GERMANY Trends and Developments Contributed by: Carsten Berrar and Peter Klormann, Sullivan & Cromwell LLP
initially welcomed by the target’s management. In recent years, Germany has seen virtually no true “hostile” bids in which an offer was formally submitted to the shareholders and the target has taken actual defensive measures. In this field of “unsolicited” approaches, Uni - credit’s stakebuilding in Commerzbank shares was certainly a very notable case in 2024. So far, not only the German government has raised concerns about a takeover of Commerzbank by Unicredit, but Commerzbank itself has also emphasised its standalone value. Further devel - opment, and whether the situation turns into “friendly” or “hostile” transaction, or no deal at all, still remains to be seen. The announcement of US-listed biotech compa - ny Halozyme Therapeutics’ intention to acquire German peer Evotec was another example of an unsolicited approach of a listed target com - pany in 2024. Evotec’s unwillingness to engage in discussions, however, very quickly resulted in Halozyme withdrawing its proposal. Regulatory developments Intensive regulatory scrutiny has resulted in lengthier, more intricate and uncertain deals, particularly in the case of cross-border trans - actions. This trend continued throughout 2024. Acquirers of German targets face potential reviews on three fronts: • merger control; • foreign direct investment (FDI) screening; and • EU foreign subsidies review (FSR). In the current geopolitical and economic climate, FDI and FSR bring national security and industri - al policy concerns to the forefront, which makes them less predictable in terms of both timing and outcome. According to reports, the closing
time for M&A deals in the EU roughly doubled between 2018 and 2022. Increased regulatory risks and the specifics of the different regimes that need to be accounted for are also leading to more controversial negotiations in transaction agreements. Merger control Over recent years, antitrust agencies have taken an increasingly aggressive stance towards fur - ther consolidation, including the European Com - mission and the German Federal Cartel Office. This trend – arguably led by the US and UK authorities – was also true for the EU. At the end of 2024, the European Commission appointed a new Competition Commissioner, Teresa Rib - era, whose task is to develop a new approach to merger control that prioritises simplicity over deregulation and who seeks a balance between strict antitrust enforcement and the promotion of corporate champions. It remains to be seen how this will impact deal-making in the coming years. FDI screening While global FDI screenings have found their established place next to merger control reviews in almost every cross-border M&A transac - tion, the development has not yet come to an end. Following an evaluation of the reforms of past years, the German Ministry of Economics (BMWK) is exploring further areas for expansion of the regime, including IP rights and licences, as well as greenfield investments. The national discussion is overlaid by the European Com - mission’s January 2024 initiative of a first pro - posal for a revision of the European Investment Screening Regulation, aiming to set certain mini - mum standards and greater harmonisation and co-ordination of national screening procedures across the EU (including an obligation to file simultaneously across member states).
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