ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira and Moshe Pasker, Arnon, Tadmor-Levy
6.4 Common Conditions for a Takeover Offer Depending on the circumstances of the parties to a transaction, various regulatory consents may be required in order to consummate the transaction. The size of the transaction and the market share of the parties may also trigger a requirement to obtain the approval of the ICA. If the target company has received funding from the IIA or tax benefits from the ITA pre-approval may then be required in order to consummate the transaction. Furthermore, if a research and development grant from the IIA has been received by the target company, and the acquirer wants to transfer the target company’s IP out of Israel, an additional payment will likely be required by the IIA. If the acquirer is using securities as considera - tion, then the target company will typically seek a ruling from the ITA deferring payment of taxes and, if no exemption applies under Israeli securi - ties law, the acquirer will need to file a prospec - tus in Israel. 6.5 Minimum Acceptance Conditions The Israeli Companies Law provides that, in order to acquire 100% of the issued shares of a company by way of a tender offer, shareholders holding at least 95% of the issued share capital must accept the offer. Additionally, as noted in 6.2 Mandatory Offer Threshold , a purchaser that 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 company’s shares.
Similarly, a purchaser that 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. 6.6 Requirement to Obtain Financing A business combination can be conditional on the bidder obtaining financing. Israeli law does not prevent an acquirer from subjecting the transaction to a condition that the acquirer obtain financing to support the transaction. 6.7 Types of Deal Security Measures Break-up fees are common in acquisitions of Israeli public companies. There is no clear Israeli statute or case law addressing “fiduciary outs” in Israel. Many Israeli practitioners believe that, in the absence of any clear restrictions, a board of directors of an Israeli company has the authority to agree to a limited no-shop period as part of the negotiations to finalise a transaction. Others believe that, if an Israeli court were pre - sented with the issue, it would look to Delaware law for guidance and may require the board of directors to retain the flexibility to accept supe - rior offers. There have been no real changes to the regula - tory environment that have impacted the length of interim periods. 6.8 Additional Governance Rights Israeli law does not restrict the governance rights that shareholders may agree to. Accordingly, a bidder buying less than 100% ownership of a target company may seek to appoint members to the target company’s board of directors and may require that the target company refrain from certain actions or decisions without the bidder’s prior written consent.
934 CHAMBERS.COM
Powered by FlippingBook