COLOMBIA Law and Practice Contributed by: Gabriela Mancero, Daniel Peña, Maria Fernanda González and Andrea Sánchez Gallardo, Peña Mancero Abogados
6. Acquisitions of Public (Exchange-Listed) Technology Companies 6.1 Stakebuilding It is not uncommon for potential acquirers to purchase a stake in a public company before making a formal offer. This strategy can help secure a foothold and potentially influence the target company’s management and share- holders. However, this is subject to regulatory requirements to ensure transparency and pro- tect all stakeholders involved, namely: • reporting threshold – the threshold for report- ing the acquisition of an interest in a public company is 10% or more of the outstanding shares; • if a shareholder already holds 10% or more and plans to increase their stake by 5% or more, this also triggers the reporting require- ment; and • timing of reporting – the acquisition must be reported to the Financial Superintendence of Colombia (FSC) within five business days after the acquisition. 6.2 Mandatory Offer There is a mandatory tender offer threshold that applies to public companies listed on the BVC. The threshold is triggered when a buyer acquires a significant stake of 25% or more in a public company’s shares with voting rights. Addition- ally, if an investor already holds 25% or more and seeks to acquire an additional 5% or more of voting shares, they must also launch a tender offer to provide other shareholders the oppor- tunity to sell. 6.3 Transaction Structures The typical transaction structures for acquiring a public company include:
• public tender offer; • direct purchase – the acquirer can directly purchase shares from the market, either through open market transactions or privately negotiated deals; • merger or consolidation – while mergers and consolidations are available, they are less commonly used for acquisitions of public companies because they involve more com- plex legal and regulatory requirements, and the process can be more time-consuming and costly; and • asset purchase – in some cases, the acquirer may choose to purchase specific assets of the target company rather than acquiring the company as a whole. 6.4 Consideration and Minimum Price Public company acquisitions in the technology industry are typically structured with cash con- sideration, takin into account variables related to valuation and liquidity. However, capital market regulation does permit stock-for-stock trans- actions, but in that case the bidder must offer to pay in cash for at least 30% of the shares intended for purchase. Minimum Price In principle, the price of the securities subject to a public tender offer will be determined by the offeror. However, if the offeror has acquired the securities within the last three months from the date of submitting the application to the Finan- cial Superintendency of Colombia, the price may not be lower than the highest price paid. Additionally, if there is a pre-agreement for the offer, the price may not be lower than the highest price set in said pre-agreement.
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