CMS Expert Guide to Public Takeovers in Norway

Yes, the Norwegian rules on takeover offers are stipulated in the Norwegian Securities Trading Act Chapter 6 and the Securities Trading Regulations Chapter 6. The rules implement Directive 2004/25/EF on takeover offers (the Takeover Directive). 

Oslo Børs is the takeover supervisory authority for companies that are subject to the Norwegian takeover rules. 

• Takeover offers 
• Acquisitions which result in the acquirer and person, or persons acting in concert, with it holding more than one-third of the voting rights in the listed company or if a shareholder holding one-third or more subsequently acquires shares taking its holding to more than 40% or 50% of the voting rights] 
• Partial offers 

The Norwegian takeover rules distinguish between voluntary and mandatory offers. A voluntary offer is an offer that, if accepted by the recipients of the offer, triggers a mandatory offer obligation for the offeror. A mandatory offer for the remaining shares in the target company is triggered if the offeror (either through a voluntary offer or otherwise) becomes owner of more than one-third (1/3) of the voting rights in the target company (with [repeat/further] triggers at 40% and 50%). 

Yes, both the offeror and the target company must engage financial advisers.  

Any person, or persons acting in concert, acquiring shares resulting in ownership of more than one-third of the voting rights in a listed company must either make an offer to acquire the remaining shares in the company (that is, a mandatory offer), or sell all of its shares above the one-third threshold within four weeks. The mandatory offer obligation is repeated if a shareholder later acquires shares representing more than 40% or 50% of the voting rights, other than where these thresholds are passed through a mandatory offer. When calculating actual ownership against the above thresholds, shares held or acquired by associated parties of a shareholder will also be counted. 

No mandatory offer obligation is applicable in cases of an acquisition in the form of: 

• inheritance or gift; 
• payment in connection with probate; or 
• payment in connection with the merger or demerger of a private limited company or public limited company. 

The takeover supervisory authority may in special cases impose a mandatory offer obligation in connection with acquisitions as mentioned in the bullet points above. The takeover supervisory authority may also make exceptions from the mandatory offer obligation in the case of acquisition by someone with whom the acquirer is consolidated.  

In addition, no mandatory offer obligation is applicable in cases where a financial institution acquires shares in a company in order to avert or limit loss on an exposure. 

The typical procedure for a public takeover offer in Norway is to initiate a structured process for acquisitions of all shares in the target company by way of a negotiated voluntary offer with support from the target company’s board. After completion of a voluntary offer, a mandatory offer obligation will likely be triggered due to the voluntary offer resulting in the offeror’s ownership being in excess of the one-third (1/3) voting rights threshold. 

The obligation to make a mandatory offer is triggered by the acquisition of shares representing more than one-third (1/3) of the voting rights in a target company listed on a Norwegian regulated market. The mandatory offer obligation is again triggered by acquisitions of shares representing more than 40 % and 50 % of the voting rights in the target company (repeat offer obligation). If a shareholder has crossed a mandatory offer threshold in such a way as not to trigger the mandatory offer obligation (e.g. by shareholders coming together to act in concert), a mandatory offer obligation is triggered by any subsequent acquisition that increases the shareholder’s proportion of voting rights. A shareholder who crosses the mandatory offer threshold will avoid the obligation to make a mandatory offer by selling the proportion of shares which exceed the threshold within four weeks of the date on which the mandatory offer obligation was triggered. The rules on voluntary offers apply to offers to purchase shares made to multiple recipients where the mandatory offer obligation comes into play if the offer is accepted by the recipients of the offer. 

If, according to the target company's articles of association, an acquisition is subject to the consent of the board of directors, the board will be deemed to have given its consent if the matter has not been decided within three weeks of the target company's receipt of notice of the acquisition. 

Where the offeror, after making a mandatory offer or voluntary offer, has acquired more than nine tenths of the voting shares of the target company and a corresponding proportion of the votes that can be cast at a general meeting, the offeror may decide to force the transfer of the remaining shares in accordance with the Norwegian Public Limited Companies Act section 4-25. The remaining shareholders are also entitled to demand that the offeror acquires their shares. 

There are no specific statutory rules on maintaining secrecy before a takeover offer is made. However, the offeror is almost always required to give a confidentiality undertaking before any specific discussions and/or agreement on the offer with the target company. 

Discussions relating to a possible takeover offer can and usually are considered to be inside information. There is no specific guidance on when discussions relating to a potential takeover offer become inside information. Key factors in the assessment are how likely it is that the discussions will result in an offer and how much the offer will affect the share price. Whether or not there is an agreement on an offer price will be an important factor. Another factor is how many conditions there are to the  launch of the takeover offer (for example, board approvals, financing, and due diligence) and how likely it is that those conditions will be satisfied. 

The parties must also comply with the disclosure obligations under the Market Abuse Regulation (“MAR”) and applicable listing rules.  

An offeror can mitigate the risk of discussions being considered inside information by limiting preliminary discussions to those with the target company's shareholders and, to the extent possible, avoiding very specific discussions on price before there is a general understanding of how the process will move forward. 

An offer must be made without undue delay and at the latest four weeks after the mandatory offer obligation was triggered. 

The offer must be for all the shares of the target company, including shares with restricted or no voting rights. Settlement under the terms of the offer must be in cash. An offer may nonetheless give the shareholders the right to accept an alternative to cash. Payment of the cash consideration must be guaranteed by a financial institution authorised to provide such guarantees in Norway. 

Settlement must take place as soon as possible and at the latest 14 days after expiry of the period of the offer. The offer shall state a time limit for shareholders to accept the offer (the period of the offer). The time limit may not be shorter than four weeks and not longer than six weeks. 

No conditions are permitted in mandatory offers. For this reason, most offers are structured as voluntary offers. Voluntary offers can be made subject to conditions and are only limited by the prohibition of discrimination against shareholders. Examples of conditions are (i) acceptance threshold (for instance 90% or 67%), (ii) acceptable financing, (iii) Norwegian Competition Authority approval, (iv) other approvals and waiver of change of control provisions and (v) other conditions, for instance due diligence. Conditions can be structured so that they can be waived or amended by the offeror. 

There are no legal requirements to have committed funding before announcing a voluntary offer. However, the offer document must describe how the offeror intends to finance the bid.  

In a mandatory offer, the consideration must be guaranteed by a financial institution authorised to provide such guarantees in Norway. The takeover supervisory authority may adopt further regulations concerning guarantees.  

One of the over-riding principles is that all shareholders must be treated equally.  

Under the Norwegian Securities Trading Act the offer price under a mandatory offer must be at least as high as the highest price paid by the offeror has made or agreed in the period six months prior to the point at which the mandatory offer obligation was triggered. In connection with the approval of the offer and the offer document in respect of a mandatory offer, the takeover supervisory authority will determine the offer price. In this connection, the offeror must provide all information relevant for the determination of the minimum offer price. 

All shareholders must be treated equally when making an offer. 

No.

The ranges of deal protection measures commonly used in the Norwegian market include: 

• A signed transaction agreement; 
• Lock-up agreements with principal shareholders (hard or soft undertakings); 
• Exclusivity or non-sollicitation provisions; 
• Matching rights; and 
• Break fees, inducements fees, termination fees and reimbursement of expenses.  

The takeover supervisory authority may also charge the offeror a fee to cover expenses in connection with its approval of an offer.  

Where a takeover offer is made under the rules on mandatory offers, the board of the target company shall make public a statement setting out its opinion on the offer and the reasons on which it is based, including its views on the effects of implementation of the offer on the target company's interests, and on the offeror's strategic plans for the target company and their likely repercussions on employment and the locations of the target company's places of business. Should the target board consider itself unable to make a recommendation to its shareholders on whether they should or should not accept the offer, it must explain why this is so. Information must also be given about the views, if any, of the target company board members and the executive management in their capacity as shareholders of the target company. If the board receives in good time a separate opinion from the employees on the effects of the offer on employment, that opinion must be appended to the statement. The statement shall be available at the latest one week before the period of the offer expires. 

Any purchase of target company shares by the potential offeror will be subject to MAR.  

Any purchases by a potential offeror will set a floor on the minimum consideration which may be offered. 

A potential offeror is generally restricted from selling any shares in the target company during the period of the offer. 

A potential offeror shall without delay make public the result of any offer made. 

A takeover offer is usually commenced by the solicitation by an offeror of irrevocable undertakings from key shareholders prior to the announcement of an offer, subject to the rules on the handling of inside information. A possible takeover offer will normally be considered inside information, and shareholders who receive the inside information are barred from trading in the target company’s shares until the information has been made public or the transaction has been abandoned. Furthermore, the solicitation cannot target too broad a group of shareholders or it will be regarded as a de facto voluntary offer. Such irrevocable undertakings are typically drafted as either "soft" irrevocables in which the selling shareholder commits to accept the offer if no higher competing offer is made or "hard" irrevocables in which the selling shareholder commits to accept the offer regardless of any subsequent higher competing offer. 

After a target company is informed that a takeover offer will be made and until the offer period has expired and the result is clear, the board of the target company is not permitted to resolve to issue shares or other financial instruments in the target company or any subsidiary of it, or undertake any merger or major investments or divestments, or to sell or purchase the target company’s shares. However, these restrictions do not apply to dispositions that are part of the normal course of business or where a general meeting of a target company’s shareholders has authorised the board to make such decisions in a takeover situation, but the extent of this flexibility must be considered in each individual case. 

Where an agreement on an acquisition triggering a mandatory offer is entered into, the person who is or will be subject to such obligation must, without delay, notify the takeover supervisory authority and the target company accordingly. The notification must state whether an offer will be made to buy the remaining shares in the target company, or if a sale will take place. The takeover supervisory authority will make the notification available to the public. 

If a person’s, entity’s or consolidated group’s proportion of shares and/or rights to shares in the target company reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of a company, the person, entity or group in question has an obligation to notify Oslo Børs immediately, which will publish the notification. There are also additional disclosure obligations for so-called primary insiders in a company (e.g. management, directors and shareholders represented on the board), regardless of the number of shares held. 

The offer period in a mandatory offer must be at least four weeks and no longer than six weeks. Settlement of the offer price must be completed as soon as possible and no longer than 14 days following the expiry of the offer period.  

A high-level timeline for a recommended voluntary offer with a competing offer made during the offer period can be: 

• The offeror approaches the potential target company; 
• Discussions between the offeror and the target company reach a form that is considered to constitute inside information and the Oslo Børs is informed about deferred disclosure of information relating to the potential offer;  
• The offeror and target company enter into a process agreement regulating confidentiality and due diligence; 
• The offeror carries out due diligence on the target company;. 
• The offeror and target company enter into a transaction agreement; 
• The offeror decides to make a voluntary offer and announces the offer; 
• The Oslo Børs approves the offeror's offer document.  The process of reviewing and approving the offer document and the offer takes approximately 12-14 business days; 
• The offer period begins;  
• A competing voluntary offer is launched; 
• Subject to the Oslo Børs' approval, any amendments to the offer terms are announced as a response to the competing offer together with any required extension of the offer period to ensure a minimum remaining offer period of two weeks; 
• An independent expert statement on the offer is announced no later than one week before the expiry of the offer period; 
• Subject to the Oslo Børs' approval, any extension of the offer period (not relating to amended offer terms) is announced, limited to a maximum offer period of ten weeks; 
• The results of the offer are announced following expiry of the offer period; 
• Any regulatory approval(s) are received;  
• Announcement of whether the conditions for closing the offer are fulfilled (or if they have been waived) is made; 
• The offer consideration is settled and the offeror becomes the owner of all the shares sold under the offer; 
• The offeror compulsorily purchases the shares of the remaining shareholders; 
• The target company is de-listed from the Oslo Børs. 

Anyone subject to a mandatory offer obligation must prepare an offer document which sets out the terms of the takeover offer and gives correct and complete information about matters of significance for evaluating the offer.  

The offer and the offer document must be approved by Oslo Børs, in its capacity as the takeover supervisory authority, before the offer is published. This applies to both voluntary offers and mandatory offers. 

In a voluntary offer, it is usual for offeror and target company to enter into a transaction agreement, including provisions on due diligence, timetable, conditions for making a bid, exclusivity, non-solicitation, matching rights, etc. 

There are no specific rules governing competitive offers.  

The offeror may make a new offer prior to the expiry of the period of the offer, provided the new offer is approved by the takeover supervisory authority. The target company's shareholders shall be entitled to choose between the offers. If a new offer is made, the period of the offer shall be extended so that at least two weeks remain to expiry. 

Where the offeror, after making a mandatory or voluntary offer pursuant to section 6-19, has acquired more than nine tenths of the voting shares of the target company and a corresponding proportion of the votes that can be cast at a general meeting of target company shareholders, the offeror may decide to force the transfer of the remaining shares. 

In the case of a failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, the takeover supervisory authority may force the acquirer to sell the shares exceeding the threshold by public auction. In addition, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise certain rights attaching to its shares in the target company, such as voting at a general meeting of shareholders, without the consent of a majority of the remaining shareholders. The shareholder may, however, receive dividends and exercise any pre-emption rights. 

A listed company may apply to the stock exchange for de-listing of the company’s shares if a general meeting of shareholders has approved the delisting by a two-thirds majority. Delisting of a target company is subject to the approval of Oslo Børs.