Mergers and Acquisitions 2015

ICLG
The International Comparative Legal Guide to:
Mergers and Acquisitions 2015
9th Edition
A practical cross-border insight into mergers and acquisitions
Published by Global Legal Group, with contributions from:
Aabø-Evensen & Co Advokatfirma
Advokatfirman Vinge KB
A.G. EROTOCRITOU LLC
Albuquerque & Associados
Ali Budiardjo, Nugroho, Reksodiputro
Astrea
Bär & Karrer
Bardek, Lisac, Mušec, Skoko in cooperation with
CMS Reich-Rohrwig Hainz
BBA
Bech-Bruun
Bennett Jones LLP
Bentsi-Enchill, Letsa & Ankomah
CMS Reich-Rohrwig Hainz
Collin Maréchal (CM Law)
Debarliev, Dameski and Kelesoska Attorneys at Law
Demarest Advogados
Dillon Eustace
Dittmar & Indrenius
Dominas & Partners
El-Borai & Partners
Ferraiuoli LLC
Gide Loyrette Nouel A.A.R.P.I.
Gjika & Associates Attorneys at Law
Grandall Law Firm
Guevara & Gutierrez – Servicios Legales
Hajji & Associés
Herbert Smith Freehills LLP
Houthoff Buruma
King & Wood Mallesons
Lendvai Partners
Maples and Calder
MJM Limited
Moravčević Vojnović i Partneri in cooperation with Schoenherr
Nader, Hayaux & Goebel
Nishimura & Asahi
Pachiu & Associates
Pen & Paper
Peña Mancero Abogados
Roca Junyent
Scemla Loizon Veverka & de Fontmichel (SLVF)
Schoenherr
Severgnini, Robiola, Grinberg & Tombeur
SIGNUM Law Firm
Skadden, Arps, Slate, Meagher & Flom LLP
Slaughter and May
Sysouev, Bondar, Khrapoutski
SZA Schilling, Zutt & Anschütz
Türkoğlu & Çelepçi in cooperation with Schoenherr
Udo Udoma & Belo-Osagie
Wachtell, Lipton, Rosen & Katz
WBW Weremczuk Bobel & Partners Attorneys at Law
The International Comparative Legal Guide to: Mergers & Acquisitions 2015
General Chapters:
Contributing Editor
Michael Hatchard, Skadden,
Arps, Slate, Meagher & Flom
(UK) LLP
Head of Business
Development
Dror Levy
1
2014 – The Market Strikes Back – Michael Hatchard & Scott Hopkins, Skadden, Arps, Slate, Meagher & Flom (UK) LLP
1
2
M&A Trends and Outlook for 2015 – Scott V. Simpson & Lorenzo Corte, Skadden, Arps, Slate, Meagher & Flom (UK) LLP
5
3
M&A in Africa – Gavin Davies & Hubert Segain, Herbert Smith Freehills LLP
4
Activist-Strategic Buyer Tag-Teams: A New Hostile Takeover Template? – Adam O. Emmerich & Trevor S. Norwitz, Wachtell, Lipton, Rosen & Katz
14
8
Country Question and Answer Chapters:
5
Albania
Gjika & Associates Attorneys at Law: Gjergji Gjika & Evis Jani
Sales Director
Florjan Osmani
6
Argentina
Severgnini, Robiola, Grinberg & Tombeur: Carlos María Tombeur & Matías Grinberg
27
Commercial Director
Antony Dine
7
Austria
Schoenherr: Christian Herbst & Sascha Hödl
33
8
Belarus
Sysouev, Bondar, Khrapoutski: Alexander Bondar & Elena Selivanova
43
Account Directors
Oliver Smith, Rory Smith
9
Belgium
Astrea: Steven De Schrijver & Jeroen Mues
50
10 Bermuda
MJM Limited: Peter Martin & Brian Holdipp 59
Senior Account Manager
Maria Lopez
11 Bolivia
Guevara & Gutierrez – Servicios Legales: Jorge Luis Inchauste
66
Sales Support Manager
Toni Hayward
12 Brazil
Demarest Advogados: Gabriel Ricardo Kuznietz & Thiago Giantomassi
71
13 BVI
Maples and Calder: Richard May and Matthew Gilbert
80
14 Bulgaria
Schoenherr: Ilko Stoyanov & Tsvetan Krumov
86
15 Canada
Bennett Jones LLP: Jeffrey Kerbel & David Spencer
94
16 Cayman Islands
Maples and Calder: Nick Evans and Suzanne Correy
100
17 China
Grandall Law Firm: Will Fung & Yu Xie
106
18 Colombia
Peña Mancero Abogados: Gabriela Mancero
111
19 Croatia
Bardek, Lisac, Mušec, Skoko in cooperation with CMS Reich-Rohrwig Hainz: Hrvoje Bardek
118
20 Cyprus
A.G. EROTOCRITOU LLC: Alexis Erotocritou 125
21 Czech Republic
Schoenherr: Martin Kubánek & Vladimír Čížek
132
22 Denmark
Bech-Bruun: Steen Jensen & Regina M. Andersen
142
23 Egypt
El-Borai & Partners: Dr. Ahmed El Borai & Dr. Ramy El Borai
148
24 Finland
Dittmar & Indrenius: Anders Carlberg & Jan Ollila
153
25 France
Scemla Loizon Veverka & de Fontmichel (SLVF): Fabrice Veverka & Alexandre Piette
160
Senior Editor
Suzie Levy
Sub Editor
Amy Hirst
Group Consulting Editor
Alan Falach
Group Publisher
Richard Firth
Published by
Global Legal Group Ltd.
59 Tanner Street
London SE1 3PL, UK
Tel: +44 20 7367 0720
Fax: +44 20 7407 5255
Email: info@glgroup.co.uk
URL: www.glgroup.co.uk
GLG Cover Design
F&F Studio Design
20
26 Germany
SZA Schilling, Zutt & Anschütz: Dr. Marc Löbbe & Dr. Stephan Harbarth
GLG Cover Image Source
iStockphoto
27 Ghana
Bentsi-Enchill, Letsa & Ankomah: Seth Asante & Frank Nimako Akowuah 173
28 Hong Kong
King & Wood Mallesons: Joshua Cole
181
Printed by
Ashford Colour Press Ltd.
March 2015
29 Hungary
Lendvai Partners: András Lendvai & Dr. Gergely Horváth
187
30 Iceland
BBA: Baldvin Björn Haraldsson & Höskuldur Eiríksson
193
31 Indonesia
Ali Budiardjo, Nugroho, Reksodiputro: Theodoor Bakker & Herry N. Kurniawan
199
32 Ireland
Dillon Eustace: Lorcan Tiernan & Adrian Benson 206
33 Japan
Nishimura & Asahi: Masakazu Iwakura & Tomohiro Takagi
213
34 Kazakhstan
SIGNUM Law Firm: Liza Zhumakhmetova & Gaukhar Kudaibergenova
222
35 Lithuania
Dominas & Partners: Šarūnas Basijokas & Karolis Racevičius
227
36 Luxembourg
Collin Maréchal (CM Law): Raphael Collin & Flavien Carbone
233
37 Macedonia
Debarliev, Dameski and Kelesoska Attorneys at Law: Emilija Kelesoska Sholjakovska & Elena Nikodinovska
241
38 Mexico
Nader, Hayaux & Goebel: Yves Hayaux-du-Tilly Laborde & Eduardo Villanueva Ortíz
248
39 Montenegro
Moravčević Vojnović i Partneri in cooperation with Schoenherr: Slaven Moravčević & Miloš Laković
254
40 Morocco
Hajji & Associés: Amin Hajji & Houda Boudlali
261
41 Netherlands
Houthoff Buruma: Alexander J. Kaarls & Peter B.J. Werdmuller
266
Copyright © 2015
Global Legal Group Ltd.
All rights reserved
No photocopying
ISBN 978-1-910083-35-2
ISSN 1752-3362
Strategic Partners
166
Continued Overleaf
Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720
Disclaimer
This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.
Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.
This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified
professional when dealing with specific situations.
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The International Comparative Legal Guide to: Mergers & Acquisitions 2015
Country Question and Answer Chapters:
42 Nigeria
Udo Udoma & Belo-Osagie: Yinka Edu & Ekundayo Onajobi
43 Norway
Aabø-Evensen & Co Advokatfirma: Ole Kristian Aabø-Evensen & Harald Blaauw
281
44 Poland
WBW Weremczuk Bobel & Partners Attorneys at Law: Lukasz Bobel & Nastazja Lisek
296
45 Portugal
Albuquerque & Associados: António Mendonça Raimundo
303
46 Puerto Rico
Ferraiuoli LLC: Fernando J. Rovira-Rullán & Yarot T. Lafontaine-Torres
309
47 Romania
Pachiu & Associates: Ioana Iovanesc & Alexandru Lefter
315
48 Russia
Pen & Paper: Stanislav Danilov
323
49 Serbia
Moravčević Vojnović i Partneri in cooperation with Schoenherr: Matija Vojnović & Luka Lopičić
329
50 Slovakia
Schoenherr: Stanislav Kovár & Monika Kormošová
336
51 Slovenia
Schoenherr: Vid Kobe & Marko Prušnik
343
52 Spain
Roca Junyent: Natàlia Martí Picó & Xavier Costa Arnau
352
53 Sweden
Advokatfirman Vinge KB: Erik Sjöman & Christian Lindhé
362
54 Switzerland
Bär & Karrer: Dr. Mariel Hoch & Dr. Christoph Neeracher
368
55 Turkey
Türkoğlu & Çelepçi in cooperation with Schoenherr: Levent Çelepçi & Burcu Özdamar
376
56 Ukraine
CMS Reich-Rohrwig Hainz: Maria Orlyk & Kateryna Soroka
382
57 United Kingdom
Slaughter and May: William Underhill
387
58 USA
Skadden, Arps, Slate, Meagher & Flom LLP: Ann Beth Stebbins & Thomas H. Kennedy
394
59 Vietnam
Gide Loyrette Nouel A.A.R.P.I.: Nasir PKM Abdul & Long Huynh
EDITORIAL
Welcome to the ninth edition of The International Comparative Legal Guide to:
Mergers & Acquisitions.
This guide provides corporate counsel and international practitioners with a
comprehensive worldwide legal analysis of the laws and regulations of mergers and
acquisitions.
It is divided into two main sections:
Four general chapters. These are designed to provide readers with an overview of
key issues affecting mergers and acquisitions, particularly from the perspective of a
multi-jurisdictional transaction.
Country question and answer chapters. These provide a broad overview of common
issues in mergers and acquisitions in 55 jurisdictions.
All chapters are written by leading mergers and acquisitions lawyers and industry
specialists and we are extremely grateful for their excellent contributions.
Special thanks are reserved for the contributing editor Michael Hatchard of Skadden,
Arps, Slate, Meagher & Flom (UK) LLP for his invaluable assistance.
Global Legal Group hopes that you find this guide practical and interesting.
The International Comparative Legal Guide series is also available online at
www.iclg.co.uk.
Alan Falach LL.M.
Group Consulting Editor
Global Legal Group
Alan.Falach@glgroup.co.uk
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Chapter 30
Iceland
Baldvin Björn Haraldsson
BBA
1 Relevant Authorities and Legislation
1.1 What regulates M&A?
There are various laws and regulations which have an impact on
M&A transactions in general, such as the Act on Public Limited
Liability Companies (the “Companies Act”), the Act on Private
Limited Liability Companies, the Contracts Act, the Act on Sales of
Goods, the Income Tax Act, the Competition Act, etc. As regards
companies listed on the Icelandic regulated market, NASDAQ
OMX Iceland, there are specific rules in the Act on Securities
Transactions (the “STA”).
It should be noted that Iceland is a member of the European Economic
Area (EEA) and the European Free Trade Association (EFTA) and
has implemented the relevant EU regulations and directives in the
field of M&A. These directives have been implemented in the
STA and therefore the Icelandic rules governing takeovers of listed
companies should be substantially in line with applicable rules in
other EEA states.
Höskuldur Eiríksson
it is not possible to describe the capital controls in any detail here,
it should be noted that New Investments are unrestricted. They can
be described as an investment made in Iceland by a non-resident
whereby the investor transfers foreign currency to Iceland, converts
the foreign currency into ISK with a domestic financial undertaking
and makes the investment in ISK. The capital controls stipulate that
investments in equity denominated in ISK has to be made with ISK.
Normal dividends from an Icelandic company can be converted into
foreign currency and transferred abroad and if an investor wants
to divest, it can sell its shares for ISK and have the sales proceeds
converted into foreign currency and transferred abroad after having
obtained a confirmation from the Central Bank of Iceland that the
sales proceeds are in fact related to the sale of a New Investment.
In addition, under the Companies Act, the CEO and at least half
the members of the board must be Icelandic residents or citizens
or residents of any country within the EEA or the Faroe Islands.
The Minister of Industries and Innovation has the authority to grant
exemptions from the residency requirements and under the current
exemptions, the same applies to residents of OECD and EFTA states.
1.4 Are there any special sector-related rules?
1.2 Are there different rules for different types of
company?
Generally, there is no significant difference in applicable rules based
on the type of company involved, although the corporate form of the
target will obviously have an impact on how a transaction must be
completed.
However, takeovers of public limited liability companies whose
shares have been admitted to trading on a regulated market are
subject to certain rules and regulations, mainly contained in the
STA, which do not apply to the acquisition of unlisted companies.
These rules are to some extent described below.
1.3 Are there special rules for foreign buyers?
For most sectors there are no special rules applicable to foreign
buyers. There are, however, some restrictions concerning certain
vital industries such as fisheries, energy and air transport.
Notwithstanding the above, it should be noted that following the
collapse of the Icelandic banking system in October 2008, capital
controls were implemented in Iceland which restrict cross-border
movement of capital.
Foreign investment under the capital controls is principally done
pursuant to what is commonly called New Investment. Although
ICLG TO: MERGERS & ACQUISITIONS 2015
In addition to those mentioned under question 1.3 above, there are
special rules regarding certain sectors that need to be taken into
account, for example regarding acquisition of financial or insurance
undertakings. Those sectors fall under the supervision of the FME
and its consent is required for holding a qualified holding. Qualified
holding means controlling, directly or indirectly, 10% or more of
issued shares or votes in an undertaking.
1.5 What are the principal sources of liability?
Breaches of the STA can result in administrative fines, penalties or
imprisonment for up to six years depending on the severity of the
breach. Such breaches can include misinformation in a prospectus,
failure to disclose insider information, failure to disclose if
shareholdings reach, exceed or fall below the thresholds discussed
under question 5.3, insider dealing, market manipulation, etc.
2 Mechanics of Acquisition
2.1 What alternative means of acquisition are there?
The takeover section of the STA governs takeovers of listed
companies. There are two types of takeover offers: mandatory
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BBA
Iceland
offers; and voluntary offers. Takeover offers made pursuant to the
STA are required to be made towards all holders of equity securities
of the target.
Voluntary offers are defined as offers made by an offeror, who
is not obligated to make a mandatory offer, and is made to all
shareholders, but does not necessarily relate to all the shares in the
target. Voluntary offers are more flexible in terms of price and can
be subject to conditions.
Mandatory offers are required to be made when a party has gained
direct or indirect control over the target whether individually or
acting in concert with other shareholders. A party is considered to
be in “Control” if he and the parties he is acting in concert with
control 30% or more of votes directly or on the basis of any sort
of understanding with other shareholders which gives the right to
control at least 30% of the votes or if he has gained the right to
appoint or dismiss the majority of the board of the company.
Stakebuilding can also be used either prior to or during the offer
process.
Statutory mergers can also be used as an acquisition tool. Statutory
mergers are principally governed by the provisions of the Companies
Act. A statutory merger requires the approval of at least 2/3 of
votes and shares represented at a shareholders meeting provided the
Article of Association do not require a higher acceptance level.
2.2 What advisers do the parties need?
The principal advisors in M&A transactions are financial and legal
advisors in addition to tax advisors and auditors.
2.3 How long does it take?
As regards unlisted companies, the process can be completed within
the timeframe agreed between the parties, provided that in some
instances where regulatory approvals are required, such as from the
Competition Authority, the process may be delayed.
As regards listed companies, once a requirement to make a
mandatory takeover offer has been triggered, the offer must be made
within four weeks from the time an offeror knew or should have
known that the requirement arose. An offeror must announce an
offer to the regulated market without delay once a decision on the
offer has been made.
The STA stipulates that an offer must be valid for a term of at least
four weeks but not longer than 10 weeks. The offer, if successful,
must be settled within five business days after the expiry of the
validity term.
The FME is authorised to extend the validity term of an offer if there
are valid reasons for such an extension. Additionally, if a competing
offer is made, the term of the original offer is extended to match
that of the competing bid if the original offer is neither revoked nor
amended.
As regards mergers, once the merger documents have been drafted
and published, a shareholders’ meeting shall be convened no sooner
than four weeks thereafter but no later than four months thereafter.
The merger documents are required to be made available to the
shareholders no later than four weeks prior to the shareholders’
meeting in which the merger is to be decided.
2.4 What are the main hurdles?
Iceland
upon a certain level being achieved, most commonly at least 2/3
or 90%. Those levels provide the offeror with a level of control
to effect a statutory merger or a squeeze-out of the remaining
shareholders.
If the target operates in a sector where governmental consents are
required obtaining such consent can be a lengthy process. Examples
of such consents are the consent of the FME regarding the authority
to hold a qualified holding in a financial undertaking or the consent
of the competition authorities.
These same hurdles apply to a statutory merger, i.e. achieving the
requisite acceptance level and/or governmental consents for the
merger.
2.5 How much flexibility is there over deal terms and
price?
In mandatory takeover offers there is considerably less flexibility on
price than in voluntary offers. The offer price cannot be less than
the highest price paid for shares in the target during the six months
prior to the offer being made. The offer price shall, however, at
a minimum be the closing price on the last trade date before the
obligation to make a takeover offer arose or the last trade date before
the takeover offer was announced.
Offerors making voluntary offers can elect to adhere to this condition
and if they elect to do so the offeror can avoid the requirement of
making a mandatory offer following the voluntary one if he gains
Control as a result of a voluntary offer.
2.6 What differences are there between offering cash and
other consideration?
Under the STA offerors can offer cash or securities with voting
rights attached or a combination of the two as consideration for the
shares in the target.
If the shares that are offered as consideration have not been admitted
to trading on a regulated market then cash must be offered as an
alternative consideration to the shares. The same applies if the
offeror or parties acting in concert with him have acquired at least
5% of shares in the target with cash (i) during the six months prior to
the obligation to make a mandatory offer is triggered, or (ii) during
the validity term of the offer. This provision of the STA is elective
in voluntary offers but not in mandatory offers. Electing to fulfil
the condition means that the offeror can avoid making a mandatory
offer following the voluntary one.
If cash is offered as consideration then the offeror must obtain a
guarantee for the payment from a credit institution authorised to
operate within the EEA. The FME is authorised to accept guarantees
from credit institutions outside the EEA.
Offering consideration in the form of securities will require the
publication of a prospectus or a document that is, in the estimation
of the FME, equivalent to a prospectus. The prospectus must
contain enough information on the issuer and the securities to enable
the shareholders of the target to assess the issuer’s assets, liabilities,
financial standing and financial results and the rights attached to the
securities offered, among other things. The prospectus is required
to be submitted to the FME for approval.
It must be noted that under the capital controls Icelandic residents
cannot receive securities issued in foreign currency. Additionally,
as discussed under question 1.3, the purchase price for shares
denominated in ISK is required to be rendered in ISK.
The main hurdle in a takeover scenario is achieving the desired
acceptance level. In a voluntary offer the offer can be conditional
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© Published and reproduced with kind permission by Global Legal Group Ltd, London
BBA
In takeover offers the same terms must be offered to all shareholders
holding the same class of shares.
If a higher price than the one offered in the takeover offer is paid
during the validity term of an offer, the takeover offer must be
amended and that higher price becomes the offer price. If an offeror
acquires shares during the three months following the expiry of the
takeover offer at a higher price, the offeror is obligated to pay the
shareholders who accepted the takeover offer the difference.
2.8 Are there obligations to purchase other classes of
target securities?
In a mandatory takeover offer situation, an offeror is required to
make an offer to all shareholders offering to buy all their shares.
A party making a voluntary offer can limit his offer to a part of the
shares, provided that the offer would not result in a mandatory offer
being triggered. There is, however, no obligation to make an offer
for other securities issued by the target.
2.9 Are there any limits on agreeing terms with
employees?
As discussed under question 2.10, employees play a limited role in
a takeover process and their consent is not required.
Generally there are no restrictions on severance packages but there
are restrictions in certain sectors. Consideration may also need to be
given to Icelandic TUPE legislation.
Additionally, any agreement on any sort of compensation or
remuneration offered to the board or management of the target has
to be disclosed in the offer document.
2.10 What role do employees, pension trustees and other
stakeholders play?
They have a very limited role to play. The targets employees are,
however, to be informed about the offer. Further, if the board receives
the opinion of the employee’s representative on the takeover offer,
prior to the board publishing its opinion the employee opinion is to
be disclosed.
In addition the offer document must include a forward looking
statement by the offeror which includes the possible effects of the
takeover on employment with the target.
2.11 What documentation is needed?
There are several key documents necessary in the takeover process
of a listed company. These are (i) the notification to the regulated
market of the offeror’s decision to make an offer, (ii) the publication
of that notice, (iii) the offer documents, (iv) the opinion of the board
of the target, and (v) the publication, by the offeror, of the results
of the offer.
If the consideration is cash, the offeror must provide a letter of
guarantee from a credit institution operating within the EEA.
The board is required to issue a memorandum on the merger plan
and a fairness opinion must be obtained from independent experts.
2.12 Are there any special disclosure requirements?
Once the offeror has made the decision to make an offer for a listed
company the regulated market must be notified of that decision
without delay. The regulated market publishes that notice.
The offer document, which is required to be published, must contain
inter alia information on the offeror (name, registered address and
corporate form), the percentage of votes controlled by the offeror
and related parties whether directly or indirectly, the offer price and
how that is established, if the consideration is not cash the principles
applied in the valuation of the consideration must be provided
as well as information on how the offer is financed and forward
looking statements by the offeror.
In voluntary offers the offer document must also contain the
conditions, if any, and the maximum and minimum percentage of
shares the offeror intends to acquire.
If the consideration offered requires the issuance of a prospectus,
there are significant disclosure requirements for such.
2.13 What are the key costs?
In addition to any applicable fees related to financing a takeover,
advisory costs are the key costs.
2.14 What consents are needed?
The offer document must be submitted to the FME for approval, as
well as the prospectus, if applicable.
A takeover or merger could be required to be notified to the relevant
competition authority.
There could also be sector-specific consents required.
2.15 What levels of approval or acceptance are needed?
There are no mandatory approval or acceptance levels but voluntary
offers can be subject to the condition that a certain level is reached,
as discussed under question 7.1.
Under the Companies Act a statutory merger requires the approval
of at least 2/3 of votes cast and shares represented at a shareholders’
meeting unless the Articles of Association require a higher
acceptance level.
2.16 When does cash consideration need to be committed
and available?
Cash offers must be guaranteed, as discussed under question 2.6, but
there is no legal requirement to have a commitment or make cash
available prior to the settlement of a successful offer. Settlement is
discussed under question 2.3.
3 Friendly or Hostile
Further if the consideration is in the form of securities the publication
of a prospectus is required.
3.1 Is there a choice?
In a statutory merger the key document required is a merger plan.
The merger plan is to some extent comparable to the offer document.
The STA does not differentiate between friendly or hostile offers.
The principal difference lies in access to information as the board of
ICLG TO: MERGERS & ACQUISITIONS 2015
Iceland
2.7 Do the same terms have to be offered to all
shareholders?
Iceland
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BBA
the target is less likely to offer any access to non-public information
if the offer is hostile.
Iceland
3.2 Are there rules about an approach to the target?
There are no rules that govern how the target is approached. It must
however be noted that once a board has information that an offer is
imminent it cannot take certain measures which could be regarded
as frustration measures without the prior approval of a shareholders’
meeting. This is further discussed under question 6.3.
3.3
How relevant is the target board?
The board has a duty of neutrality and must act in the best interests
of the company and the shareholders. The board of the target is
obligated to issue and publish its opinion on the terms and conditions
of the offer, the board’s estimation on the effects of the offer on the
target, the targets employees and possible relocation of the targets
operation.
While the board is obligated to give the shareholders an opportunity
to make a decision in relation to an offer, if the board is supportive
of an offer it increases the chances that the shareholders regard the
offer in the same way.
Additionally it falls under the authority of the board to grant access
to information in relation to the target in a due diligence exercise.
Having the support of the board of the target can mean that an offer
is made on the basis of better information than if the offer is hostile.
3.4
Does the choice affect process?
The process surrounding a takeover offer, once the offer has been
announced, is no different whether the offer is friendly or hostile,
but access to information may vary.
4Information
4.1
What information is available to a buyer?
What information will be available will depend on whether the
board decides to grant the offeror access to non-public information.
The board can also decide to limit access and allow a limited
due diligence to be conducted. Listed companies have certain
information disclosure requirements such as publishing financial
results, which means such information is publicly available.
4.2
Is negotiation confidential and is access restricted?
Negotiations can be confidential but if rumours of a potential
takeover spread then the target may be required to disclose the
negotiations. Under the same circumstances the FME is authorised
to require the potential offeror to publicly disclose whether the
offeror intends to make an offer or not.
4.3
When is an announcement required and what will
become public?
Once the decision to make an offer has been made the offeror is
required to notify the regulated market without delay. That notice is
then published by the regulated market.
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Iceland
4.4
What if the information is wrong or changes?
In a takeover offer scenario of a listed company there are little
means of recourse available against the shareholders as they make
no representations or warranties.
5Stakebuilding
5.1
Can shares be bought outside the offer process?
Shares can be purchased outside the offer process. However that
can entail that the terms and price of the offer have to be amended.
Stakebuilding can also trigger disclosure requirements, discussed
under question 5.3.
Gaining control will trigger an obligation to make a mandatory
takeover offer. As they are considerably less flexible concerning the
terms and price and such offers cannot be conditional, stakebuilding
may therefore be a less attractive option.
Possession of insider information, as a result of being granted access
to information, may preclude the possibility of purchasing shares
outside the offer process.
5.2
Can derivatives be bought outside the offer process?
Derivatives can also be bought outside the offer process but the
restrictions, possible obligations and disclosure requirements
discussed under question 5.1 may be triggered.
5.3
What are the disclosure triggers for shares and
derivatives stakebuilding before the offer and during
the offer period?
The offeror is required to notify the target and the FME if its
percentage of votes reaches, exceeds or falls below the following
thresholds: 5, 10, 15, 20, 25, 30, 35, 40, 50, 66 2/3 and 90%.
Certain types of convertible securities and irrevocable undertakings
have to be taken into account. Borrowing shares and having security
over shares that authorise the pledgee to vote on the basis of those
shares also have to be counted.
If the issuer makes changes to its share capital or voting rights
that lead to any of the abovementioned threshold being reached an
obligation to notify the target and the FME is also triggered. This
means that disclosure can be triggered without any action by the
offeror.
5.4
What are the limitations and consequences?
See question 5.3.
6 Deal Protection
6.1
Are break fees available?
Break fees are not specifically regulated. Generally, break fee
arrangements can be agreed upon if it is considered in the best
interest of the target to do so.
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BBA
Can the target agree not to shop the company or its
assets?
The STA does not have any rules on ‘no shop’ clauses and similar to
break fee arrangements, they could be negotiated to the extent it is
considered in the best interest of the company and its shareholders.
There are restrictions on the board’s authority to dispose of assets
once the board is aware that a takeover offer is imminent as
discussed under question 6.3. But nothing in the STA prohibits the
target from undertaking not to dispose of assets.
6.3
Can the target agree to issue shares or sell assets?
Once the board has information that an offer is imminent and until
the expiry of the offer there are strict conditions for issuing shares
and selling assets, the STA therefore limits the possibility to take
frustration measures. Such actions require the prior approval of a
shareholders’ meeting.
6.4
What commitments are available to tie up a deal?
In addition to no shop and disposal of assets, irrevocable
undertakings by shareholders can be used to increase the likelihood
that the offer is successful.
7 Bidder Protection
7.1
What deal conditions are permitted and is their
invocation restricted?
Only voluntary offers can be conditional. The conditions for the
offer must be clearly disclosed in the offer document and they
generally have to be objective so that the determination of their
fulfilment is not left solely to the offeror’s discretion. Conditions
that are not fulfilled allow the offeror to withdraw the offer. The
notification of the results of the offer must disclose whether the
conditions are fulfilled or not and whether the offeror waives the
conditions or withdraws the offer.
7.2
What control does the bidder have over the target
during the process?
The STA does not provide a bidder with any control over the
target during the process. The STA does not prohibit entering into
agreements with the board of the target for the purpose of ensuring
that the target acts in the ordinary course of business during the
process.
7.3
When does control pass to the bidder?
Control over the shares acquired through the takeover offer passes
to the offeror on the settlement of the offer.
If an offeror has acquired 50% or more of the votes in the target the
offeror has secured enough votes to control matters that require a
simple majority and appointing a majority of the board.
Acquiring 2/3 of the votes and shares gives an offeror a greater
level of control as that is the requisite percentage of votes to effect
ICLG TO: MERGERS & ACQUISITIONS 2015
amendments to the Articles of Association, mergers, demergers and
dissolution of a company, provided the Articles of Association do
not require a higher acceptance level.
If an offeror acquires more than 90% a squeeze-out of the remaining
shareholders can be effected, c.f. question 7.4.
7.4
How can the bidder get 100% control?
If the offeror acquires more than 90% of shares in the target the
offeror can squeeze-out the remaining shareholders. The remaining
shareholders are to be notified of such a decision. The notice to
the remaining shareholders shall contain information on the terms
and conditions for the squeeze-out and the method by which the
squeeze-out price is established. If the squeeze-out is demanded
within three months from the expiry of a takeover offer then the
price offered therein is assumed to be fair, unless the offeror has
paid a higher price for shares in the target after the takeover offer
has expired.
Iceland
6.2
Iceland
To effect a statutory merger the offeror requires 2/3 of the shares and
votes in the target. If that level is achieved in the takeover offer it is
possible to effect such a merger whereby the offeror would acquire
the deficit of shares required to effect a squeeze-out.
8 Target Defences
8.1
Does the board of the target have to publicise
discussions?
The board of the target may be required to disclose discussions
as they may be considered as insider information; this is further
discussed under questions 4.2 and 4.3.
8.2
What can the target do to resist change of control?
Under the STA the following decisions of the target’s board must
receive the prior approval of a shareholders meeting: the issuance of
new shares or securities in the target and its subsidiaries; the purchase
or disposal of own shares and shares in the targets subsidiaries; the
purchase or disposal of the assets of the target and its subsidiaries
which can have a substantial effect on the targets operations or its
subsidiaries; entering into agreements falling outside the ordinary
course of business; substantially amending the remuneration of the
targets management; and any other decisions having a comparable
effect on the conduct of the target’s business.
8.3
Is it a fair fight?
The STA does not require it to be a fair fight aside for the antifrustration measures discussed under question 8.2. The board is
however obligated to provide shareholders with the opportunity to
make a decision on an offer.
In a competing offer scenario the fight could be unfair especially if
one offer is hostile and the other is friendly, i.e. the friendly offeror
could have greater access to information. However if a competing
offer is made the original offeror is authorised to amend its offer
and offer more favourable terms to match that of the competing
offer. The offer process can be deemed to be fair in a competing bid
scenario as offers can be amended to offer more favourable terms.
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197
BBA
Iceland
9 Other Useful Facts
Iceland
9.1
What are the major influences on the success of an
acquisition?
The offer price is most likely to be a deciding factor for many
shareholders but having the support of the target’s board and largest
shareholders can also be invaluable.
9.2
What happens if it fails?
10
Updates
10.1 Please provide a summary of any relevant new law or
practices in M&A in Iceland.
The rules and regulations on takeovers of companies whose
securities have been admitted to trading have largely remained
unchanged since 2009 and due to the financial crisis in 2008 there
have been relatively few takeovers of publicly listed companies in
recent years although M&A activity involving unlisted companies
has been increasing in the last few years.
There are no particular consequences. In voluntary offers if any one
of the conditions set for the offer in the offer document is not met
and the offeror does not wish to waive the conditions it is possible
to revoke the offer.
Baldvin Björn Haraldsson
Höskuldur Eiríksson
BBA
Höfðatorg, 19th floor
Reykjavik
Iceland
BBA
Höfðatorg, 19th floor
Reykjavik
Iceland
Tel: +354 550 0500
Fax: +354 550 0505
Email:baldvin@bba.is
URL:www.bba.is
Tel: +354 550 0500
Fax: +354 550 0505
Email:hoskuldur@bba.is
URL:www.bba.is
Baldvin Björn is one of the two founding partners of BBA. He has been
a member of the Icelandic Bar Association since 1994 and became a
member of the Paris Bar in 1998 after having obtained a DESS and
a Troisieme Cycle degree in International Business Law from ILERI in
Paris. Baldvin Björn has actively advised clients throughout his career
in M&A, Financing, Energy Law and PPPs and has been involved in
many of the largest M&A deals in Iceland in recent years. He advised
the UK Deposit Guarantee Fund and HMT in their legal proceedings in
Iceland relating to the Icesave deposits. Baldvin Björn is the Chairman
of the French-Icelandic Chamber of Commerce.
Höskuldur joined the firm in 2007 and became a partner in 2014.
Höskuldur obtained an LL.M. degree in International Banking &
Finance Law from University College London (UCL) in 2011 and is
currently also a part-time lecturer on M&A transactions in one of the
local universities. He has been involved in a number of cross-border,
as well as domestic, financing and M&A transactions and regularly
advises a variety of domestic and foreign clients on such transactions
as well as other corporate matters.
BBA was the first law firm in Iceland to build its practice exclusively on servicing the business sector. This is and has always been
our main focus.
As a result, BBA has been a leading firm for a number of years in the field of mergers and acquisitions, capital markets, banking
and corporate finance, bankruptcy law, PFI projects and general corporate and commercial law on the Icelandic market. This is
confirmed by the firm’s top tier ranking in the respective fields by all the major ranking companies.
Due to our level of expertise and good reputation we have been entrusted by our local and international clients to provide advice
on many of Iceland’s biggest and most complicated financing and M&A deals, as well as the country’s most important PFI projects.
198
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