Principal changes to Dutch rules on takeover bids

The Dutch rules on takeover bids, including the Public Takeover Bids (Financial Supervision Act) Decree [Besluit openbare biedingen, hereinafter “Bob”], will be changed with effect from 1 July 2012. The new rules will apply to public bids announced on or after 1 July 2012. Bids announced before that date will be subject to the current rules.

The Netherlands Authority for the Financial Markets (the AFM) is issuing this press release in order to give a brief explanation of five principal changes. The AFM will shortly publish a detailed newsletter on the new takeover bid rules in which other changes will be explained.

The “Put up or shut up” rule

One of the most important changes concerns the introduction of the so-called “put up or shut up” rule (Section 2a Bob new). On the basis of this rule, a target company can request the AFM to oblige a potential bidder to clearly state its intentions. The potential bidder must then either announce a public bid, or publicly state that it will not announce a public bid. If the potential bidder states that it will not announce a public bid, it will not be able to announce a new public bid for the same target company for a period of six months.

Announcement of a “hostile bid”

The Section of the Decree dealing with when a so-called “hostile bid” is announced (Section 5:2 Bob), has also been changed. The statutory terms applying to the bidding process commence when a bid is announced. As is the case under the current takeover bid rules, a bid is announced when a bidder publicly provides concrete information regarding its proposed public bid. The Section has been amended to include a possibility for the target company to announce immediately after the bidder’s announcement that it is consulting with the bidder, in which case the bidder’s statement no longer qualifies as an announcement of a public bid. Such an announcement by the target company will thus prevent the commencement of the statutory terms applying to the bidding process.

Increasing the bid price

The provision that the bid price may only be increased on one occasion has also been changed (Section 15:4 Bob new). The new rules allow a bidder to raise the bid price several times during the offer period. If the raising of the bid price means that the composition of the price offered changes, the bidder must publish a document. This will be the case if the bid price is initially in cash and after the increase it includes securities as well. The document must contain all the information important to shareholders in order to form a well-founded opinion regarding the increase in the offered price (Section 15a Bob new). If there are less than seven days of the offer period remaining at the time the bid price is raised, the offer period shall be extended to seven days (by law).

Announcement of transactions in a regulated market

Another important change concerns the announcement of transactions and agreements during a takeover bid. A bidder and a target company are, also under the current takeover bid rules, obliged to make a public announcement of all transactions and agreements regarding the securities to which the public bid relates. This obligation applies from the time of the announcement of the bid until the time the bid is declared to be unconditional. For reasons of transparency, transactions effected in a regulated market are no longer exempt from this obligation (Sections 5:4 Bob new and 13:1 Bob new). Under the new takeover bid rules, a public announcement must also be made with regard to transactions in a regulated market.

Offer period

Lastly, the minimum offer period has been changed. The minimum offer period will now be eight weeks rather than four weeks, as previously was the case (Section 14:3 Bob new).

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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