EGYPT Law and Practice Contributed by: Mohamed Hashish, Farida Rezk, Omar Aboul-Ella and Mariam Rabie, Soliman, Hashish & Partners
6.4 Common Conditions for a Takeover Offer Voluntary Tender Offers In a voluntary tender offer, a bidder is free to make a tender offer to acquire the target com - pany’s share capital and voting rights, as long as such share capital or voting rights do not exceed more than one-third of the capital or voting rights of the target company, or do not result in reach - ing a percentage that requires a mandatory ten - der offer. In the event that the number of shares offered exceeds the voluntary tender offer threshold, the shares must be purchased from all shareholders that responded to the offer in proportion to what is offered by each of them to the total shares required to be purchased, taking into account rounding up fractions in favour of minority share - holders. Mandatory Tender Offers As highlighted in 6.2 Mandatory Offer Thresh - old , a mandatory tender offer obligation is ful - filled when a person, whether directly or through its related parties: • acquires one-third or more of the share capi - tal or voting rights of the target company; • holds more than one-third but not more than half of the share capital or the voting rights of the target company, and within 12 con - secutive months, its ownership exceeds 5% above its existing stake; • exceeds half of the share capital or voting rights of the target company at any given time; • holds more than half but not more than two- thirds of the share capital or voting rights of the target company, and within 12 con - secutive months, its ownership exceeds 5% above its existing stake;
panies and pump additional investments into them; • implementation of mergers; • restructuring of capital between related per - sons and/or a group of related companies; • cases of purchasing treasury shares or reduc - ing capital by cancelling treasury shares or distributing treasury shares as free shares; • cases of increasing the capital of the com - pany targeted by the offer, provided that this does not result from purchasing subscription rights in the capital increase; • cases that result in a shareholder owning shares or controlling voting rights in one of the companies subject to the provisions of the Capital Markets Law, when this is done without their desire or will; and • cases that result in a person, alone or with their related persons, owning part or all of the shares or voting rights owned by a major shareholder, alone or with their related per - sons, according to the economic considera - tions or necessities approved by the Council of Ministers, with a maximum of 50% of the shares or voting rights in the company. 6.3 Consideration Cash consideration is most commonly used as the form of consideration in Egypt. However, a consideration may be cash, a share swap, or a combination of cash and share swap. In prac - tice, if the acquisition is carried out by way of open-market transactions, the consideration must be cash. Furthermore, in the case of a mandatory tender offer, the shareholders of the target company must be able to choose cash instead of shares as consideration.
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