Absurdities in taking control in public tender deals
Tomasz Kudelski & Aleksandra Rogalska
by Tomasz Kudelski & Aleksandra Rogalska
Recent changes to Poland’s public tender offer procedure were aimed at addressing the criticised 33% and 66% thresholds for total votes. These were under scrutiny as they triggered the obligation to launch a tender offer, but their alignment with the EU Takeover Bids Directive was questionable.
Previously, once a shareholder exceeded the 33% threshold in a public company, they were compelled to announce a tender offer only up to 66% of votes. This restricted minority shareholders from selling all shares. Only upon exceeding the 66% threshold was a tender offer for the entire 100% required. Following recent amendments, Poland established one threshold which requires the launch of a tender offer when the 50% threshold of votes is exceeded.
Article 5 of the Takeover Bids Directive requires any entity obtaining control in a company to submit a tender offer to all shareholders, encompassing all their shares. However, the Directive does not provide a precise definition of control and the establishment of the control threshold is determined by each individual member state.
Polish law established a 50% threshold which eliminated the already existing minority shareholder protection within the 33% to 50% range. Moreover, the implication of control when exceeding the 50% benchmark is inconsistent with other definitions of control – in particular Polish anti-monopoly practice.
Transactions resulting in a change of control in public companies with dispersed shareholding occur below the 50% threshold. This incongruity means that a transaction may be deemed a change of control under anti-monopoly rules, but does not trigger the obligation to announce a tender.
This disparity was evident in Norsk Hydro’s recent acquisition of Alumetal. Another party, Elemental Holding, obtained anti-monopoly clearance for taking control in order to acquire a 49.99% stake, and it was evident to the market they would thereby “gain control” over Alumetal. Elemental, however, would not have been obligated to announce a public tender offer.
Given the implementation of the Takeover Bids Directive and the practices followed in other European countries, the 50% threshold may require further consideration. Many EU states have thresholds set between 25% and 33%, and Polish law previously provided some measure of protection starting from the 33% threshold.
The current situation means it is possible to gain actual control over a company without being subject to the obligation of announcing a tender offer.
GGI member firmPenterisWarsaw, PolandT: +48 22 257 83 00Law Firm Services
Penteris is a European law firm committed to keeping clients ahead of the market with a mantra of “getting things done” and “building long-term relations”.
Tomasz fuses together his market knowledge and broad experience to extract that which is vital in the quest for bringing success to his business partners in the M&A and corporate environment. Contact Tomasz.
Aleksandra is pragmatic in her expertise, focusing on M&A transactions involving corporate, employment, real estate, anti-monopoly, and financial matters. Contact Aleksandra.
