What process applies in the case of public offers?
And what is the AFM's role in this process?
The following is a short summary of the most important rules relating to the publications that accompany an offer process.
- Announcement of the public offer
The offer process usually starts with an announcement of an intended public offer. Generally, this announcement is made by means of a press release in which it is stated that parties have reached a 'conditional agreement', in other words: takeover talks have reached a point at which the parties reached an agreement, whether conditional or unconditional, on the public offer.
Another way for the offer process to start – for example in the situation of a 'hostile offer' (see below) – is that the offeror is responsible for the publication of 'concrete information' (not necessarily in the form of a press release). 'Concrete information' is deemed to have been made public, if, as a minimum, the offeror mentions the name of the target company in combination with an intended price or a concretely defined envisioned timetable for conducting the intended offer.
Finally, a third possibility is that a mandatory offer is announced (see below). The above does not prejudice the fact that both the offeror and the target company have the obligation to publish price sensitive information forthwith. This applies, for example, in a situation in which information on preparations for a public offer have been 'leaked'.
- Hostile offer
If the target company is not interested in a takeover by the offeror but the latter still wants to make an offer, the offeror will have to adopt a 'hostile' approach. The offer rules do not oblige the offeror to inform the target company of its intention prior to the public announcement of the intended offer. The intended (hostile) offer is deemed to be announced if the offeror has made public 'concrete information' regarding the intended offer. As stated above, an offer can already deemed to be announced if the offeror is responsible for the publication of the name of the target company in combination with an intended price or a concretely defined timetable for conducting the intended offer.
- Mandatory offer
Each (legal) person, whether alone or acting in concert, who can exercise at least 30% of the voting rights in the general meeting of shareholders of the target company, is required to make an offer for obtaining all remaining shares. If the 30%-holder decides not to make an offer, the mandatory offer can be enforced by the Enterprise Chamber of the Amsterdam Court of Appeal. The Enterprise Chamber will only judge that the 30%-holder is required to make a mandatory offer if this is requested by the shareholders or by the target company. The AFM is not authorised to file for such a request.
A mandatory offer has to be made against a 'fair price'. As a rule, the 'fair price' is regarded to be the highest price paid for the same shares by the offeror in the year prior to the announcement of the mandatory offer. In deviation therefrom, the Enterprise Chamber may, at request, determine the 'fair price'. The judgement whether a mandatory offer has to be made and the possible adjustment of the 'fair price', are powers of the Enterprise Chamber, not of the AFM.
A mandatory offer is announced by means of the offeror launching a press release about the offer or the judgement of the Enterprise Chamber regarding the obligation for making a public offer becoming final and conclusive (a third possibility is if the target company publishes a press release in which it is stated that a mandatory offer is required by the regulation of another member state). As soon as a mandatory offer is announced, the offer is subject to the supervision on public offers by the AFM and the further described offering process – apart from small exceptions – is applicable.
- 4-weeks press release
Within four weeks after the announcement of a public offer, as described above, a press release has to be published by the offeror in which it has to state; i) that a request for approval of the offer memorandum will be filed with the AFM within a period, to be determined and specified by the offeror, of maximum 12 weeks after the announcement of the intended offer (in practice this regularly takes the form of a press release in which the parties provide an 'update' to the effect that the preparation of the offer is progressing), or (ii) that the offeror has decided not to make an offer. Obviously, the offeror lacks the possibility mentioned under ii), if it concerns a mandatory offer.
- Certainty of funds- press release
An offeror has to make sure that, at the latest on the moment of filing the request for approval of the offer memorandum with the AFM, it guarantees the cash funding of the bid price or has taken all reasonable measures to provide any other form of compensation for paying its offer ('certain funds'). As soon as the offeror has 'certain funds' at its disposal, the offeror has to make a public announcement.
- Offer memorandum
Within the period announced by the offeror in the 4-weeks press release, the offeror has to file a request for approval of the offer memorandum with the AFM. The AFM will subsequently decide upon this request. After the decision for approval is reported to the offeror, the offeror makes a bid within six working days, by making the offer memorandum publicly available (this means; the offeror publishes the offer memorandum for example on the website of the target company or on its own website and publicly announces where the offer memorandum is obtainable free of charge). The offeror publishes a press release about the general availability of the offer memorandum, specifying where the offer memorandum is available.
Within the above mentioned six working days, it is also possible that the offeror publicly announces that it will not make a public offer.
- Determination of the position of the target company and the general meeting of shareholders
Within at least six working days prior to the end of the tender period, the target company is obliged to have a general meeting of shareholders to inform its shareholders about the offer. At least four days prior to the general meeting of shareholders, the target company has to publicly announce - with reasons – whether or not it supports the offer ('determiniation of the position'). In the event of a friendly offer, this position statement will generally be published at the same time as the offer memorandum. Prior to its publication, the determination of the position is, contrary to the offer memorandum, not subject to approval by the AFM.
- Tender period
The tender period starts no earlier than the first working day following the publication of the offer document. The applicable legislation and regulations prescribe different minimum registration periods for each type of offer. For example, a minimum period of four weeks applies to a (voluntary or mandatory) offer on all shares of the target company. A minimum period of two weeks applies for the so-called partial offer or tender offer. For each type of offer a maximum tender period of ten weeks applies. The tender period may be extended once if not all conditions of the offer have been fulfilled yet. An extension has to be publicly announced at the latest on the third working day after the end of the original tender period. If the tender period is extended, shareholders have the possibility to recall their tendered shares.
In the specific situation in which a competitive offer (see below) is made, the first offeror has the possibility to extend the tender period once during the tender period until, for example, the closing date of the tender period of the competitive bid.
The offeror may raise the offered price once during the – extended or not extended - tender period. He has to make a public announcement to that effect.
- Competitive offer
A possible competitive offeror can, in principle, announce an alternative offer at any time during an existing offer process involving the initial offeror. In practice, this competitive offer is often a hostile offer because the target company is usually bound to its recommendation of the initial offer (if such is a friendly offer). Incidentally, the offer price published in an offer document is considered to be the definitive price. During the offer period, this price may be raised once (see above).
- Unconditional offer
The offeror has to announce whether the offer is going to be declared unconditional no later than on the third working day after the end of the (possibly extended) tender period.
- Post- tender period
At the latest within three working days after the offer has been declared unconditional, the offeror has the possibility to publicly announce that it will initiate a so-called post-tender period for no more than two weeks. During the post-tender period, shareholders which had not yet tendered their shares under the offer, may still tender their shares against the same price and under the same conditions as [which] were applicable for the unconditional offer. In practice, a post-tender period is often already announced in the press release in which the offer is declared unconditional.