Erste Bank JPMorgan Merrill Lynch International

Takeover Commission and must prepare an offer (“mandatory offer”) to purchase the remaining shares
in the target company and must submit the offer document to the Takeover Commission within
20 trading days of acquiring the controlling interest. Furthermore, every voluntary offer aiming at
acquiring a controlling influence is statutorily under the condition precedent that the bidder acquires
more than 50% of the outstanding shares with permanent voting power (“voluntary offer to gain
control”).
Important portions of the Takeover Act are based on a formal concept of control. Within the
meaning of the Takeover Act, an interest is “controlling” if it confers more than 30% of the voting rights
in the target company. Acquisitions of less than 30% of the voting rights do not in any way trigger a
mandatory offer (“safe harbor”). If the threshold of 30% is not exceeded, but a secured blocking
minority (26%) is indeed exceeded, only 26% of the voting rights can be exercised unless the
Takeover Commission explicitly revokes the suspension of the voting rights. In this event, the Takeover
Commission becomes involved only upon request and, instead of suspending the voting rights, it can
also establish conditions and obligations.
What is referred to as “passive” acquisition of control (that is, where a shareholder acquires a
controlling interest without recent actions of its own (for example acquisition of shares) for example as
a result of the break-up of a controlling shareholder consortium) similarly does not trigger a mandatory
offer provided the person acquiring control would not necessarily have been expecting to achieve
control when the shares were acquired. In this case as well, only 26% of the voting rights can be
exercised if the Takeover Commission does not, upon request, explicitly revoke the suspension of the
voting rights.
In addition, under certain circumstances, the extension of an existing controlling interest also
triggers a mandatory offer (“creeping-in”): that is, a person with a controlling interest who does not
have a majority of the voting rights of a listed company at his disposal and acquires an additional 2%
or more of the voting rights within a period of 12 months must make a mandatory offer.
The Articles of Association of a stock corporation can, inter alia, stipulate that during the takeover
process certain restrictions on transfer and voting rights with respect to shares of the target company
are not applicable (“break through”). The acquirer of an interest of at least 75% of the share capital of
a stock corporation can call a shareholders’ meeting within six months after a takeover process. If, in
such a shareholders’ meeting, a vote is taken on changes to the Articles of Association (in particular
the abolition of transfer restrictions, voting right restrictions and delegation rights) or the recall or
election of members of the supervisory board, restrictions on voting rights do not apply.
As a rule, the price for a voluntary public offer can be freely determined. The price for a
mandatory offer and the voluntary offer to gain control (i) must be at least equal to the average stock
exchange price weighted according to the respective trading volume during the preceding six months
before the day, on which the intent to bid was pronounced and (ii) must be at least equal to the
highest share price that the bidder or a legal entity acting jointly with the bidder has paid or agreed to
pay during the last 12 months before publication of the offer. Under certain circumstances, an
appropriate price is to be set for a mandatory offer.
A mandatory offer must include an alternative offer which provides exclusively for paying cash for
the securities which are to be acquired. In addition, the bidder may also offer the person to whom the
offer is directed an alternative choice of receiving other securities in exchange for the shares.
The offer document for voluntary offers and mandatory offers is to be examined by a qualified
independent expert before the offer document is submitted to the Takeover Commission and delivered
to the target company. The management board of the target company must issue a statement on the
offer immediately after the publication of the offer document.
As a rule, subsequent improvement of public offerings and the submission of competitive offers
are permissible. As a rule, the same rules that apply to the original offer also apply to improved or
competitive offers.
After the bidder’s intention of making an offer becomes known to the management board and the
supervisory board of the target company, they require the consent of the shareholders’ meeting for all
measures which could hinder the offer or its success. This applies particularly to the issuance of
securities through which the bidder could be prevented from acquiring control of the target company.
The bidder and all parties acting jointly with the bidder may not acquire securities of the target
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