Mandatory offer: Difference between revisions
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In [[mergers and acquisitions]], a '''mandatory offer''' is an offer made by one company (the "acquiring company" or "bidder") to purchase all outstanding shares of another company (the "target"), in situations specified by [[securities law]]s and regulations or [[stock exchange]] rules. Typically, a mandatory offer must be made when the acquiring company exceeds a certain shareholding threshold in the target, or gains actual control of the target.<ref>{{cite book|url=https://books.google.com/books?id=gBTDtqdQwe4C&pg=PA126|first=Martin|last=Schultz|title=The Law of Business Organizations: A Concise Overview of German Corporate Law|publisher=Springer|year=2012|isbn=9783642177934|pages=123–126}}</ref> Most countries, with the notable exception of the United States, have such a requirement.<ref>{{cite book|url=https://books.google.com/books?id=smnIBAAAQBAJ&pg=PA810|first=Pierre|last=Vernimmen|first2=Pascal|last2=Quiry|first3=Maurizio|last3=Dallocchio|first4=Yann|last4=Le Fur|first5=Antonio |last5=Salvi|title=Corporate Finance: Theory and Practice|publisher=Wiley|year=2014|isbn=9781118849293|page=810}}</ref> The purpose of mandatory offer regulations is to protect [[minority shareholders]] in situations where control of the target is being transferred, and in particular to discourage acquisitions driven by [[private benefits of control]] by requiring that a premium be paid for such control.<ref>{{cite book|url=https://books.google.com/books?id=CrE1GTRdGkgC&pg=PA186|first=Gerard|last=Hertig|first2=Hideki|last2=Kanda|chapter=Issuers and Investor Protection|title=The Anatomy of Corporate Law: A Comparative and Functional Approach|publisher=Oxford University Press|year=2004|isbn=9780199260645|page=186}}</ref> |
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==By jurisdiction== |
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===Germany=== |
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In Germany, mandatory offers are required under the {{ill|Public Takeover Act|de|Wertpapiererwerbs- und Übernahmegesetz}}.<ref>{{harvnb|Schultz|2012|pp=124}}</ref> An acquiring company must make a mandatory offer upon achieving a "controlling interest" in the target, defined by § 35 of the act as a thirty percent direct or indirect shareholding. Upon reaching this threshold, the acquiring company must notify the target company and the [[Federal Financial Supervisory Authority]], and make an offer in the form specified by § 11 of the act and its regulations to acquire the remaining shares.<ref>{{harvnb|Schultz|2012|pp=126}}</ref> |
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===Hong Kong=== |
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In Hong Kong, mandatory offers are regulated under the Code on Takeovers and Mergers. |
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===Others=== |
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Sweden adopted a mandatory offer rule in 1999. France adopted a partial mandatory offer rule in 1989: it obligated the acquirer to offer to purchase two-thirds of the outstanding shares. In the 1990s, France's rule was expanded to require an offer to purchase 100% of outstanding shares.<ref>{{harvnb|Hertig|Kanda|2004|p=186}}</ref> |
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==References== |
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In mergers and acquisitions, a mandatory offer is an offer made by one company (the "acquiring company" or "bidder") to purchase all outstanding shares of another company (the "target"), in situations specified by securities laws and regulations or stock exchange rules. Typically, a mandatory offer must be made when the acquiring company exceeds a certain shareholding threshold in the target, or gains actual control of the target.[1] Most countries, with the notable exception of the United States, have such a requirement.[2] The purpose of mandatory offer regulations is to protect minority shareholders in situations where control of the target is being transferred, and in particular to discourage acquisitions driven by private benefits of control by requiring that a premium be paid for such control.[3]
By jurisdiction
Germany
In Germany, mandatory offers are required under the Public Takeover Act.[4] An acquiring company must make a mandatory offer upon achieving a "controlling interest" in the target, defined by § 35 of the act as a thirty percent direct or indirect shareholding. Upon reaching this threshold, the acquiring company must notify the target company and the Federal Financial Supervisory Authority, and make an offer in the form specified by § 11 of the act and its regulations to acquire the remaining shares.[5]
Hong Kong
In Hong Kong, mandatory offers are regulated under the Code on Takeovers and Mergers.
Others
Sweden adopted a mandatory offer rule in 1999. France adopted a partial mandatory offer rule in 1989: it obligated the acquirer to offer to purchase two-thirds of the outstanding shares. In the 1990s, France's rule was expanded to require an offer to purchase 100% of outstanding shares.[6]
References
- ^ Schultz, Martin (2012). The Law of Business Organizations: A Concise Overview of German Corporate Law. Springer. pp. 123–126. ISBN 9783642177934.
- ^ Vernimmen, Pierre; Quiry, Pascal; Dallocchio, Maurizio; Le Fur, Yann; Salvi, Antonio (2014). Corporate Finance: Theory and Practice. Wiley. p. 810. ISBN 9781118849293.
- ^ Hertig, Gerard; Kanda, Hideki (2004). "Issuers and Investor Protection". The Anatomy of Corporate Law: A Comparative and Functional Approach. Oxford University Press. p. 186. ISBN 9780199260645.
- ^ Schultz 2012, pp. 124
- ^ Schultz 2012, pp. 126
- ^ Hertig & Kanda 2004, p. 186