CMS Expert Guide to Public Takeovers in Netherlands

Yes - the Financial Supervision Act (Wet op het financieel toezicht) governs takeovers of Dutch public companies listed on a regulated market. Additionally, there are more specific guidelines regarding public takeover offers that can be found in royal and ministerial decrees such as the Decree on Public Offers (Besluit Openbare Biedingen), the Exemption Decree, and the Exemption Regulation. Book 2 of the Civil Code (Burgerlijk Wetboek, "Civil Code") governs most aspects of Dutch corporate law. The Civil Code contains provisions relating to takeover defences, inquiry proceedings (enqûeteprocedure) and squeeze-outs.  

• Full offers;
• partial offers; and
• tender offers.

Parties are not required to engage any specific advisers, although typically the offeror and the target company will engage financial advisers, such as bankers and consultants, in relation to a takeover offer.

The offer document will include financial information provided by the auditors. Furthermore, the management board of a target company commonly obtains a fairness opinion from a financial adviser.  

A mandatory offer must be made if a person, or a group of persons acting in concert, directly or indirectly acquires a controlling interest. A “controlling interest” means having more than 30% of the voting rights in the general meeting of the target company. “Acting in concert” is defined as persons cooperating (on a long-term basis or for a single occasion) under an agreement (oral or written) with the aim of acquiring control in the target company or, if in cooperation with the target company, to frustrate the success of an announced public takeover offer. Affiliated companies (group companies and controlled companies) are deemed to be acting in concert.  A party that acquires a controlling interest in a target company shall issue a press release without delay.

There are exemptions where the acquisition of a controlling interest is excluded from the mandatory offer requirement. First of all, a mandatory offer is not required if the controlling party reduces its interest below 30% of the voting rights within 30 days following the acquisition of the controlling interest. This period may be extended by 60 days. The acquiring party is also exempted from the mandatory offer in the event of:

• A controlling interest is obtained in a scheme for collective investment in transferable securities or an investment company that allows participants to request direct or indirect redemption or repayment of their shares or units;
• A controlling interest is obtained as a result of an unconditional full (voluntary) public bid if the acquirer can exercise more than 50% of the voting rights in the general meeting as a result of the unconditional full public bid;
• The acquirer is an independent protective foundation that acquires shares after the announcement of a hostile bid as a protective measure for a maximum period of two years;
• The acquirer is an independent trust office that has issued depository receipts;
• The controlling interest is acquired by a group company;
• A controlling interest is obtained in a company in moratorium or bankruptcy;
• Hereditary succession;
• The controlling interest is acquired by parties acting in concert;
• A controlling interest was acquired before the shares or depository receipts are admitted to trading on a regulated market for the first time;
• The acquirer is a custodian of shares that cannot exercise voting rights at his discretion;
• Acquisition took place by marriage or registered partnership to a person with a controlling interest;
• Control is acquired in the situation that the State intervenes in a financially distressed company;
• The mandatory offer leads to issues under competition law;
• The general meeting of the target consents before the bidder obtains control, but no longer than three months before, that no mandatory offer should be made. The consent must be carried by at least 90% of the votes cast by shareholders than the acquirer of the controlling interest and persons with whom the acquirer is acting in concert;
• A bank has to purchase shares as a result of underwriting, thereby acquiring a controlling interest.

Takeovers are commonly implemented as a full, voluntary offer. Voluntary offers may be subject to acceptance conditions, the acceptance threshold is typically set between 80% and 95%.

Dutch law provides for a general squeeze-out procedure and a specific squeeze-out procedure following a public takeover offer. For the specific squeeze-out procedure the offeror must own 95% of the shares and voting rights of the target company. The general squeeze-out procedure requires the acquisition of  95% or more of the shares of the target company.

If an offeror that has acquired 95% of the shares and voting rights of the target company as a result of a public takeover offer it may start a specific squeeze-out procedure against the remaining shareholders. These squeeze-out proceedings must be initiated within three months after the acceptance period of the offer has lapsed and must be brought before the Enterprise Chamber at the Amsterdam Court of Appeals (Ondernemingskamer, the "Enterprise Chamber").

Alternative squeeze-out mechanisms, such as a pre-wired asset sales, are also often included in the merger protocol. These alternative squeeze-out mechanisms typically allow for a threshold below 95%.

Yes. The parties may maintain confidentiality and the offeror and target company usually enter into a confidentiality agreement. However, parties must observe the disclosure obligations under MAR, as well as Dutch public offer rules. 

Yes.

• An offeror and target company can start the offer process with the announcement of the offeror's intention to make a public takeover offer. This will usually be done in the form of a press release stating that the parties have reached ‘conditional agreement’.
• A hostile offer can start after the provision of ‘concrete information’. The provision of concrete information is in any case deemed to have occurred if the offeror publishes the name of the target company in combination with a proposed offer price or a preliminary timetable for the conduct of the proposed takeover offer. Also in the event of a hostile offer, the offeror must issue a press release within four weeks of the provision of 'concrete information', which states (i) that it will file a request for approval of the offer document with the Dutch Authority for Financial Markets (Autoriteit Financiële Markten, "AFM") within a period specified in the press release, but in any case not more than 12 weeks after the announcement of the proposed takeover offer or (ii) the offeror has decided not to make a takeover offer. A target company may prevent a public takeover offer from being announced by publishing a statement stating that the offeror and the target company are in consultation concerning an intended public takeover offer.
• Any person or entity, whether acting alone or in concert, who can exercise at least 30% of the voting rights of the target company is required to make a mandatory offer for all the remaining shares. After such acquisition, an offeror has 30 days in which to sell down its interest and announce that it has wound down its interest to less than  30% or to make a mandatory takeover offer. This period can be extended by an additional 60 days by the Enterprise Chamber. In its assessment, the Enterprise Chamber has to take into all account all interest, thereby concluding that the interest of winding down the interest prevails. Furthermore, the holder of the controlling interest has to make a public announcement on the extension of the period. If the holder of at least 30% of the voting rights does not make a mandatory offer, it can be forced to do so by the Enterprise Chamber. The Enterprise Chamber, together with the shareholders and depositary receipt holders, can also grant dispensation from the requirement to make a mandatory offer in the event the target's financial condition is distressed.    
• The takeover offer process may also begin because of the ‘put up or shut up’ rule. On the basis of this rule, a target company can request the AFM to require a potential offeror to clearly state its intentions regarding a possible public takeover offer. If the AFM imposes the ‘put up or shut up’ rule, the potential offeror must, within six weeks, either announce a public takeover offer or publicly state that it will not announce a public takeover offer. If the potential offeror states that it will not announce a public takeover offer, it will not be able to announce a new public takeover offer for the same target company for six months.

The offeror must issue a press release within four weeks of the announcement of a public takeover offer, which states (i) that it will file a request for approval of the offer document with the AFM within a period specified in the press release, but in any case, not more than 12 weeks after the announcement of the takeover offer or (ii) the offeror has decided not to make a takeover offer. In the event of a mandatory offer the offeror must issue a press release within four weeks after announcement of the mandatory offer, which states that it will file a request for approval of the offer document with the AFM within a period specified in the press release, but in any case, not more than 12 weeks after the announcement.  

A voluntary offer may not contain conditions whose fulfilment is within the offeror’s discretion. Further, conditionality around an offer is allowed. Frequently used conditions in voluntary offers are:

• Minimum acceptance conditions;
• MAC clauses relating to the target company;
• Financial covenants;
• Competing offer clauses; and
• Non-insolvency clauses.

Mandatory offers may not be subject to any conditions set by the offeror.

The offeror must procure that, by the time the request for approval of the offer document is filed with the AFM, it is either able to pay the consideration in cash or has taken every reasonable measure to provide any other kind of consideration to be able to declare the offer unconditional. A certain fund announcement is typically included in the first public announcement as a matter of market practice.

• Subject to the 'best price rule' there are no rules governing the maximum/minimum price for voluntary offers.
• An offeror making a mandatory offer must offer a 'fair price'. A fair price is the highest price paid by the offeror – or persons acting in concert with the offeror – for the relevant securities in the year preceding the announcement of the mandatory offer. If the offeror did not acquire any such securities in the year preceding the announcement of the mandatory offer, the fair price is the average stock exchange price of such securities during that one-year period. If, after the announcement of the mandatory offer and prior to the end of the offer period, the offeror or the persons with whom it is acting in concert, acquire securities at a higher price than the fair price, the offeror should increase the offer price up to at least the highest price that has been paid for the acquired securities. At the request of the offeror, the target company or a shareholder in the target company, the Enterprise Chamber may determine the 'fair price'.
• The 'best price' rule applies to all types of offers and provides that an offeror must increase the price to the highest price paid by the offeror for the relevant securities in the target company in any transaction entered into after the initial public announcement regarding the offer. Certain on-market transactions are excluded for the purposes of the best price rule.
• Typically, in a takeover offer the consideration is only cash. However, it is also possible to offer cash or securities, or a combination of cash and securities.   

Shareholders of the same class or category of shares should be offered the same deal.

A target company is allowed to provide information for due diligence subject to the obligations under MAR. When a friendly offer is made, the target company's management board often consents to the offeror conducting due diligence on the target company’s business. A hostile offeror's due diligence options are typically restricted to information that is publicly available. The target company is not obliged to grant an offeror access to conduct due diligence and should assess if disclosing the requested information is in the best interests of the target company and its stakeholders.

An offeror may implement deal protection measures, including arrangements for a break fee, matching rights, exclusivity, and information rights. However, the target company directors are required to act in the best interests of the target company. Any deal protection measures should therefore be proportional and reasonable. The target company typically requires a “fiduciary opt out” from such measures and can only accept temporary deal protection measures. All circumstances should be considered to determine if the total package of deal protection measures is permissible. Furthermore, stakebuilding and irrevocable undertakings from major shareholders are generally permissible.

The board of the target company is under no obligation to engage with a potential offeror or to facilitate its takeover offer. However, the target company directors remain subject to their general duty to act in the best interests of the target company and its stakeholders and therefore may be in a position where those duties require them to engage to some extent.

Most Dutch listed companies have a defensive measure in place. The most common defensive measure is an option agreement between the company and an independent foundation incorporated for this purpose. An option agreement allows the company to issue protective shares to the foundation acting as a special purpose trust if there is a threatened hostile takeover attempt. Also, priority shares are frequently used as a defensive measure whereby special controlling rights may be attached to priority shares, for example the power to make a binding nomination for the appointment of executive and non-executive directors.

Dutch case law recognises and permits the use of ad hoc defensive measures in the event of a hostile takeover, provided that the defensive measure is proportionate, reasonable and temporary. It is questionable however whether poison pills and golden parachutes are permitted under Dutch law, this will depend on the circumstances.

• Direct or indirect control by a party alone or together with persons with whom it is acting in concert through acquisition of more than 30% of the voting rights in the target company triggers the obligation of making a mandatory offer.
• Any purchases by a potential offeror could set a floor on the minimum consideration that may be offered.  
• Any purchase of target company shares by the potential offeror will be subject to MAR.

Yes. Target company shareholders may give irrevocable commitments to accept an offer if made or once made. The irrevocable commitments can also include voting arrangements.    

In the case of a mandatory offer, the offeror is allowed to acquire shares outside the offer, provided that the offer price is increased up to the highest price paid between the announcement of the mandatory offer and the end of the offer period.

In the case of a voluntary offer, the offer price must also be increased to the highest price paid in transactions outside the offer, except for regular transactions on the regulated market or a comparable system in a non-EU member state. Only private (non-regulated) transactions of the offeror play a role in determining the price under the 'best price rule'. The 'best price' will be determined when the bid is declared unconditional. At that moment, comparison is made between the offer price and the price paid in any private transactions carried out by the offeror in the period between the announcement and the offer being declared unconditional.

The offeror and the target company must publicly disclose all transactions in target company securities made by them in the period between the initial public announcement of the offer and the publication of the offer document and in the period between the publication of the offer document and the offer being declared unconditional.

In addition, the general substantial holding notification requirements are applicable, the percentage thresholds under which are: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.

Where the offer is implemented by way of a full voluntary offer:

• D: First announcement of public takeover offer
• D+28: interim announcement of when offeror should submit the offer to AFM for approval
• D +84: Announce (i) submission of draft offer document to AFM; and (ii) certain funds confirmation
• D+94: AFM approves offer document
• D+94: Publication of offer document
• D+97: Start of tender acceptance period
• D+157: Target company must publish a “position statement”
• D+161: Informative EGM of the target company on the offer
• D+167: End of tender acceptance period
• D+170: Announce whether the offer is declared unconditional
• D+173: Settlement
• D+187: End of optional post-offer tender acceptance period

The actual timetable will depend on various circumstances.

• Initial publication announcement (offeror)
• Four-week announcement (offeror)
• “Certain funds announcement” (offeror)
• Notice for an offeror shareholder meeting (if applicable) (offeror)
• Offer document (offeror) (and additional documentation if the offer price is raised and/or the composition of the consideration is changed)
• Prospectus for offeror shares (if applicable) (offeror)
• Position Statement (target company)
• Notice for a target company shareholder meeting (target company)

A competing offeror may at any time make a counteroffer. Only a few specific rules apply to competing offers. The competing offeror may announce a public takeover offer and its final price without consulting the target company. The target company is not required to provide the competing offeror with the same information as the first offeror.

In the period between the announcement and publication of the offer document, the offeror is entitled to make any modifications regarding its public takeover offer, provided that the offeror complies with mandatory publication requirements, e.g. disclosure of inside information.

After publication of the offer document, the offeror is not allowed to make any modifications to its offer (other than to the price). However, an exemption to this rule is that the offeror may extend the offer period once. The first offeror also has the possibility to extend the offer period in the event of a competitive offer. The extension of the offer period should last between two and ten weeks.

Mandatory offers may not be withdrawn. Voluntary offers may not be withdrawn after the publication of the offer document. However, if it has been determined that a condition specified by the offeror will not be fulfilled, the offeror may at its discretion decide to let a voluntary offer lapse.

Dutch law provides for a general squeeze-out procedure and a specific squeeze-out procedure following a public takeover offer. For the specific squeeze-out procedure 95% of the shares and voting rights of the target company shall be required. The general squeeze-out procedure requires 95% or more of the shares of the target company.

Yes. The offeror cannot withdraw its offer after the offer has been formally launched by making an offer document publicly available. If a potential offeror withdraws the offer before the formal launch but after approval of the offer document by the AFM, it will be prohibited from making a new offer during the six months following termination. If a potential offeror launches its offer but the offer lapses, it will also be prohibited from making a new offer or acquiring a controlling interest in the target company for a period of six months.

To delist a company from Euronext Amsterdam, the offeror must acquire at least 95% of the shares in the target company. A request to de-list must be submitted to Euronext Amsterdam. If Euronext Amsterdam approves, de-listing will take place 20 trading days after the decision is published.