SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen and Leonard Baumann, Loyens & Loeff
articles of incorporation would stipulate differ- ent voting thresholds. 6.8 Squeeze-Out Mechanisms If a bidder does not achieve a shareholding of 100% after a public tender offer, it may squeeze out the remaining minority shareholders. The squeeze-out mechanism depends on the own- ership threshold, as follows. • If the bidder already holds more than 98% of the voting rights, the squeeze-out can be effected through court proceedings. In this case, the bidder would file a respective squeeze-out request within three months after the end of the additional offer period. The shares of the minority shareholders will be cancelled upon a court order against a compensation payable by the bidder and re-issued to the bidder. Subsequently, and after the general meeting of shareholders has resolved a delisting, the target company may request the delisting of its shares. Often the delisting process is already initiated in parallel to the squeeze-out procedure. • If the bidder holds more than 90% but less than 98%, the squeeze-out can be effected through a statutory squeeze-out merger. In this case, the bidder (or one of its affili- ates) is merged with the target company. This requires the entering into of a merger agreement between the merging companies, approval by the general meeting of share- holders of both companies, a report by the board of the merging companies outlining the reasons for the merger, a report by a Swiss qualified auditor reviewing the merger docu- mentation, and a filing with the commercial registers where the two companies are reg- istered. Following registration of the merger, the transferring company will be deleted from the commercial register and the minority
shareholders will receive a cash compensa- tion. The adequacy of the compensation can be challenged during a period of two months following the publication of the merger in the Swiss Official Gazette of Commerce. 6.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer Upon publication of the offer prospectus in con- nection with a public tender offer, the bidder must confirm that the funds required to finance the takeover will be available on the settlement date. Under Swiss public takeover laws, an inde- pendent review body (auditor) has to confirm the availability of the necessary funds. In the case of debt financed offers, the executed financ- ing documentation (and not only a term sheet) should be available, as the financing banks will issue their commitment letters only under such documentation. The permissibility of conditions and covenants in the financing documentation are admissible but limited and need to correspond with the offer conditions. Offers conditional on obtain- ing financing are not permitted, as the financing documentation must be available in executed form already at the time of publishing the pro- spectus. There is no certain funds requirement in a statu- tory merger. 6.10 Types of Deal Protection Measures To secure support for a transaction, the bidder and the target company may enter into a trans- action agreement and agree on deal protection measures. Typical deal protection measures are: • the undertaking of the board of directors of the target company to support the deal; • non-solicitation provisions; and
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