COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Andres Crump and Natalia Ponce de León, Baker McKenzie
and cannot be made subject to pre-conditions (except as described below). Thus, any govern - mental approvals or other applicable conditions will have to be obtained or satisfied prior to launching the tender offer. In a pre-arranged transaction, it is common for the buyer’s obligation to launch the public ten - der offer to be subject to the satisfaction of pre- conditions such as securing antitrust clearance. In practice, the bidder’s obligation to purchase the shares is subject only to the condition that acceptances correspond to at least the mini - mum number of shares specified in the offer notice, and that the shares to be acquired do not exceed the maximum number of shares the bidder offers to acquire in the offer notice. 6.5 Minimum Acceptance Conditions A bidder will be required to acquire at least 5% of the voting capital in a listed company, and the difference between the minimum and maximum offer should be at least 20%. Should the public tender offer fail to receive acceptances that satisfy this condition, the bid - der has the option to either waive the condition or allow the offer to lapse, in which case, the public tender offer would be unsuccessful. 6.6 Requirement to Obtain Financing Private Companies In private transactions, it is indeed an option for bidders to incorporate a condition in their offers pertaining to the procurement of financing. This stipulation, if included, should be explicitly artic - ulated in the offer. Additionally, any pertinent details concern - ing the status of the financing, such as term sheets, should be clearly stated. By adopting
this approach, sellers can gain enhanced assur - ance regarding the availability of funds, thereby facilitating a smoother transaction process. Listed Companies In public transactions, once a public tender offer is launched it cannot be conditioned on the bid - der obtaining financing. On the contrary, bid - ders will be required to demonstrate certainty of funds by providing a performance guarantee, covering a certain percentage of the value of the transaction to the BVC. The guarantee can be in the form of cash, a stand-by letter of credit or a bank guarantee, among other options. 6.7 Types of Deal Security Measures Break-Up Fees In private acquisition processes, break-up fees and penalty clauses are rare but not unheard of. In the case of public transactions, break-up fees are more common and are employed to ensure that initial selling shareholders compensate the bidder if a third party launches a competing offer and acquires the relevant shares. In certain instances, the SFC has revised agreed break-up fees to reduce them whenever it considers them excessive. Exclusivity Agreements In Colombia, exclusivity agreements are a more common deal security measure, yet still very heavily negotiated. These agreements restrict the seller from negotiating with other potential Risks associated with COVID-19 have signifi - cantly influenced the drafting of material adverse effect clauses. These clauses now explicitly include new pandemics as adverse material effects. Parties are carefully considering the impact of unforeseen events like pandemics on buyers during a specified period. Pandemic Risk Considerations
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