FRANCE Law and Practice Contributed by: Karl Hepp de Sevelinges, Nicolas Martin, Cyril Deniaud and Benjamin Cohu, Jeantet
confirm the fairness of the tender offer consid - eration for the transaction to proceed. In cases where valuation is uncertain, parties often employ earn-out arrangements to address differences in perceived value. These arrange - ments involve additional payments contingent on achieving specific performance targets, such as revenue, EBITDA or regulatory approvals. Earn-out mechanisms can be part of an agree - ment or embedded in financial instruments like share warrants, preferred shares or contingent value rights. While applicable to both public and private M&A transactions, they are generally more challenging to implement in public M&A deals. 6.4 Common Conditions for a Takeover Offer In France, takeover bids for companies listed on the stock exchange must generally be uncondi - tional, but there are specific exceptions outlined in the AMF General Regulation. • Minimum acceptance threshold: Bidders may require a minimum percentage of shares to be accepted by shareholders (refer to 6.5 Minimum Acceptance Conditions for more information). • Additional conditions: Voluntary offers can also be subject to: (a) reaching a voluntary minimum accept - ance threshold ( seuil de renonciation ) which in practice cannot be higher than two-thirds of the share capital or voting rights; (b) approval from the bidder’s shareholders for issuing new securities as part of the offer consideration, as per Article 231-12 of the AMF General Regulation; (c) the success of other simultaneous offers by the same bidder;
(d) antitrust approvals obtained in the initial review phase; if a detailed investigation follows, the offer will automatically be withdrawn, in accordance with Article 234-6 of the AMF General Regulation; and (e) regulatory approvals, whether industry- specific (such as for financial institutions) or related to foreign investment regula - tions. • Offer withdrawal: The bidder may withdraw the offer if the AMF announces a timeline for a rival or improved bid, or with AMF’s con - sent if defensive measures by the target are enacted (refer to 9.3 Common Defensive Measures for typical defensive tactics). In private M&A transactions, parties have con - siderable freedom to agree on conditions, as long as they are not unlawful, unethical or reliant solely on one party’s discretion. 6.5 Minimum Acceptance Conditions Under French law, any takeover bid, whether voluntary or mandatory, will automatically lapse if the bidder does not achieve ownership of more than 50% of the target’s share capital or voting rights, as per Article 231-9 of the AMF General Regulation. However, the AMF can allow this threshold to be lowered or waived if reaching it is impractical due to factors unrelated to the offer’s terms, such as existing control by another shareholder or competing bids. The 50% threshold aligns with the majority needed for decisions at ordinary general meet - ings, which handle key matters like appointing directors and approving financial statements. This ensures that the bidder pays an appropri - ate control premium, as de facto control requires more than mere minority influence.
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