Dutch M&A Q&A

Country Q

&A

Mergers and Acquisitions 2011/12 Country Q&A

© This article was first published in the PLCCross-border Mergers and Acquisitions Handbook 2011/12 and is reproduced with the permission of the publisher, Practical Law Company.

The Netherlands

Ferdinand Mason and Bastiaan Kout Boekel De Nerée

www.practicallaw.com/3-502-0666

M&A ACtivity

1. Please give a brief overview of the public M&A market in your jurisdiction.

The public M&A market in The Netherlands was quiet throughout 2010, and only a limited number of transactions were closed (Mergermarket):

� Equity One’s recommended offer for DIM Vastgoed of US$22.66 million.

� One Equity Partners’ recommended offer for SMARTRC of EUR319 million.

(As at 1 March 2011, US$1 was about EUR0.7.)

By the end of 2010, there were approximately six deals pending, which include:

� Brambles’ recommended offer for IFCO Systems of EUR894 million.

� Waha Capital’s recommended offer for AerCap holdings of EUR270 million.

� Johnson & Johnson’s recommended offer for Crucell of EUR1,432 million.

2. What are the main means of obtaining control of a public company?

The following means of obtaining control of a public company are possible. A combination of one or more methods can be used, depending on the merger’s proposed structure.

Public offers

Public offers for securities in a Dutch public company (naamloze vennootschap) (NV) are commonly used to obtain control over an NV. They are governed by legislation based on Directive 2004/25/EC on takeover bids (Takeover Directive). Depending on the quantity of securities subject to the offer, they can be categorised as one of the following:

� Complete offer. A public offer to acquire all of the target’s share capital.

� Partial offer. A public offer for no more than 30% of the target’s share capital.

� tender offer. A public offer inviting holders of no more than 30% of the target’s share capital to tender shares and state the consideration they would like to receive.

The consideration can take the form of cash, share for share, or a combination of the two.

A shareholder that has acquired 30% or more of the voting rights must make a mandatory offer for the target’s entire share capital.

Statutory mergers

Statutory mergers are mergers of:

� An acquiring company (which can be a newly incorporated company).

� A company (or companies) that ceases to exist as a result of the merger (target).

The acquiring company acquires all of the assets and liabilities of the target under universal title. The statutory merger must comply with the following formalities:

� A general meeting of the target’s shareholders must approve the merger.

� The acquiring company’s board must approve the merger.

� The acquiring company must file a merger proposal, agreed by both companies, with the chamber of commerce. Creditors of either company can object to this proposal within one month following its announcement.

� An auditor confirming the fairness of the share exchange ratio (see below).

Generally, the target’s shareholders become the acquiring company’s shareholders under a share-for-share exchange. However, the structure of the merger or the exchange ratio can result in certain shareholders losing their shareholding, in which case they must be compensated. Therefore, statutory mergers can be used to squeeze out minority shareholders. However, case law provides that using a statutory merger primarily for this purpose can be contrary to the principles of reasonableness and fairness.

Under Dutch law based on Directive 2005/56/EC on cross-border mergers of limited liability companies (Cross-border Mergers Directive), Dutch private and public companies can merge with joint stock companies incorporated under the laws of the EU or European Economic Area (EEA). International statutory mergers require additional formalities in relation to, among other things, the merger proposal, announcement, and auditor’s report. The target’s shareholders can also exit from their shareholding by voting against the merger and claiming compensation.

The international statutory merger can be a useful instrument and the procedures are becoming smoother as counsels and notaries in various jurisdictions become used to the relevant formalities in


Cou

ntry

Q&

A

For more informationabout this publication, please visit www.practicallaw.com/about/handbooks

about Practical Law Company, please visit www.practicallaw.com/about/practicallaw

other jurisdictions. However, European and/or Dutch legislation is still necessary to allow for statutory mergers with companies outside the EEA.

HoStile bidS

3. Are hostile bids allowed? if so, are they common? if they are not common, why not?

Hostile bids are allowed under Dutch law. They are still common in the M&A market, although no hostile bids took place in 2010 (see Question 1).

RegulAtion And RegulAtoRy bodieS

4. How are public takeovers and mergers regulated, and by whom?

legislation

In The Netherlands, the key provisions governing public takeovers are contained in:

� the Financial Supervision Act (Wet op het Financieel Toezicht). The Financial Supervision Act regulates listed companies, including public takeovers. It contains specific provisions in relation to public offers on securities concerning:

� mandatory public offers (see Question 2, Public offers);

� the offer memorandum and its approval (see Question 14, Offer memorandum).

The Financial Supervision Act also contains general provisions that are relevant to public takeovers and mergers, concerning:

� prospectus requirements, including:

� contents;

� approval;

� disclosure.

� issuing certificates of approval of the prospectus for use in other jurisdictions (EU passport);

� market abuse (prohibition of insider trading and market manipulation);

� continuing and periodic disclosure requirements for share issuers;

� notifications by issuers, shareholders, and independent directors of:

� voting rights;

� share capital;

� control; and

� capital interests.

� the Public offer decree (Besluit Openbare Biedingen). The Public Offer Decree is delegated legislation which contains detailed provisions governing the process of public offers, from announcement to completion, including:

� the timing and contents of the initial public announcement of the intended offer;

� follow up announcements on the:

� submission of the offer memorandum for approval;

� certain funds;

� continuation of the offer; and

� offer period;

� the offer period, including the:

� best price rule;

� duration of the period; and

� extension of the period;

� an extraordinary general meeting of the target’s shareholders.

� the dutch Civil Code. This contains rules which are of general relevance, in particular rules contained in the following:

� book 2. This focuses on the law of legal entities, and contains relevant provisions on:

� squeeze-out provisions, particularly following a public offer;

� the powers of corporate bodies;

� resolutions that require shareholder approval (such as a change of control);

� resolutions of corporate bodies and the grounds/procedures for annulment of those resolutions;

� statutory mergers (see Question 2, Statutory mergers);

� financial reporting; and

� directors’ liability for mismanagement;

� book 6. This focuses on the law of obligations, and contains relevant provisions on:

� contractual obligations, including liability for breach of contract;

� liability for torts, in particular for misleading adver-tising (which applies to prospectuses).

� the Works Council Act 1979 (Wet op de Ondernemingsraden) and the SeR Merger Rules 2000 (SER Besluit Fusiegedragsregels 2000). These deal with aspects of employees’ representation and contain provisions on consultation rights and notification obligations to trade unions, work councils and the Social and Economic Council (De Sociaal-Economische Raad) (SER).

Country Q

&A




Regulators

The two major financial regulators in The Netherlands are:

� the netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) (AFM). The AFM focuses on supervision of market conduct and is the main regulator monitoring public takeovers. It approves prospectuses and offer memoranda. It can approve the offer memorandum if:

� the target’s securities are listed in The Netherlands; or

� the target company’s registered office is in The Netherlands, where securities are also listed in other EU jurisdictions.

The AFM can impose fines if the relevant provisions are breached.

� the dutch Central bank (De Nederlandsche Bank) (dnb). The DNB has authority over, among others, banks, investment firms or insurers with registered offices in The Netherlands. A bidder must obtain a statement of no objection if it wishes to acquire one of these entities (see Question 25).

In addition, the following can be relevant:

� the netherlands Competition Authority (De Nederlandse Mededingingsautoriteit) (nMa). The NMa is the regulator for national competition law matters (see Question 25).

� the enterprise Chamber of the Court of Appeal of Amsterdam (Ondernemingskamer). The Enterprise Chamber has an important role in public takeovers, and has jurisdiction over:

� matters concerning the mandatory offer, such as:

� enforcing the mandatory offer;

� granting dispensation from the mandatory offer;

� determining a reasonable price;

� squeeze-out procedures following a public takeover (see Questions 16 and 20).

See box, The regulatory authorities.

PRe-bid

Due diligence

5. What due diligence enquiries does a bidder generally make before making a recommended bid and a hostile bid? What information is in the public domain?

Recommended bid

Only limited due diligence takes place before the initial announcement of the intended public offer. It becomes more intensive during the stage following the initial announcement and before publication of the offer memorandum.

A friendly bidder is usually permitted to perform full-scale due diligence before making a recommended bid as the public offer cannot be made conditional on subjective conditions, such as the

satisfactory outcome of due diligence. The bidder and target must take adequate measures to prevent the use of inside information gathered in the due diligence process (see, for example, the Numico decision of the Dutch Supreme Court).

Hostile bid

Hostile bidders are not usually permitted to perform due diligence. There is case law available, based on the Dutch principles of reasonableness and fairness, suggesting that the board of directors has a duty to:

� Take into account the legitimate interests of potential bidders.

� Not frustrate possible bids or resist a level playing field.

It has been argued that the effect of this requires the board of directors, in certain circumstances, to:

� Provide non-public information to a hostile bidder.

� Allow limited due diligence.

� Provide a hostile bidder with the same information provided to an original friendly bidder.

This duty will not exist if the:

� Hostile bidder is not a serious bidder.

� Hostile bidder lacks sufficient funds to support the offer.

� Hostile bidder’s intentions are contrary to the target’s interests.

Public domain

Due to increasing disclosure and transparency requirements based on relevant EU Directives, listed companies disclose a significant amount of information to the market on a continuing and periodic basis. This includes:

� Quarterly, half-yearly and annual accounts (disclosed on the company’s website and on the public trade registry).

� Inside information through press releases (disclosed on the company’s website).

� An annual document containing an overview of disclosed information over a period of 12 months (disclosed on the company’s website).

� The initial public offer (IPO) prospectus (on the company’s website).

� Notifications on voting rights, capital, control, insider transactions (on the AFM register on the AFM’s website (see box, The regulatory authorities)).

� Articles of association (on the trade registry and on the company’s website).

� On the trade registry, a corporate profile containing general details on the company’s:

� share capital;

� registered office; and

� members of the board of directors (and supervisory board, where relevant (see Question 23, Other measures) and their powers.


Cou

ntry

Q&

A



Secrecy

6. Are there any rules on maintaining secrecy until the bid is made?

In the period preceding the actual bid, both the target and the bidder gather inside information. A listed company must immediately make inside information generally available to the public (Financial Supervision Act). However, disclosure can be postponed if, among other things:

� Postponement serves a legitimate interest. A legitimate interest is present, according to the Transparency Decree (Besluit uitvoeringsrichtlijn transparantie uitgevende instellingen Wft), if:

� the outcome of negotiations could be influenced by disclosure;

� the required supervisory board approval has not yet been granted; and

� an announcement of the inside information could distort the public’s view of the proposed merger.

� The company can guarantee the inside information’s confidentiality.

Therefore, it is essential that insider lists are kept and updated regularly and insiders bound to a confidentiality agreement.

From the bidder’s perspective, gathering inside information means that the bidder is prohibited from engaging in insider trading and cannot build its shareholding before the bid takes place. This is usually guaranteed by a standstill agreement (see Question 8, Restrictions).

Agreements with shareholders

7. is it common to obtain a memorandum of understanding or undertaking from key shareholders to sell their shares? if so, are there any disclosure requirements or other restrictions on the nature or terms of the agreement?

A bidder can approach key shareholders, if knowledge of the shareholders’ intentions is reasonably required for the decision to make a public offer. This approach is explicitly exempt from the prohibition on providing inside information to third parties (tip-offs) (see Question 6). After this approach, the key shareholders possess inside information, and cannot carry out any further transactions in securities, except to enter into an agreement with the bidder. This agreement must create an irrevocable undertaking (irrevocable) to sell a specified number of shares if the offer is pursued.

The buyer usually considers it essential to obtain these irrevocables from the key shareholders. In practice, these undertakings are not actually irrevocable if the current bidder increases its bid, or if another bidder offers more.

There is no direct obligation to disclose irrevocables under the Financial Supervision Act. However, disclosure of the irrevocables sends a positive signal to the market, which increases the bid’s chances of success. It is arguable that there may be an

indirect obligation to disclose irrevocables under the continuing requirement to disclose inside information (see Question 6). Following the initial announcement of the bid, the bidder and the target must notify the AFM of transactions in the target’s securities. The bidder must disclose the irrevocables in his offer memorandum (see Question 14, Offer memorandum).

Stakebuilding

8. if the bidder decides to build a stake in the target (either through a direct shareholding or by using derivatives), before announcing the bid, what disclosure requirements, restrictions or timetables apply? Are there circumstances in which shareholdings, or derivative holdings, of associates could be aggregated for these purposes?

general disclosure requirements

The following groups of persons with securities in the target have notification obligations to the AFM (Financial Supervision Act):

� Shareholders.

� Holders of depository receipts (certificates representing economic interest in a number of underlying shares (see Question 23, Depository receipts).

� Holders of other securities which grant a right to acquire shares or depository receipts.

� Other persons with voting rights.

� Holders of shares which grant the holder a special right of control.

These persons must notify the AFM immediately if:

� Their ownership of the target’s shares or voting rights passes the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.

� They acquire shares which grant the holder special rights of control.

In some circumstances, ownership of securities or voting rights can be attributed to other parties (see below).

Aggregation of shareholdings or derivative holdings

The general disclosure requirements in the Financial Supervision Act contain rules for attributing ownership of securities or voting rights held by one party to another, such as:

� Voting rights granted under a share pledge or right of usufruct (vruchtgebruik) are attributed to the pledgee or holder of the right of usufruct.

� A subsidiary’s voting rights and securities are attributed to the parent company.

� Voting rights and securities held by third parties (legal ownership) are attributed to the beneficial owner.

� Voting rights under an agreement containing a long-term common policy on exercising the voting rights or power of attorney are also attributed to the beneficial owner.

Country Q

&A




In addition, the Financial Supervision Act contains a definition of “persons acting in joint consultation” which includes natural persons, legal persons or companies, collaborating under an agreement to either:

� Acquire predominant control in a public limited company.

� Where the target is one of the collaborators, to frustrate an announced public takeover bid.

Predominant control is defined as 30% or more of the voting rights (see Question 2, Public offers). To establish the requirement to make a mandatory offer, the persons acting in joint consultation must combine their interests.

Restrictions

The following restrictions apply:

� insider trading. A restriction on stakebuilding flows from the insider trading prohibition (see Question 6). In the case of a friendly bid, the bidder is usually bound to a confidentiality and standstill agreement that prohibits any stakebuilding before announcing the bid. In the case of a hostile bidder, there is not normally any restriction on stakebuilding, as knowledge of one’s own proposed transactions does not qualify as inside information.

� Price restrictions. Price restrictions for the purpose of equal treatment of owners of securities that are subject to the offer do not restrict stakebuilding before announcement of the offer.

Agreements in recommended bids

9. if the board of the target company recommends a bid, is it common to have a formal agreement between the bidder and target? if so, what are the main issues that are likely to be covered in the agreement? to what extent can a target board agree not to solicit or recommend other offers?

It is usual to have a formal agreement between a friendly bidder and the target. These agreements are usually called merger agreements or merger protocols (Merger Protocols). However, Merger Protocols are not required, and the parties should carefully consider whether it is desirable to limit their freedom in relation to the offer, its conditions, and so on. In The Netherlands, a Merger Protocol is not a public document, unlike the US where it would be filed with the US Securities Exchange Commission.

A Merger Protocol will generally cover the following:

� An obligation for the bidder to make the offer within a certain time limit. This is to reduce uncertainty for the target as, under the Financial Supervision Act and Public Offer Decree, the bidder has several ways to delay or to abort the offer process.

� Conditions for making and pursuing the offer. Common conditions include:

� obtaining the approval of the works council (a body elected by a company’s employees);

� complying with the Merger Protocol;

� the AFM approving the offer memorandum;

� no material adverse change;

� fulfilment of conditions in financial documentation;

� the approval of the competition authorities; and

� acceptance of the offer by a minimum percentage of shareholders.

� An obligation for the target to recommend the offer. The board of directors of the target must recommend the bid to its shareholders in the mandatory extraordinary meeting where the bid will be discussed. This will be an essential condition for the bidder.

� exclusive dealing arrangements (that is, no-shop, no-talk, and so on). Exclusive dealing arrangements are usually included in the Merger Protocol. However, they may conflict with the duty of the board of directors to take into account the legitimate interests of potential bidders and not frustrate possible bids. The board of directors must therefore examine other potential bids carefully before concluding any exclusive dealing arrangements.

� break fees. See Question 10.

Break fees

10. is it common on a recommended bid for the target, or the bidder, to agree to pay a break fee if the bid is not successful? if so, please explain the circumstances in which the fee is likely to be payable, and any restrictions on the size of the payment.

It is common to agree on a break fee in the Merger Protocol if the bid is not successful. Trigger events could be:

� The approval or recommendation by the target’s or the bidder’s board of directors of a third-party transaction.

� Revocation of the target board’s recommendation of the offer.

� Termination of the Merger Protocol on (other) specified grounds.

As the bidder and/or target will have incurred substantial costs in preparing the offer, the break fee arrangement normally sets out in detail what penalties and/or damages will apply. There is no case law setting out requirements for break fees. However, it is thought that the rules for anti-takeover measures apply by analogy, meaning that the break fee is unlawful if it is disproportionate for a potential bidder. In addition, directors can be liable for mismanagement if they harm the interest of the company by agreeing excessive break fees as these may be considered contrary to the corporate interest.

Committed funding

11. is committed funding required before announcing an offer?

On applying for approval of the offer memorandum to the AFM, the bidder must ensure it has acquired the necessary funds and has published a certain funds announcement, which can be made after the initial public announcement (see Question 12, Initial public announcement and Certain funds announcement).


Cou

ntry

Q&

A



If a share issue is part of the financing, a notice of an extraordinary general meeting of shareholders for that purpose must have been issued on making the certain funds announcement. The meeting itself can be no later than seven days before expiry of the offer period (see Question 12, Offer period). The AFM does not carry out any due diligence in relation to financing, but does examine the certain funds announcement.

AnnounCing And MAking tHe oFFeR

Making the bid public

12. Please explain how (and when) the bid is made public (highlighting any relevant regulatory requirements), and set out brief details of the offer timetable. (Consider both recommended and hostile bids.) is the timetable altered if there is a competing bid?

initial public announcement

In the case of a recommended bid, the bidder and the target must jointly announce a non-mandatory public offer on reaching agreement. The announcement must contain the price or exchange ratio and the conditions to concluding the offer, such as the approval of competition authorities and works council approval (see Question 9).

In the case of a mandatory public offer (see Question 16), the bidder must announce the offer 30 days after acquiring the required level of control.

Finally, a non-mandatory hostile offer is deemed to be announced if the bidder has disclosed specific information concerning the proposed public offer, such as the name of the target company and a price or exchange ratio.

The bidder and target should carefully observe insider trading rules which may require announcement of the contemplated offer before any statutory maximum period has expired (for example, where confidentiality of the transaction can no longer be guaranteed, or a leak has occurred).

Follow up announcement

The bidder must make a follow-up announcement within four weeks after the initial public announcement, stating that the bidder will either:

� Submit the offer memorandum for approval to the AFM within a specific number of weeks (which cannot exceed 12 weeks).

� Not apply for approval of the offer memorandum.

Certain funds announcement

On applying for approval of the offer memorandum (see below, Approval of the offer memorandum), the bidder must ensure that it has obtained sufficient funding and must publicly announce this (see Question 11).

Approval of the offer memorandum

The AFM reviews and approves the offer memorandum within ten business days. This period can be extended if the AFM requires additional information.

Publication of the offer memorandum

Within six business days of the AFM’s approval of the offer memorandum, the bidder must publish the offer memorandum and make an announcement in relation to that publication. If the offer is not continued, the bidder must make an announcement to that effect.

offer period

The offer period must be between four weeks and ten weeks, and can be extended once. If a competing offer is announced during the offer period, the bidder can extend the offer period according to the offer period of the competing offer.

The target must call a shareholders’ meeting at least six business days before expiry of the offer period to discuss the offer on the basis of a reasoned opinion, which must have been made available to its shareholders at least four business days before the meeting. If a share issue forms part of the financing, the bidder must call a shareholders’ meeting at least seven business days before expiry of the offer period (see Question 12).

Completion

On the third business day after the offer period has expired, the bidder must:

� Announce whether the offer will be pursued.

� Disclose the value, number and percentage of its shareholding following the offer period.

At this stage, the bidder can grant a final extension of the offer period for up to two weeks, allowing shareholders that have not yet offered their shares to still offer them. Following that extension, the bidder must update its announcement on its shareholding.

Offer conditions

13. What conditions are usually attached to a takeover offer (in particular, is there a regulatory requirement that a certain percentage of the target’s shares must be offered/bid)? Can an offer be made subject to the satisfaction of pre-conditions (and, if so, are there any restrictions on the content of these pre-conditions)?

There are two types of conditions, pre-conditions and conditions for completing the transaction.

This distinction is important, as the conditions for completing the transaction may not be under the bidder’s control.

Common conditions for completing the transaction include that:

� The number of offered, acquired and committed shares amounts to a minimum percentage of capital interest (95% is common with a view to a successful squeeze-out, but lower percentages are sometimes used).

� No material adverse change has occurred.

� No competing offer has been made by a third party.

� The approvals of competition authorities have been obtained.

Country Q

&A




Bid documents

14. What documents do the target’s shareholders receive on a recommended and hostile bid?

The following documents will be provided to the target’s shareholders throughout the public bid (in chronological order).

offer memorandum

It is prohibited to make a public offer without publishing an offer memorandum approved by the AFM or a financial regulator of another EU (or EEA) member state. The bidder is responsible for the offer memorandum, but in the case of a recommended bid, this is in practice a joint effort by the target and the bidder. The purpose of the offer memorandum is to inform the target’s shareholders of the offer and the conditions that the bidder and the target must satisfy. The main terms include:

� The terms related to the offer, including:

� whether it is a friendly offer;

� the offer period;

� the funding of the offer;

� the rationale for the offer and intentions in relation to the continuation of the target’s activities;

� the offer price and its rationale; and

� the required minimum tendered shares and further conditions.

� Terms related to the bidder and target, including:

� their names, registered office, and legal forms;

� their mutual capital interests;

� securities in the target held by directors and members of the supervisory board and compensation that will be paid on their resignation (where applicable); and

� the proposed composition of the target’s and bidder’s board and supervisory board after the bid.

Prospectus

In the case of an exchange offer, securities are offered to the public. This requires an approved prospectus. There is an exemption for a public offer that applies where a document is generally made available containing information that the competent authority regards as being equivalent to that of the prospectus. This can be the offer memorandum, if it contains the required information. However, there is currently no EU regulation and EU passport for this equivalent document, as the European Commission has not enacted any further regulations under Article 4(3) of Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading (Prospectus Directive). This causes uncertainty as to whether the exemption will apply in another member state.

target’s memorandum

The target must publish a memorandum four business days before its mandatory extraordinary meeting of shareholders (see Question 12, Offer period). The memorandum must contain, among other things, the following:

� An opinion of the board of directors in relation to the:

� offer price or exchange ratio; and

� underlying merits of the offer and other considerations.

� Information on the company’s balance sheet and profit and loss statement (where the first quarter has passed, this must be of the current financial year).

� Where the target has obtained a third party’s fairness opinion on the merits of the offer, the target must disclose the identity of this third party and the opinion’s conclusions.

Employee consultation

15. Are there any requirements for a target’s board to inform or consult its employees about the offer?

For both hostile and recommended offers the relevant trade unions and works councils of the bidder and the target should be:

� Informed about the proposed takeover, before an agreement is reached between the bidder and the target.

� Provided with the offer circular immediately after it becomes available to the public.

Targets that are the subject of a recommended bid must give their works council an opportunity to advise on any planned decision concerning a transfer of control. This must be done once the bidder and the target have entered into a conditional agreement. If the advice of the works council is negative, and that advice is not or only partially followed, the transaction must, in principle, be delayed for one month, allowing the works council to appeal the decision to the Enterprise Chamber of the Court of Appeals in Amsterdam. The employee representatives must be provided with a statement of the:

� Grounds for the decision.

� Anticipated consequences for the persons who work for the undertaking and the projected measures concerning those consequences.

A target that is involved in a hostile bid must comply with the trade union’s consultation procedure before communicating its position to its shareholders and the public. Consultations with the trade unions must be confidential (SER Merger Rules).

Mandatory offers

16. is there a requirement to make a mandatory offer? if so, when does it arise?

obligation to make a mandatory offer

Any party that, either on its own or together with persons with which it acts in “joint consultation”, acquires, either directly or indirectly, “predominant control” over a public limited company, must make a public takeover bid for all the shares and all the depositary receipts (certificaten) for shares issued with the public limited company’s co-operation.


Cou

ntry

Q&

A



Joint consultation and predominant control have the following meanings:

� Joint consultation. Persons acting in joint consultation are defined as natural persons, legal persons or companies that are collaborating under a contract with the aim of either:

� acquiring predominant control in a public limited company; or

� frustrating the success of an announced public takeover bid for that company, if the target is one of the collaborators.

Joint consultation should be established according to objective criteria; the intentions of the parties are not relevant. Acting in joint consultation is interpreted in a broad sense and can also be established on a non-permanent (incidental) basis.

� Predominant control. Predominant control is defined as the right to exercise 30% or more of the voting rights in a general meeting of shareholders of a public limited company. It is not relevant whether the voting rights are or will ever be exercised. Holders of depository receipts (issued with the company’s co-operation) can also be obliged to make a mandatory offer, since Dutch corporate law grants them the right to request a proxy for their depository receipts. However, this right may be limited under circumstances that prevent the obligation to make a mandatory offer from arising.

exemptions

There are certain exemptions to the obligation to make a mandatory offer. For example, an obligation to make a mandatory offer does not apply if predominant control is acquired:

� In a closed-end investment company.

� Following a public bid.

� By an independent legal person as an anti-takeover mechanism. That person may hold the shares for a maximum period of two years after the announcement of a public takeover bid.

� By an intra-group transaction.

� Over a public limited company that has been granted a provisional moratorium or has been declared insolvent.

� By hereditary succession.

ConSideRAtion

17. What form of consideration is commonly offered on a public takeover?

Four types of consideration are commonly offered on a public takeover:

� Cash offers.

� Exchange offers. An exchange offer can include shares, depository receipts or other securities issued by the bidder or, less commonly, a third party. It generally qualifies as offering securities to the public, which means that an approved prospectus is required (subject to the “equivalent document” exemption (see Question 14, Prospectus)).

� Share and cash offers.

� Offers of choice, which will allow the target’s shareholders to opt for their preferred consideration.

18. Are there any regulations that provide for a minimum level of consideration?

If the bidder declares the full offer unconditional, the bidder:

� Must pay consideration for all securities registered in connection with that full offer. This consideration must correspond to the higher of:

� the consideration specified in the offer document, plus any subsequent increases;

� the highest consideration paid by the bidder after the initial public announcement, except for transactions conducted as part of the regular trade on markets for financial instruments (regular transactions).

� Cannot, for one year after the offer document was made generally available, directly or indirectly acquire securities of the type to which the public takeover bid related, at conditions more favourable than applied under the bid. There are exceptions (see Question 28).

19. Are there additional restrictions or requirements on the consideration that a foreign bidder can offer to shareholders?

There are no additional restrictions or requirements on the consideration.

PoSt-bid

20. Can a bidder compulsorily purchase the shares of remaining minority shareholders?

A shareholder who, after a public offer, has obtained at least 95% of the shares, can:

� Buy out minority shareholders within three months of the expiry of the offer period. If the acceptance under the offer exceeded 90%, the price to be paid is the offer price. The remaining minority shareholders must accept the offer price on the squeeze-out.

� Be required by minority shareholders who have not previously reacted to the offer and who have the right of sell-off to buy their shares. To claim this right, the minority shareholders must file a claim with the Enterprise Chamber within three months of the expiry of the offer period.

At any time, any shareholder holding 95% or more of the issued share capital can initiate squeeze-out proceedings with the Enterprise Chamber. The Enterprise Chamber determines the cash price payable for the shares. This procedure takes at least six months.

Country Q

&A




The last option for a bidder to squeeze out minority shareholders is through a statutory merger. The target merges into its parent company and the minority shareholders receive shares in the parent or holding company. However, the Supreme Court has ruled that it is not permitted to use a statutory merger if the sole purpose is to get rid of minority shareholders.

21. if a bidder fails to obtain control of the target, are there any restrictions on it launching a new offer or buying shares in the target?

Unsuccessful bidders, who abandon their initial plans, are not required to observe a cooling-off period before launching a new offer. In a recommended bid, the bidder and the target can agree to a standstill period during which the bidder is not permitted to make an offer without the target’s approval.

Where the offer is declared unconditional, the bidder cannot acquire shares at more favourable conditions for one year after the offer document is publicised (see Question 18). This does not prevent the bidder from entering into a statutory merger with the target (see Question 2, Statutory mergers).

De-listing

22. What action is required to de-list a company?

De-listing requires termination of the listing agreement with The Netherlands’ stock exchange NYSE Euronext Amsterdam (see box, The regulatory authorities). In the case of a successful public offer, de-listing is only allowed if the (Announcement 2004-01):

� Bidder has acquired at least 95% of the shares (or depository receipts).

� Issuer agrees with de-listing.

After obtaining a positive decision from Euronext on the application for de-listing, Euronext:

� Officially announces the de-listing.

� Issues a joint press release with the issuer.

In addition to terminating the listing agreement, the formal approval of the general meeting of shareholders is required.

tARget’S ReSPonSe

23. What actions can a target’s board take to defend a hostile bid (pre- and post-bid)?

Dutch case law recognises the legitimate interest of a company’s board of directors and/or supervisory board to use protective measures if this is in the interest of the company and its stakeholders. Those measures should be adequate, proportional, and limited in duration (and therefore reversible). The most common measures are discussed below.

Protective preference shares

The target issues preference shares to an independent special purpose foundation. The preference shares are issued at par value, with only 25% of the nominal value paid-up by the foundation. The following requirements apply:

� The majority of the board members must be independent.

� The shares are issued on the basis of a call-option agreement between the target and the foundation.

� The foundation obtains external financing to purchase the preference shares.

� If the foundation holds more than 30% of the outstanding shares it must issue a mandatory bid. If the preference shares are issued following the announcement of a hostile bid, the foundation is exempt from this requirement for two years. In that case, the foundation can hold up to 50% of the outstanding shares.

Priority shares

A priority share provides its holder with special voting powers on certain issues, such as the right to:

� Propose an amendment to the articles.

� Approve the issuance of shares.

� Nominate candidates for appointment to the board.

These special voting powers are set out in the articles.

depository receipts

Dutch corporate law allows the separation of voting rights from the financial interest in shares. The holders of depository receipts (which can be listed) do not have the right to vote on the underlying shares. The voting rights on the shares for which depository receipts have been issued are exercised by a foundation that has issued the depository receipts.

The foundation can issue blanket proxies for a shareholders’ meeting to those holders of depository receipts that request this. However, the foundation can restrict the rights of depository receipt holders to exercise their proxy rights if one of the following applies:

� A public offer has been made or has been announced (or an offer is expected), without the bidder having reached an agreement with the target.

� One or more holders of depository receipts working in concert hold 25% or more of the outstanding depository receipts.

� In the opinion of the foundation the exercise of voting rights by a holder of depository receipts would conflict with the interest of the company and its business.

other measures

In certain cases, targets have taken other measures which may make an offer less attractive for the bidder, for example:

� Selling certain assets.

� Hiving out certain assets or subsidiaries to an independent foundation.


Cou

ntry

Q&

A



These measures may require shareholder consent.

Certain provisions of the Dutch corporate code can act as protective measures against hostile bids when combined with applicable provisions in the articles. For example, companies falling under the “large company regime” must have a two tier-board consisting of a board of directors and a supervisory board. The supervisory board has the power to appoint and dismiss managing directors, to nominate members for the supervisory board and to approve certain actions of the board of directors. The large company regime applies to companies that have:

� An issued share capital and reserves of EUR16 million.

� A works council in the group.

� At least 100 employees in The Netherlands in the group.

The articles of a company can provide limited protection against a hostile bid by, among others things:

� Including majority voting requirements.

� Delegating exclusive authority to propose amendments to the articles to the board of directors.

� Providing delegated authority for the board to issue shares.

tAx

24. Are any transfer duties payable on the sale of shares in a company that is incorporated and/or listed in your jurisdiction? Can payment of transfer duties be avoided?

No transfer duties are payable on the transfer of shares in The Netherlands, except for the transfer of a substantial shareholding in a real estate company.

otHeR RegulAtoRy ReStRiCtionS

25. Are any other regulatory approvals required, such as merger control and banking? if so, what is the effect of obtaining these approvals on the public offer timetable?

Competition clearance

The NMa (see box, The regulatory authorities) is responsible for deciding whether a concentration between undertakings is permitted under the Netherlands Competition Act 1997 (Competition Act).

thresholds for notification. Concentrations must be notified to the NMa when in the preceding calendar year:

� The combined worldwide turnover of the participating undertakings exceeded EUR113.45 million.

� At least two of the undertakings involved each had an individual turnover in The Netherlands exceeding EUR30 million.

Lower thresholds can be imposed on specific categories of undertakings for a period up to five years. The Minister of Economic Affairs has temporarily (until 31 December 2012) imposed lower thresholds on the healthcare sector. Prior notification of a concentration in the healthcare sector is now mandatory when, in the preceding calendar year:

� The aggregate turnover of the participating undertakings exceeded EUR50 million.

� At least two of the undertakings involved had individual turnovers in The Netherlands exceeding EUR10 million.

� At least two of the undertakings involved each realised a EUR5.5 million turnover by healthcare activities.

Concentrations that fall within the European Commission’s jurisdiction need not be notified to the NMa.

Substantive test. The test the NMa applies to decide whether a licence is required is whether a particular concentration will significantly restrict effective competition on the Dutch market or any part of it, because of the creation or strengthening of a dominant position.

If the creation of a joint undertaking gives rise to the co-ordination of the joining companies’ competitive behaviour, the NMa considers whether it is compatible with Article 6 of the Competition Act, which prohibits restrictive agreements and practices.

Media concentrations were subject to a temporary act (which came into force in June 2007) but which has been withdrawn as of 1 January 2011, before its intended termination date of 1 January 2012.

Filing procedure. The investigation procedure can be divided into two phases:

� notification phase. No concentrations that fall within the scope of the Competition Act can be implemented before:

� they have been notified to the NMa; and

� a period of four weeks has passed.

The NMa issues a formal decision as whether or not a licence is required within these four weeks. If no licence is required, the concentration can be implemented. During the notification procedure, the NMa can suspend the four-week period if it requires additional information.

The NMa processes mergers using a short-form procedure unless:

� a licence and further investigation are required;

� interested parties have raised objections to the merger; or

� the short-form procedure deviates from advice about the merger from the:

� Post and Electronic Communications regulator;

� Dutch Health Authority; or

� Dutch Media Commission.

A short-form procedure often results in a faster process and the decision being obtained before the four-week deadline expires.

Country Q

&A




� licensing phase. If the NMa decides that a licence is required, the undertakings involved must submit an application for a licence with the NMa. Within 13 weeks of receipt of the application, the NMa must decide whether a licence is:

� granted;

� denied; or

� granted subject to certain conditions.

Public bid. The prohibition against implementing an intended concentration before the four-week notification phase has ended does not apply to a public takeover to acquire participation in an undertaking’s share capital. However, the NMa must be notified immediately and the acquiring party cannot exercise the voting rights attached to the acquired shares. On the request of the party notifying the concentration, the NMa can decide that voting rights can be exercised to maintain the full value of the party’s investment.

If the NMa decides that a licence is required:

� The transaction is invalidated within 13 weeks if the parties submit an application for a licence within four weeks.

� If restrictions or conditions are imposed on the granting of a licence, parties must comply with these within 13 weeks of its issue.

� If an application for a licence is refused, the transaction is invalidated within 13 weeks.

exemptions. Certain transactions do not constitute a concentration requiring notification. Two important examples of these transactions are:

� The acquisition of shares by credit institutions or other financial institutions that hold securities in the course of their normal activities on a temporary basis, with a view to reselling those securities without exercising the voting rights attached to them, provided these institutions:

� do not exercise the voting rights in respect of those securities to determine the competitive behaviour of the relevant undertaking(s);

� exercise the voting rights only with a view to preparing for the sale of those securities and any such sale takes place within one year of the date of acquisition.

� The acquisition by venture capital undertakings of participating interests in capital, provided the voting rights attached to those participating interests are exercised only to maintain the full value of the investments.

tHe RegulAtoRy AutHoRitieS

Authority for the Financial Markets (Autoriteit Financiële Markten) (AFM)

Address. Vijzelgracht 50PO Box 11723 1001 GS, Amsterdam The Netherlands t +31 20 797 2000F +31 20 797 3800e [email protected] www.afm.nl

Main area of responsibility. The AFM supervises market conduct in the savings, lending, investment, and insurance markets under the political responsibility of the Minister of Finance. The AFM is the main regulator monitoring public takeovers and is competent to approve prospectuses and offer memoranda.

nySe euronext Amsterdam

Address. Beursplein 5PO Box 19163 1000 GD Amsterdam The Netherlands t +31 20 550 4444F +31 20 550 4953e [email protected] www.euronext.com

Main area of responsibility. Euronext Amsterdam NV organises the Official Segment (Officiële Markt) of the Stock Market in Amsterdam and supervises information provided to investors.

the Merger Committee (Geschillencommissie Fusiegedragsregels)

Address. Bezuidenhoutseweg 60PO Box 90405 2509 LK The Hague The Netherlands t +31 70 349 9559F +31 70 383 2535e [email protected] www.ser.nl

Main area of responsibility. The Merger Committee administers the SER Merger Rules (SER Besluit Fusiegedragsregels 2000).

the netherlands Competition Authority (De Nederlandse Mededingingsautoriteit) (nMa)

Address. Wijnhaven 24PO Box 16326 2500 BH The Hague t +31 70 330 3330F +31 70 330 3370e [email protected] www.nmanet.nl

Main area of responsibility. The NMa enforces fair competition in the Dutch economy and brings actions against parties who participate in a cartel or who abuse a dominant position. The NMa reviews concentration notifications submitted by the parties to a proposed merger.


Cou

ntry

Q&

A



other regulatory clearances

The bidder must obtain a statement of no objection from the DNB for proposed acquisitions of financial institutions with registered offices in The Netherlands (see Question 4, Regulators).

26. Are there restrictions on foreign ownership of shares (generally and/or in specific sectors)? if so, what approvals are required for foreign ownership and from whom are they obtained?

There are no general restrictions on foreign ownership. The articles can provide for certain requirements that shareholders must comply with, such as being resident in The Netherlands or being an EU national. Such restrictions are uncommon.

27. Are there any restrictions on repatriation of profits or exchange control rules for foreign companies? if so, please give details.

There are no restrictions on repatriation of profits or exchange control rules, but certain formalities may apply.

28. Following the announcement of the offer, are there any restrictions or disclosure requirements imposed on persons (whether or not parties to the bid or their associates) who deal in securities of the parties to the bid?

Once a bid has been declared unconditional, the bidder is prohibited from directly or indirectly acquiring shares in the target on terms that are more beneficial for one year after publication of the offer document. Exceptions apply for shares acquired through:

� Ordinary trade on the stock exchange.

� A squeeze-out procedure (see Question 20).

� A statutory merger (see Question 2, Statutory mergers).

ReFoRM

29. Please summarise any proposals for the reform of takeover regulation in your jurisdiction.

Proposed amendments to public offer rules

On 11 June 2010 the Dutch Ministry of Finance launched a consultation on proposed amendments to the public offer rules, which followed previous discussions on introducing a market supervisor (marktmeester) along the lines of the Takeover Panel in the UK to the Dutch public offer rules. The consultation period ended on 26 July 2010.

Although the market supervisor proposal was rejected, the Minister of Finance did indicate that the public offer rules would benefit from amendments that would:

� Streamline the offering process.

� Increase transparency before and during the offering process.

� Make the rules concerning mandatory offers more specific.

� Adjust the rules on buy-out and consignment.

The proposed amendments to the public offer rules, include:

� A “put up or shut up” rule is introduced, under which the AFM can at the request of the target require a potential bidder to make a public announcement within six weeks either:

� announcing the public offer; or

� that no intention exists to make a public offer.

� A public offer will be deemed to have been first announced when the potential target indicates that it will not reach a conditional agreement with the potential bidder, instead of when a potential bidder has made public any concrete information concerning the substance of the intended public offer.

� The limitation that the offer price may only be increased once after the offer has been announced will be removed and offer prices may be increased without limitation.

� The majority requirement for an exemption to the mandatory public offer obligation by the general meeting of shareholders will be decreased from 95% to 75%.

� Underwriters will be exempted from the mandatory offer obligation, provided dominant control will be lost within one year and the underwriters will not exercise voting rights.

Proposed amendments to corporate governance rules

A legislative proposal is currently being submitted to the Dutch Lower House of Parliament on the relation between the board of directors and the shareholders and shareholder activism:

� The threshold for notification of capital interest by a shareholder of a listed company (see Question 8) will decrease from 5% to 3%.

� The company must publish its strategy on its website, and shareholders with a capital interest of at least 3% must publicly disclose whether or not they agree with the company’s strategy.

� Listed companies will be able to establish the identity of their shareholders through a right of inquiry with the Securities Depository.

� The threshold requirement for placing an item on the agenda of the general meeting of shareholders will increase from a 1% capital interest to a 3% capital interest.

Country Q

&A




Qualified. The Netherlands, 1992

Areas of practice. M&A; capital markets.

Recent transactions

� Represented New World Resources (listed FTSE100) in the launch of a EUR500 million high-yield bond. The bankers involved were Goldman Sachs, Morgan Stanley and JP Morgan.

� Dutch counsel to JP Morgan, Citi and BXR, the underwriters of NWR’s US$1.2 billion unsolicited bid for Bogdanka.

� Acting as issuer’s counsel for a proposed listing of a Dutch NV on the WSE.

FeRdinAnd MASon

Boekel De Nerée NVt +44 207 337 2507e [email protected] www.boekeldeneree.com

ContRibutoR detAilS

Qualified. The Netherlands, 2004

Areas of practice. M&A; capital markets.

Recent transactions

� Represented New World Resources (listed FTSE100) in the launch of a EUR500 million high-yield bond. The bankers involved were Goldman Sachs, Morgan Stanley and JP Morgan.

� Dutch counsel to JP Morgan, Citi, and BXR, the underwriters of NWR’s US$1.2 billion unsolicited bid for Bogdanka.

� Acting as issuer’s counsel for a proposed listing of a Dutch NV on the WSE.

bAStiAAn kout

Boekel De Nerée NVt +44 207 337 2503e [email protected] W www.boekeldeneree.com

Documents

Dutch M&A Q&A