Mergers & Acquisitions 2012

ICLG The International Comparative Legal Guide to: Mergers & Acquisitions 2012 A practical cross-border insight into mergers and acquisitions

Published by Global Legal Group, with contributions from:

Albuquerque & Associados Lenz & Staehelin Ali Budiardjo, Nugroho, Reksodiputro Lorenz Andreas Neocleous & Co LLC Mannheimer Swartling Advokatbyrå AB Arzinger Nishimura & Asahi Bech-Bruun Pachiu & Associates Cárdenas & Cárdenas Abogados Santa Maria Studio Legale Associato Covington & Burling LLP Schoenherr Cravath, Swaine & Moore LLP Skadden, Arps, Slate, Meagher & Flom LLP Dittmar & Indrenius Slaughter and May Elvinger, Hoss & Prussen SNR Denton & Co Gide Loyrette Nouel Steenstrup Stordrange Goltsblat BLP Stikeman Elliott LLP Hengeler Mueller Tonucci & Partners Herbert Smith LLP Wachtell, Lipton, Rosen & Katz J & A Garrigues, SLP Webber Wentzel Karanovic & Nikolic Yigal Arnon & Co. Koep & Partners Zhong Lun Law Firm Lee and Li, Attorneys-at-Law Žurić i Partneri d.o.o., law firm The International Comparative Legal Guide to: Mergers & Acquisitions 2012

General Chapters: 1 European M&A Trends and Outlook for 2012 – Michael Hatchard & Scott V. Simpson, Skadden, Arps, Slate, Meagher & Flom (UK) LLP 1 2 European Union: The UK-Continental Europe Debate on Takeover Regulation – Lorenzo Corte & Scott Hopkins, Skadden, Arps, Slate, Meagher & Flom (UK) LLP 4

Contributing Editor 3 Defending a UK Hostile Bid: The Tools for the Battle – Gavin Davies & Stephen Wilkinson, Michael Hatchard, Herbert Smith LLP 7 Skadden, Arps, Slate, 4 Recent Developments in Deal Protection in U.S. and U.K. Markets – Richard Hall, Meagher & Flom (UK) LLP Cravath, Swaine & Moore LLP 14 Account Managers 5 Conflict Transactions: Upping the Ante at a Time of Anxiety – Adam O. Emmerich & Trevor S. Norwitz, Dror Levy, Maria Lopez, Wachtell, Lipton, Rosen & Katz 17 Florjan Osmani, Oliver Smith, Rory Smith, 6 The Search for Deterrence: Derivatives Clauses in Shareholder Rights Plans – Leonard Chazen & Toni Wyatt Scott Smith, Covington & Burling LLP 22

Sub Editors Country Question and Answer Chapters: Suzie Kidd 7 Albania Tonucci & Partners: Enklid Milaj & Ajola Xoxa 29 Jodie Mablin 8 Austria Schoenherr: Christian Herbst & Sascha Hödl 34 Senior Editor Penny Smale 9 Belgium Lorenz: Steven De Schrijver & Jeroen Mues 44

Managing Editor 10 Bulgaria Advokatsko druzhestvo Andreev, Stoyanov & Tsekova in cooperation with Alan Falach Schoenherr: Ilko Stoyanov & Tsvetan Krumov 52

Group Publisher 11 Canada Stikeman Elliott LLP: Elizabeth Breen & Simon A. Romano 59 Richard Firth 12 China Zhong Lun Law Firm: Zhou Yun & Steve Zhao 65 Published by 13 Colombia Cárdenas & Cárdenas Abogados: Bernardo P. Cárdenas M. & Mauricio Borrero 73 Global Legal Group Ltd. 59 Tanner Street 14 Croatia Žurić i Partneri d.o.o., law firm: Tomislav Tus & Martina Prpić 77 London SE1 3PL, UK 15 Cyprus Andreas Neocleous & Co LLC: Elias Neocleous & Marinella Kilikitas 84 Tel: +44 20 7367 0720 Fax: +44 20 7407 5255 16 Czech Republic Schoenherr: Martin Kubánek & Miroslav Pokorný 91 Email: [email protected] 17 Denmark Bech-Bruun: Steen Jensen & Regina M. Andersen 102 URL: www.glgroup.co.uk 18 Finland Dittmar & Indrenius: Anders Carlberg & Jan Ollila 108 GLG Cover Design F&F Studio Design 19 France Herbert Smith Paris LLP: Hubert Segain & Edouard Thomas 115

GLG Cover Image Source 20 Germany Hengeler Mueller: Dr. Steffen Oppenlaender 122 istockphoto 21 Indonesia Ali Budiardjo, Nugroho, Reksodiputro: Herry N. Kurniawan & Theodoor Bakker 128 Printed by 22 Israel Yigal Arnon & Co.: Barry P. Levenfeld & Shiri Shaham 134 Ashford Colour Press Ltd. February 2012 23 Italy Santa Maria Studio Legale Associato: Luigi Santa Maria & Francesca Torricelli 142 24 Japan Nishimura & Asahi: Masakazu Iwakura & Noriya Ishikawa 150 Copyright © 2012 Global Legal Group Ltd. 25 Luxembourg Elvinger, Hoss & Prussen: François Felten 158 All rights reserved 26 Macedonia Karanovic & Nikolic: Ljupka Noveska & Veton Qoku 165 No photocopying 27 Namibia Koep & Partners: Peter Frank Koep & Hugo Meyer van den Berg 171 ISBN 978-1-908070-21-0 ISSN 1752-3362 28 Norway Steenstrup Stordrange: Tuva Aas Bakke & Terje Gulbrandsen 176 29 Poland Gide Loyrette Nouel: Rafał Dziedzic & Sergiusz Kielian 182 Strategic Partners 30 Portugal Albuquerque & Associados: António Mendonça Raimundo & João Ricardo Branco 189 31 Qatar SNR Denton & Co: Roberto Lusardi & Zaher Nammour 195 32 Romania Pachiu & Associates: Marius Nita & Alexandru Lefter 202 33 Russia Goltsblat BLP: Anton Rogoza & Matvey Kaploukhiy 209 34 Serbia Moravčević Vojnović i Partneri in cooperation with Schoenherr: Matija Vojnović & Luka Lopičić 215 35 Slovakia Schoenherr: Stanislav Kovár 222

36 Slovenia Law firm Sorsak d.o.o. in cooperation with Schoenherr: Vid Kobe & Maja Vagaja 228

Continued Overleaf

Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720

Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations. www.ICLG.co.uk The International Comparative Legal Guide to: Mergers & Acquisitions 2012

Country Question and Answer Chapters: 37 South Africa Webber Wentzel: Deepa Vallabh & Jesse Watson 236

38 Spain J & A Garrigues, SLP: Fernando Vives & Rafael González-Gallarza 246

39 Sweden Mannheimer Swartling Advokatbyrå AB: Thomas Wallinder & Nina Svensson 253

40 Switzerland Lenz & Staehelin: Jacques Iffland & Hans-Jakob Diem 259

41 Taiwan Lee and Li, Attorneys-at-Law: Ken-Ying Tseng & Susan Lo 266

42 Turkey Schoenherr in cooperation with Türkoğlu & Çelepçi Avukatlık Ortaklığı: Levent Çelepçi & Burcu Özdamar 272

43 Ukraine Arzinger: Maksym Cherkasenko & Stanislav Gerasymenko 278

44 United Kingdom Slaughter and May: William Underhill 287

45 USA Skadden, Arps, Slate, Meagher & Flom LLP: Ann Beth Stebbins & Alan C. Myers 294

46 Vietnam Gide Loyrette Nouel A.A.R.P.I.: Samantha Campbell & Huynh Tuong Long 311

EDITORIAL

Welcome to the sixth edition of The International Comparative Legal Guide to: Mergers & Acquisitions. This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of the laws and regulations of mergers and acquisitions. It is divided into two main sections: Six general chapters. These are designed to provide readers with a comprehensive overview of key issues affecting mergers and acquisitions, particularly from the perspective of a multi-jurisdictional transaction. Country question and answer chapters. These provide a broad overview of common issues in mergers and acquisitions in 40 jurisdictions. All chapters are written by leading M&A lawyers and we are extremely grateful for their excellent contributions. Special thanks are reserved for the contributing editor Michael Hatchard of Skadden, Arps, Slate, Meagher & Flom (UK) LLP, for his invaluable assistance. Global Legal Group hopes that you find this guide practical and interesting. The International Comparative Legal Guide series is also available online at www.iclg.co.uk

Alan Falach LL.M Managing Editor Global Legal Group [email protected] Chapter 17 Denmark Steen Jensen

Bech-Bruun Regina M. Andersen

1 Relevant Authorities and Legislation 1.5 Does protectionism operate in favour of local owners?

The applicable rules and regulations do not protect or favour local 1.1 What regulates M&A? owners.

The primary legal regime for public takeovers in Denmark is the Danish Securities Trading Act (the “STA”) and the Takeover Order 1.6 What are the principal sources of liability? implementing the Takeover Directive (2004/25/EC). The STA rules on prospectuses and listing of shares are relevant if share Violation of the Takeover Order, including in particular consideration is offered. misrepresentations or omission of information in the offer The Danish Companies Act (the “DCA”) governs public takeovers document, may entail financial penalties. Civil claims may be by way of statutory mergers and contains certain limitations as to brought against the offeror, the target company or its directors how a takeover or a defensive strategy may be structured. personally based on the Danish rules on tort, although litigation is mostly absent in Danish takeover transactions. The Danish Financial Supervisory Authority (the “FSA”) has been the supervisory authority in respect of takeovers in Denmark since Conduct amounting to market abuse or insider trading may give rise 1 September 2006. to financial penalties or criminal liability.

1.2 Are there different rules for different types of company? 2 Mechanics of Acquisition

The Takeover Order applies to takeovers of Danish and non-Danish 2.1 What alternative means of acquisition are there? target companies which have shares admitted to trading on a regulated market (primarily NASDAQ OMX Copenhagen Under the Takeover Order the acquisition of a Danish listed (“OMX”)) or an alternative market place (i.e. First North) in company may be structured as a voluntary offer with no or little Denmark. If the shares are also listed in another EEA Member prior stakebuilding or a prior stakebuilding exceeding 33% of the State, the Takeover Order applies if the initial listing took place in votes followed by a mandatory offer. Denmark or if the securities were listed at the same time on Alternative means of acquisitions are: (i) asset deals/spin-offs; or different regulated markets and the FSA has been appointed as the (ii) statutory mergers, including cross-border mergers pursuant to competent supervisory authority by the target company. the DCA, which implements the EU Directive on cross-border mergers (2005/56/EC). Acquisitions of Danish listed companies by 1.3 Are there special rules for foreign buyers? way of a statutory merger are extremely rare. Unlike some common law jurisdictions, Danish law does not provide The takeover rules apply equally to Danish and non-Danish buyers, for structures involving the courts such as “schemes of arrangement”. and no restrictions apply to foreign investments in listed companies in Denmark. 2.2 What advisers do the parties need?

1.4 Are there any special sector-related rules? Depending on the complexity and the status of the target company (large, mid or small cap), a buyer will almost always engage legal The direct or indirect acquisition of 10% or more of the share counsel and financial advisers. Accountants may be engaged to capital or the voting rights or such interest which makes it possible analyse the expected post-transaction equity structure based on to exercise a controlling influence on the management of a financial outside-in analysis of the target company. The target board will undertaking (such as banks and companies within the insurance and typically – but is not required to – obtain a fairness opinion from its securities trading industry) is subject to prior approval by the FSA. financial adviser to support the required opinion of the target board This applies whether the acquirer is Danish or foreign and whether on the offer. In terms of settlement, the acquirer will need to engage the acquirer is acting alone or in concert with other parties. a bank to handle acceptances, clearance and settlement with the issuing bank and the Danish clearing house VP Securities and settlement in a subsequent compulsory acquisition/squeeze-out.

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2.3 How long does it take? 2.8 Are there obligations to purchase other classes of target securities? The offer document must be published within 4 weeks from the date of announcement of the offeror’s decision to make an offer or the In mandatory offers the buyer is required to extend the offer to all date where the offeror has acquired control of the target company, shareholders in the target company and thus a buyer could be see question 5.3. The offer period must be at least 4 weeks and not required to purchase other classes of shares. more than 10 weeks. Improvements of the offer made within the last 2 weeks of the offer period will extend the offer period by 2 2.9 Are there any limits on agreeing terms with employees? weeks; i.e. up to a total of 12 weeks. If anti-trust approval is

required, the offer period may be extended for up to a total of 4 enmark The Takeover Order prohibits the offeror from entering into or months from the time where the offer document was published. If D amending agreements with directors or the management of the a voluntary offer is to be followed by a squeeze-out procedure, the target company regarding bonuses and similar benefits from the time frame will be extended by a minimum of 4 weeks and more time when negotiations with the target company are initiated. This likely approximately 4-5 months. rule limits the possibility of retaining management on a committed basis. 2.4 What are the main hurdles? The target board must present its position on the offeror’s strategy for the company and the expected impact on employment to the The main hurdle is to obtain the acceptance level needed to employee representatives, allowing for the representatives to effectively gain control of the company or to allow a subsequent provide and make public (through the target board) a separate squeeze-out of remaining shareholders and delisting of the statement on this impact. company, see question 2.15. Another main hurdle is often to The target company may have adopted rules on internal structure how to retain management as restrictions apply in this consultation procedures to be followed in case of a takeover. respect, see question 2.9. Before making the public offer, the main hurdles are obtaining due diligence access, negotiating financing terms, obtaining access to 2.10 What role do employees play? and negotiating offer terms with the target board and often seeking support from larger shareholders. Generally, the employees do not play an active role. As set out above, the target board must present its position on the offeror’s strategy for the company and the expected impact on employment 2.5 How much flexibility is there over deal terms and price? to the employee representatives, allowing for the representatives to provide and make public a separate statement on this impact. In Under the Takeover Order, the offeror making a voluntary offer is practice, such separate employee statement is almost never afforded a great amount of flexibility in determining the deal terms, prepared and make public. including (to some extent) setting out conditions for the offer, the form of consideration and the offer price. However, the offeror must afford equal treatment to all shareholders within the same 2.11 What documentation is needed? class of shares. For mandatory offers very little flexibility is available. The documentation needed to complete the takeover is: (i) an announcement by the offeror of its decision to make an offer or that the offeror has acquired control of the target company; (ii) the offer 2.6 What differences are there between offering cash and document containing all information on the financial and other other consideration? terms of the offer necessary for the shareholders to make an informed decision; (iii) an offer advertisement providing a brief Under the Danish takeover rules, consideration may be offered by account of the offer and information on how to obtain a copy of the way of cash, shares or a combination thereof. Mandatory offers offer document (website and/or address); (iv) a public statement (see question 5.3) must include a cash alternative if the shares from the target board to the shareholders of its reasoned position on offered are not freely tradable on a regulated market, or if the the offer including the considered impact of the offer on the offeror has acquired 5% or more against cash payment within 6 interests of the company; (v) an announcement of the result of the months prior to the offer. Furthermore, cash has to be offered in the offer; and (vi) a prospectus or “equivalent document” (see question squeeze-out of minority shareholders. If shares are offered as 2.6), if applicable. consideration, this may trigger an obligation to publish a prospectus A supplementary offer document and a revised statement from the or – at the choice of the offeror – to issue an equivalent document target board are required if the offeror amends (only amendments in containing information similar to that of a prospectus. The favour of the shareholders are permitted) or waives any of the “equivalent document” is often the preferred solution, as the conditions within the offer period. disclosure can be included in the offer document, without being fully Prospectus Directive compliant. 2.12 Are there any special disclosure requirements?

2.7 Do the same terms have to be offered to all shareholders? The Takeover Order sets out the requirements for disclosure to be made in the offer document which include a requirement to disclose any dividends from the target company intended to be distributed in The same terms must be offered to all shareholders within the same the 12-month period following the takeover, as well as the intended class of shares. The general principle of equal treatment also entails amount of such dividend distribution. If such disclosure is not proportionate equal treatment of the different classes of shares, i.e. made, the possibility of making distributions within the 12-month when determining the price for different classes of shares. period is limited.

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No disclosure of financial information is required in the offer important for the successful completion of a takeover. It is the document, but historical financial information in summary form is gateway for access to carrying out a due diligence beyond outside- typically included. in due diligence and – more importantly – a supportive target board If share consideration is offered and a prospectus is required, the and a target board recommendation of the offer are generally disclosure requirements are extensive and include detailed deemed necessary for obtaining sufficient shareholder acceptance information regarding the business of the offeror and the shares of the offer. offered. Also, extensive financial information accompanied by statements from the accountants must be included in the prospectus. 3.4 Does the choice affect process? enmark 2.13 What are the key costs? See question 3.3. D

The key costs in a takeover process are fees to financial advisers 4 Information and legal advisers.

4.1 What information is available to a buyer? 2.14 What consents are needed? If no due diligence access is granted, the information available to The primary consents needed are regulatory approvals from the the offeror is information already published by the target company FSA in respect of the documents to be published according to the and other publicly available information. This includes Takeover Order (offer document, offer advertisement; announcements and financial statements published by the target supplementary offer document and offer advertisement, and company through the OMX. Information memoranda/prospectuses prospectus, if relevant). used in share offerings by the target company will be available on Anti-trust approvals may be needed, as well as other sector-related the FSA’s website. Corporate information and documents and approvals (e.g. financial undertakings, see question 1.4). annual accounts can be retrieved or requested from the DCCA.

2.15 What levels of approval or acceptance are needed? 4.2 Is negotiation confidential and is access restricted?

Ownership of more than 50% of the votes gives control of the target Negotiations with the target company (and/or shareholders) may be board. Ownership of at least 2/3 of all the votes and the share conducted in confidence, provided that the parties are able to capital is the recommended minimum control threshold as it gives maintain confidentiality. The current position under Danish law is control over most changes to the articles of association. Squeeze- that disclosure is required when the takeover becomes a reality (i.e. out and de-listing is typically the ultimate aim, which requires when the offeror resolves to make an offer). If information on a ownership of more than 9/10 of all shares and votes. Delisting of potential takeover is leaked to the media, the target may be forced the company may be applied for once the squeeze-out has been to comment on whether it is involved in takeover negotiations. The initiated. target is not, however, required to disclose the name of the potential offeror and the offeror is not required to publicly disclose its 2.16 When does cash consideration need to be committed and identity until the time when a takeover offer is made public. available? Access to negotiation is solely within the discretion of the board.

Cash consideration must be committed prior to announcement of 4.3 What will become public? the intention to make an offer. The cash consideration must be available at settlement (but committed prior to the announcement of The Takeover Order does not require a disclosure of the track of the offer). No formal requirements exist on how to document this contacts between the target board and the offeror. Thus, only requirement, and it is usually met by a confirmed term sheet for information which the target board elects to include in its reasoned financing. statement or in a voluntary disclosure announcement will become According to market practice, settlement is made within 3 days public. The offeror may complete the offer although holding inside following announcement of the result of the offer. information provided by the target company in the context of a due diligence. However, no purchases outside the offer can be made in 3 Friendly or Hostile this situation. In practice, a so-called “wash clean” announcement is published by the target company immediately prior to publication of the offer document, disclosing any inside information provided 3.1 Is there a choice? to the offeror in the context of a due diligence.

Yes. However, Denmark has only experienced a few hostile bids. 4.4 What if the information is wrong or changes?

3.2 Are there rules about an approach to the target? Once published, the offer is binding subject only to any conditions included (in a voluntary offer). The terms of the offer may be There are no statutory rules about an approach to the target. amended during the offer period, however, only to the extent that the terms are improved for the shareholders (e.g. an increased offer 3.3 How relevant is the target board? price). However, the Takeover Order provides that the offeror may revoke the offer if a competing offer is made, provided that this is specifically stated in the offer document. Support from the target board is generally considered very

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In respect of voluntary offers, the offeror may further revoke the The existence and effect of potential voting rights, including rights offer if this is specifically provided for in the offer document by to subscribe for and purchase shares that are currently exercisable stating the circumstances in which the offer may be revoked. These or convertible are aggregated when assessing whether the circumstances must, as any other condition made to the offer, be thresholds have been reached. Further, voting rights held by parties objective, i.e. beyond the control of the offeror. acting in concert with the acquirer are aggregated for this purpose. In the event of material changes to the information published (besides The obligation to make a mandatory offer is triggered even though the terms of the offer) which are necessary to enable the shareholders the controlling interest is acquired through a public offer or to make an informed assessment of the offer, a supplement to the subscription of new shares in the company. Although the STA does offer document must be published as soon as possible. not purport to include situations where control is obtained by virtue

of a merger, the practice of the FSA has proven to be unclear. enmark D 5 Stakebuilding A mandatory offer must be made as soon as possible and no later than four weeks after the obligation has been triggered. The Takeover Order sets out detailed rules for the mandatory offer, e.g. 5.1 Can shares be bought outside the offer process? the minimum price and the form of consideration (only cash and/or shares). No conditions are permitted. Shares may be bought in the market both within and outside the Limited exemptions exist for securities dealers, credit institutions and offer process. After the launch of the offer document, the principle investment companies in respect of market-maker and underwriting of equal treatment provides that if open market purchases are made agreements. Further, the FSA has granted exemptions from the on more favourable terms, including price, the same terms and price takeover rules in situations where a shift in the control has been the must be offered to the shareholders comprised by the offer. only alternative to avoiding a bankruptcy of the target company. Acquisition of shares outside the offer may be prohibited to the extent that the offeror is in possession of inside information. If the stake building is made in conjunction with an offer which observes the requirements applicable to voluntary offers, the mandatory offer rules will not be triggered. 5.2 What are the disclosure triggers?

Once an acquirer has acquired a controlling stake or an offeror has 6 Deal Protection decided to make a voluntary offer, the acquirer/offeror must make a public announcement to this effect and submit the announcement to 6.1 Are break fees available? the FSA and the OMX. Moreover, the acquirer/offeror must submit a “major shareholding” Break fees are not specifically regulated, but due to general legal notification to the company and the FSA of a direct or indirect principles, such as the principle that directors are not permitted to interest representing 5% of the shares or the voting rights of the fetter the future exercise of their discretion, the point of departure is company. Disclosure is also required if the interest rises above or that break fees are not accepted by target boards. falls below the level of 5, 10, 15, 20, 25, 50 or 90% or 1/3 or 2/3 of the shares or the voting rights. 6.2 Can the target agree not to shop the company or its assets? 5.3 What are the limitations and implications? A no-shop agreement limited to prevent the company’s active A duty to make a mandatory offer is triggered upon a transfer of solicitation is permissible, provided that it is entered into in the shares whereby the acquirer obtains control by way of a controlling short-term and long-term collective shareholder interest. In order influence. not to fetter its future exercise of discretion, a target board can The prima facie rule is that control is established if the acquirer presumably not agree to restrictions on asset sales, but a voluntary owns more than 50% of the voting rights in the target company, offer can contain conditions to this effect. unless it can be clearly demonstrated that such ownership, in exceptional cases, does not constitute a controlling influence (e.g. 6.3 Can the target agree to issue shares or sell assets? voting caps). Where an acquirer holds less than 50% of the voting rights, control As a general rule it will not be considered to be in the collective is established if the acquirer has: shareholder interest if the target board issues shares or disposes of (i) the power to exercise more than half of the voting rights by assets to the offeror. virtue of an agreement with other investors; (ii) the power to control the financial and operating decisions of 6.4 What commitments are available to tie up a deal? the target company under any articles of association or agreement; The target board can commit to recommend the offer within a (iii) the power to appoint or remove a majority of the members of matter of a few days subject to subsequent developments, e.g. an the board of directors and the board has control of the unsolicited better offer. business; or (iv) ownership of more than 1/3 of the voting rights and the de facto majority of votes at general meetings and thus the 7 Bidder Protection actual controlling influence on the target company. The 1/3 threshold is to be interpreted strictly, i.e. pursuant to FSA 7.1 What deal conditions are permitted? practice 33.28% of the votes will not trigger the mandatory offer rules. Voluntary offers can be made on a conditional basis, provided the

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fulfilment of a condition can be assessed objectively and provided meeting of shareholders, whereas the target board, with very few fulfilment or non-fulfilment is beyond the offeror’s control. Typical exceptions, may not make any amendments on its own. Thus, all conditions include: (i) obtaining more than 9/10 of the votes and the amendments to a company’s articles of association, including for capital of the target company; (ii) the absence of changes in the defensive purposes, must be approved by the shareholders. target company’s capital structure and articles of association; (iii) Another obstacle is the fact that many Danish companies are the obtaining of antitrust clearances and other necessary approvals controlled by foundations which, under their constituent from public authorities; (iv) the absence of new legislation, court documents, may be obliged to maintain control at all times. As to orders etc. obstructing the offer; and (v) no material adverse the target board’s ability to resist a takeover, there are no provisions change. The offeror is entitled to waive or reduce conditions if this in Danish statutory law or in Danish regulations setting forth the

enmark is provided for in the offer document. duties of the target board and the management when faced with a

D hostile takeover attempt. The provisions of the DCA dealing with 7.2 What control does the bidder have over the target during directors and management liability are based on the general the process? standard in Danish tort law being a rule of negligence based on a “prudent and reasonable person” test. In that regard it is important In principle, the bidder does not have any control over the target to note that Danish company law also imposes on the target board a during the process, other than any limitations on its scope to act that duty to act loyally towards all shareholders and in the short-term the target board has committed to contractually. In practice, good and long-term interest of all shareholders and thus prohibits the corporate governance practice dictates that the target board allows target board and the management from acting in a fashion that is its shareholders to consider the offer and hence indirectly clearly likely to provide certain shareholders or others with an significantly limits the target board’s scope to act outside the undue advantage at the expense of other shareholders or the ordinary course of business, which is generally respected by target company. There is no bright line in Danish law between events boards. As to the offeror’s ability to influence the process, the offer where pursuit of interests other than that of the shareholders is price is an important tool in practice. Section 6 illustrates the permissible (e.g. the impact on employees) and where such pursuit limited extent to which the target can commit itself. violates the duties owed to the shareholders.

7.3 When does control pass to the bidder? 8.3 Is it a fair fight?

Three days after the lapse of the offer, the offeror must announce Apart from the rules under the Takeover Order, no rules designed to the level of acceptance. Control passes at that point, provided the create a level playing field for competing offerors exist. conditions are met (or waived). Differentiation in treatment of offerors is permitted, including as regards access to information during due diligence. Whether this is fair or not is not an issue in the Danish market. 7.4 How can the bidder get 100% control?

See question 2.3. 9 Other Useful Facts

8 Target Defences 9.1 What are the major influences on the success of an acquisition?

8.1 Does the board of the target have to publicise Obtaining the support of the target board, as well as major discussions? shareholders of the target company is essential for the success of an acquisition as this will facilitate other shareholders to accept the See question 4.3. The target board is not obliged to inform offer. The communication strategy and skills of the offeror are key. shareholders of an approach; see, however, question 4.2.

9.2 What happens if it fails? 8.2 What can the target do to resist change of control? There are no restrictions in terms of submitting a new offer. Defensive devices may exist in the articles of association of the target company. Most importantly, the share capital may be divided into different classes of shares, typically A shares and B shares. A 10 Updates classic scenario is that the B shares are listed on the OMX, while the (unlisted) A shares remain in the hands of the original 10.1 Please provide a summary of any relevant new law or shareholders. As the A shares often carry 10 times as many votes practices in M&A in Denmark. per share as the B shares, 9.1% of a company’s share capital may hold the majority of the votes in the company. Another common Amendments to the Danish Companies Act came into force in 2011 defensive device is voting caps and, less commonly, ownership caps allowing for more flexibility in respect of financial assistance. or other defensive devices. Denmark has opted-out of the “non- However, financial assistance from the target company is subject to frustration” regime and the “breakthrough” regime under the certain conditions being met, e.g. approval from shareholders, the Takeover Directive, but the DCA provides for an “opt-in” procedure target board must provide a credit rating and limitation of the funds whereby defensive devices may be suspended. However, this that may be used for financial assistance. The prohibition against procedure requires a resolution to be made by the shareholders. The shareholder loans still exists. Whether the new financial assistance right to amend the articles of association is vested in the general

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regime is an attractive alternative to a debt push-down structure will concluded that a bidder cannot make successive improvements to depend on the effect on the financial ratios and the tax position. the bid, including waiving or reducing prescribed conditions with In an interpretive statement from March 2011 the Danish FSA consequent mandatory and automatic extensions of the offer period clarified its practice in terms of improving the terms of the offer and beyond 12 weeks or 4½ months respectively.

Steen Jensen Regina M. Andersen

Bech-Bruun Bech-Bruun enmark

Langelinie Allé 35 Langelinie Allé 35 D DK-2100 Copenhagen DK-2100 Copenhagen Denmark Denmark

Tel: +45 2526 3346 Tel: +45 7227 3549 Fax: +45 7227 0027 Fax: +45 7227 0027 Email: [email protected] Email: [email protected] URL: www.bechbruun.com URL: www.bechbruun.com

Steen Jensen is partner in and head of Bech-Bruun’s capital Regina M. Andersen is a partner at Bech-Bruun’s M&A Capital markets group, specialising in securities law and securities law- Markets department specialising in securities laws, including related transactions, such as listings, private placement and securities laws transactions such as IPOs, rights issues, and delisting and takeover offers. He has been involved in numerous public M&A. Clients include Danish listed companies, as well as structures for public acquisition processes, flotations as well as international banks and corporate clients. Regina M. Andersen other ECM work. Clients are national and international banks, holds a law degree from the University of Copenhagen. financial advisers and major Danish corporates. Steen Jensen holds a Master of Laws from the University of Copenhagen and a Master of Laws from the University of London.

Bech-Bruun is a leading Danish full-service law firm with offices in Copenhagen and Aarhus. Bech-Bruun has a strong international profile based on its longstanding experience in working cross-border in conjunction with leading foreign law firms on a non-exclusive basis. Practice areas include M&A Corporate, Capital Markets, Tax, Restructuring, EU and Competition, Public law, Construction and Real Estate, Environmental, TMT, Labour law, Transport and Insurance, and Chinese in- and outbound investments.

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