10.3 Third Party as a Source of Remuneration 361votes. As Volkswagen benefited from its so-called “grandfather status”, there was no obli-
gation make a mandatory bid.^146
If there is a duty to make a bid, the bid must be addressed at the earliest opportu-
nity to all the holders of those securities for all their holdings at the equitable price
as defined in the Directive.^147 The mandatory bid rule does not apply where con-
trol has been acquired following a voluntary bid.^148
Consideration and price. The bidder must pay “the equitable price”. The equi-
table price is the highest price paid by the bidder over a certain period. The Mem-
ber States may choose the length of the period. The period must nevertheless be
“not less than six months and not more than 12 before the bid”.^149
The consideration may consist of securities, cash, or a combination of both se-
curities and cash. Where the consideration offered by the offeror does not consist
of liquid securities admitted to trading on a regulated market, it must include a
cash alternative.^150
It can be more difficult to interpret mandatory bid rules following share ex-
changes. The Directive on takeover bids does not require any mandatory bid
where “control has been acquired following a voluntary bid made in accordance
with [the Directive] to all the holders of securities for all their holdings”.^151 How-
ever, where the voluntary bid did not fulfil those conditions, the outcome of the
voluntary bid can trigger an obligation to make a mandatory bid for all remaining
transferable securities carrying voting rights in the target company at “the equita-
ble price”;^152 alternatively, the share exchange may not have been part of a bid.
The equitable price depends on “the highest price” paid by the bidder during a cer-
tain period of time.^153 But if the consideration consisted of the bidder’s own
shares, the value of both those shares and the target’s shares may fluctuate. Where
the price of the bidder’s shares has increased, the value of shares held by share-
holders who accepted the prior is higher than the original cash value of “the high-
est price”. Where the price of the target’s securities has increased more, the origi-
nal conversion ratio has become unfavourable to remaining shareholders.
Basically, the supervisory authorities are not entitled to adjust the “equitable
price” after normal market movements.^154
(^146) See also Stattin D, Dispenser från budplikt vid Volkswagens köp av Scania-aktier, JT
2007–08 pp 873–881.
(^147) Article 5(1) of Directive 2004/25/EC (Directive on takeover bids).
(^148) Article 5(2) of Directive 2004/25/EC (Directive on takeover bids).
(^149) Article 5(4) of Directive 2004/25/EC (Directive on takeover bids).
(^150) Article 5(5) of Directive 2004/25/EC (Directive on takeover bids).
(^151) Article 5(2) of Directive 2004/25/EC (Directive on takeover bids).
(^152) Article 5(1) of Directive 2004/25/EC (Directive on takeover bids).
(^153) Article 5(4) of Directive 2004/25/EC (Directive on takeover bids).
(^154) Article 5(4) of Directive 2004/25/EC (Directive on takeover bids).