry in the shareholders’ register, and/or control over the board.
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