ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira and Moshe Pasker, Arnon, Tadmor-Levy
certain period agreed upon by the parties, as a condition for conducting the negotiations. For a public company, it is also common to grant exclusivity for a limited period to conduct nego - tiations and perform due diligence. However, in cases where a tender offer is sub - mitted, or the company wishes to hold an auc - tion, the seller may reach a standstill agreement with a potential buyer to allow flexibility in nego - tiating with additional bidders. Recently, in the context of public company transactions involv - ing the acquisition of control, “fiduciary out” mechanisms have been used, granting the board of directors the authority to terminate an exist - ing deal in light of a superior offer from another buyer. 5.5 Definitive Agreements It is not common for the terms of a tender offer to be documented in a definitive agreement. However, it is permissible to do so. A public company receiving a tender offer to purchase its shares is required to publish a report to the stock exchange detailing the terms of the tender offer. 6. Structuring 6.1 Length of Process for Acquisition/ Sale With the exception of a reverse triangular merger (which the Israeli Companies Law sets out mini - mum time periods for) there are no minimum or maximum time periods for acquiring or selling a business in Israel. If the circumstances permit, the acquisition can sign and close simultane - ously. With respect to statutory mergers, the Israeli Companies Law provides that the merger may not be consummated until the later of:
• 50 days following the filing of a merger notice by the merging companies with the Israeli Registrar of Companies (which is not filed until the merger agreement is executed); and • 30 days following the approval of the merger by the shareholders of the merging compa - nies. Accordingly, it typically takes nearly two months at least following signing to consummate a stat - utory merger in Israel. 6.2 Mandatory Offer Threshold The Israeli Companies Law provides that hold - ings of certain thresholds in public companies may only be obtained through a special tender offer. A purchaser who wishes to acquire a 25% interest in a public company may only do so by way of a special tender offer for at least 5% of the company’s shares. This requirement does not apply if the target company already has a shareholder holding of at least 25% of the tar - get’s shares. Similarly, a purchaser who wishes to exceed the 45% threshold may only do so by way of a 5% or more special tender offer, unless there is already a shareholder of the target company holding at least 45% of the target company’s shares. 6.3 Consideration Israeli law does not dictate the type of consid - eration which can be used to make an acquisi - tion. While cash is most commonly used, shares of the acquirer or a combination of cash and shares are both permissible and not uncommon. Earn-outs are frequently used in acquisitions in Israel to bridge valuation gaps.
933 CHAMBERS.COM
Powered by FlippingBook