19 A Listed Company as the Target
19.1 General Remarks
The takeover of a company whose shares have been admitted to trading on a regu-
lated market is subject to a larger and more detailed regulatory regime under
Community law. This chapter will provide a summary of the most important rules.
These questions have partly been discussed in other parts of this book. Many of
them can better be discussed in specialist works.
Nature of the acquisition. The acquisition of a listed company is fundamentally
different from the acquisition of a privately-owned company. (a) Where the target
is a listed company, the acquirer can negotiate only with the target’s management,
controlling shareholders, or other substantial shareholders. (b) The acquisition can
be a going-private transaction (LBO, MBO, private-equity deal). Alternatively, the
target company can remain listed, provided that it still fulfils the admission re-
quirements (for delisting, see section 5.9.9). (c) The acquisition of a listed com-
pany can be structured as a merger, or as a public takeover bid (tender offer) fol-
lowed by the squeeze-out of minority shareholders. (d) Regardless of its form, the
acquisition is always governed by an extensive disclosure and information man-
agement regime.
Mergers v public takeover bids. There are differences between mergers and
public takeover bids.
Mergers are always friendly. A merger requires an agreement between the par-
ticipating companies’ boards (section 5.11.3) and shareholder approval. However,
a resolution authorising a merger only requires a majority or a qualified majority.
If such a resolution is legally passed, dissenting shareholders cannot prevent the
merger; dissenting shareholders typically have appraisal rights. The merger proc-
ess tends to be lengthy because of mandatory provisions of law protecting share-
holders in general, dissenting shareholders, and third parties.
In contrast to the merger process, a public takeover bid neither requires prior
approval by nor prior contact with the target or its management. A public takeover
bid can be friendly or hostile. Many public takeover bids do involve prior contact
and even negotiations with the target management. “Negotiated tender offers”
may help to resolve bargaining issues such as differences of opinion on what con-
stitutes a reasonable bid price.^1
A public takeover bid can be limited to a certain amount of shares and be con-
ditional. Unlike a merger process, a public takeover bid is relatively quick. The
(^1) See Betton S, Eckbo BE, Thorburn KS, op cit.
P. Mäntysaari, The Law of Corporate Finance: General Principles and EU Law,
DOI 10.1007/ 978-3-642-03058-1_19, © Springer-Verlag Berlin Heidelberg 2010