FRANCE Law and Practice Contributed by: Karl Hepp de Sevelinges, Nicolas Martin, Cyril Deniaud and Benjamin Cohu, Jeantet
For voluntary offers, bidders can set higher thresholds, such as two-thirds of voting rights, which grants control over extraordinary general meetings and enables actions like amending the articles of association or approving mergers. Conversely, setting a threshold at 90%, neces - sary for a squeeze-out and tax consolidation, is not accepted by the AMF. 6.6 Requirement to Obtain Financing Under French law, any tender offer ( offre pub - lique ) must be fully funded at the time the offer is filed with the AMF. The bidder is required to provide a bank guarantee or proof of available funds, ensuring it has the financial capacity to complete the transaction. This rule protects target shareholders from speculative bids and reinforces the credibility of the offer. In private M&A transactions, financing condi - tions are more flexible. It is not uncommon for bidders to negotiate conditions precedent linked to securing financing. However, in competitive sale processes, sellers often push for binding offers without financing conditions to minimise deal execution risk. 6.7 Types of Deal Security Measures In France, bidders frequently employ various security measures to safeguard their position and mitigate the risk of transaction failure, espe - cially in competitive M&A environments. • Break-up fees: These are commonly agreed upon, requiring the target to pay a fee if the transaction fails due to specific condi - tions, such as accepting a rival bid. In 2024, break-up fees typically ranged from 1% to 3% of the deal value. In public M&A transac - tions, break-up fees are subject to regulatory scrutiny to ensure they do not obstruct the free flow of offers, as noted by the Paris Court
of Appeal in the Capgemini/Altran case (13 March 2020), and do not exceed 2% of the deal value. • Match rights: These provisions allow the origi - nal bidder to match any superior competing offer, providing a strategic advantage. This was notably used in a recent bidding war for a French renewable energy company, allow - ing the initial bidder to maintain its position. • Non-solicitation provisions: Targets often commit not to seek alternative bids after sign - ing exclusivity agreements, focusing efforts on finalising the negotiated deal. These mechanisms are designed to balance deterrence and fairness, protecting bidders’ interests in complex transactions. 6.8 Additional Governance Rights When a bidder acquires a significant but non- controlling stake in a French company, it often negotiates additional governance rights to pro - tect its investment and influence strategic deci - sions. These rights are particularly important in deals where the bidder aims for strong oversight without full ownership. • Board representation: A common request is the appointment of one or more directors proportionate to the bidder’s shareholding. • Veto rights: Bidders may seek veto power over key decisions like major acquisitions, capital increases or significant budget chang - es, ensuring they have a say in critical mat - ters. • Information rights: Enhanced access to finan - cial reports and strategic plans allows the bidder to monitor performance closely and anticipate risks. • Shareholder agreements: These often for - malise governance rights, covering voting
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