USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Pierre-Emmanuel Perais, Clara Pang and Gregory Gewirtz, Linklaters LLP
6. Acquisitions of Public (Exchange-Listed) Technology Companies 6.1 Stakebuilding Most acquisitions in the USA are negotiated transactions and do not involve the buyer build- ing a stake in the target prior to the transaction. Principal Stakebuilding Strategies Stakebuilding is permitted in the USA and, in contrast to many other jurisdictions’ takeover laws, US federal law does not mandate that an acquiror make a bid for the target upon reaching a specified threshold. Therefore, unless it has publicly announced or commences a tender offer for shares of the target, an acquiror may purchase a publicly traded target’s shares on the open market, so long as the acquiror does not hold “inside” information that would cause such purchase to violate insider trading rules. US securities laws generally require an acqui- ror to file a notification on Schedule 13D (or a short-form equivalent), which requires disclosure of the acquiror’s ownership stake and its inten- tions with respect to the target, within five busi- ness days of acquiring beneficial ownership of more than 5% in a target company. Additionally, acquisitions in excess of the HSR Act threshold (expected to be USD126.4 million in 2025) will require an antitrust filing. In addition, a number of states, including Dela- ware, have “anti-takeover” statutes that have the effect of encouraging acquirors to negoti- ate with management and discourage certain hostile activities. Delaware’s business combi- nation statute prevents acquirors from entering into business combinations with a target if they have exceeded a specific ownership threshold (15%), unless they received prior board of direc-
tors’ approval or a super-majority vote of the shareholders. Material Shareholding Disclosure Threshold Under Sections 13(d) and 13(g) of the US Securi- ties Exchange Act of 1934 (the “Exchange Act”), persons or groups who own or acquire beneficial ownership of more than 5% of certain classes of equity securities registered under the Exchange Act are required to file beneficial ownership reports with the SEC. Generally, if Section 13(d) is triggered, a person must file a Schedule 13D unless they are eligible to use Schedule 13G. The shorter-form Schedule 13G is available to passive investors meeting certain requirements. A beneficial owner of a security includes any person who, directly or indirectly, has or shares either: • the power to vote or to direct the voting of the security; or • the power to dispose or direct the disposition of the security. A Schedule 13D must be filed five business days after acquiring beneficial ownership of more than 5% of the outstanding shares of a class of voting equity securities or losing Schedule 13G eligi- bility, and Schedule 13D amendments must be filed within two business days after the trigger- ing event. 6.2 Mandatory Offer US federal securities laws and Delaware laws applicable to tender offers do not require an acquiror that obtains a given threshold of the target company’s shares to make an offer for the remaining shares of the target company. Howev- er, a few states (eg, Pennsylvania) have adopted “control share cash-out” statutes, whereby once an acquiror obtains control (ie, exceeds a certain
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