Conference Magazine - GoingPublic.de - Deutsches Eigenkapitalforum

Legal
Barbarians at the gate?
Takeover defence: the perspective of bidder and target
In the recent past, the operational success of German enterprises
has often not been reflected by their stock market
valuation. At the same time, more and more international
companies are seeking know-how or strategic acquisitions
and some financial investors are under significant pressure
to invest. Therefore, even potentially hostile takeovers become
an increasingly realistic scenario for many companies.
The perspective of the bidder – swift, cheap and silent
It is among the key interests of the bidder to conduct the
transaction with the least possible use of resources, while
maintaining a high level of transaction certainty. The bidder
must therefore aim to avoid rival offers or defence measures
that might delay or even frustrate the process. In addition, a
bidder may want to swiftly implement the necessary legal
integration measures to bring about the desired operational
integration following the offer. This usually requires a qualified
majority in the target’s shareholders’ meeting. While a
media debate, political attention or even interference is
usually counter-productive in this regard, the bidder might
have to offer a significant premium to reach the required
acceptance threshold.
Unfriendly takeovers – a way to succeed?
A takeover is predominantly driven by the bidder, who sets
the terms and conditions of the offer, as well as the timeline
of the process. Even though the German Securities Acquisition
and Takeover Act (“Wertpapiererwerbs- und Übernahmegesetz”)
does not require the bidder to involve the
target’s management prior to the announcement of the offer,
takeover offers are considered “hostile” when the target’s
management is not “on board”.
Nevertheless, the support of the target company’s
management team considerably facilitates the process. In
contrast, an “unfriendly” takeover might become a long and
rocky road for the bidder: The target will not allow the
bidder to conduct a due diligence and it is likely that
defence measures will be taken. Also, the target’s management
team may turn to politicians and media with the plea
for help and reject the offer for not being in the target
company’s best interests. As a consequence of a lack of
Page 68 Deutsches Eigenkapitalforum 2012
Christoph F. Vaupel, Partner,
Taylor Wessing
Dr. Lars-Gerrit Lüßmann, Partner,
Taylor Wessing
management support and a critical public debate, many
shareholders may refuse to tender or require a higher premium
to be convinced. Hence, the bidder must carefully
evaluate whether these side effects are acceptable and
outweighed by the benefits of an unfriendly approach.
The perspective of the target – just say “no” or
“yes – but”?
Generally, the target has a rather reactive role in the
takeover process. It is the primary duty of the target’s management
team, however, to carefully evaluate the offer. The
only valid parameter for an evaluation (and, possibly,
rejection) is the interest of the company. Key aspects which
the management team must also assess in its mandatory
reasoned opinion are the consideration offered, the objects
pursued by the bidder and the expected consequences of a
successful offer for the target, its business and employees.
Defence measures following the public announcement of
the offer which are apt to prevent the success of the offer
are generally prohibited. Nevertheless, the target’s management
team may search for a rival offer and take all the
actions that “a prudent and responsible management
would take”. Based on the company’s best interests and
the management team’s evaluation of the offer, defence
actions with the consent of the supervisory board or autho-