1. Mergers and Acquisitions 2011/12
Country Q&A
The Netherlands
Ferdinand Mason and Bastiaan Kout www.practicallaw.com/3-502-0666
Boekel De Nerée
M&A activity The consideration can take the form of cash, share for share, or a
combination of the two.
1. Please give a brief overview of the public M&A market in your
A shareholder that has acquired 30% or more of the voting rights
jurisdiction.
must make a mandatory offer for the target’s entire share capital.
Statutory mergers
The public M&A market in The Netherlands was quiet throughout
2010, and only a limited number of transactions were closed Statutory mergers are mergers of:
(Mergermarket): „„ An acquiring company (which can be a newly incorporated
„„ Equity One’s recommended offer for DIM Vastgoed of company).
US$22.66 million. „„ A company (or companies) that ceases to exist as a result of
„„ One Equity Partners’ recommended offer for SMARTRC of the merger (target).
EUR319 million.
The acquiring company acquires all of the assets and liabilities of
(As at 1 March 2011, US$1 was about EUR0.7.) the target under universal title. The statutory merger must comply
with the following formalities:
By the end of 2010, there were approximately six deals pending, „„ A general meeting of the target’s shareholders must approve
which include: the merger.
„„ Brambles’ recommended offer for IFCO Systems of EUR894
„„ The acquiring company’s board must approve the merger.
million.
„„ The acquiring company must file a merger proposal, agreed
Country Q&A
„„ Waha Capital’s recommended offer for AerCap holdings of
by both companies, with the chamber of commerce.
EUR270 million.
Creditors of either company can object to this proposal
„„ Johnson & Johnson’s recommended offer for Crucell of within one month following its announcement.
EUR1,432 million.
„„ An auditor confirming the fairness of the share exchange
ratio (see below).
2. What are the main means of obtaining control of a public
company? 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
The following means of obtaining control of a public company are result in certain shareholders losing their shareholding, in which
possible. A combination of one or more methods can be used, case they must be compensated. Therefore, statutory mergers can
depending on the merger’s proposed structure. be used to squeeze out minority shareholders. However, case law
provides that using a statutory merger primarily for this purpose
Public offers can be contrary to the principles of reasonableness and fairness.
Public offers for securities in a Dutch public company (naamloze
Under Dutch law based on Directive 2005/56/EC on cross-border
vennootschap) (NV) are commonly used to obtain control over an
mergers of limited liability companies (Cross-border Mergers
NV. They are governed by legislation based on Directive 2004/25/EC
Directive), Dutch private and public companies can merge with
on takeover bids (Takeover Directive). Depending on the quantity
joint stock companies incorporated under the laws of the EU or
of securities subject to the offer, they can be categorised as one
European Economic Area (EEA). International statutory mergers
of the following:
require additional formalities in relation to, among other things,
„„ Complete offer. A public offer to acquire all of the target’s the merger proposal, announcement, and auditor’s report. The
share capital. target’s shareholders can also exit from their shareholding by
„„ Partial offer. A public offer for no more than 30% of the voting against the merger and claiming compensation.
target’s share capital.
The international statutory merger can be a useful instrument and
„„ Tender offer. A public offer inviting holders of no more than the procedures are becoming smoother as counsels and notaries
30% of the target’s share capital to tender shares and state in various jurisdictions become used to the relevant formalities in
the consideration they would like to receive.
© 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.

2. Mergers and Acquisitions 2011/12
Country Q&A
other jurisdictions. However, European and/or Dutch legislation „„ The Public Offer Decree (Besluit Openbare Biedingen). The
is still necessary to allow for statutory mergers with companies Public Offer Decree is delegated legislation which contains
outside the EEA. detailed provisions governing the process of public offers,
from announcement to completion, including:
Hostile bids „„ the timing and contents of the initial public
announcement of the intended offer;
3. Are hostile bids allowed? If so, are they common? If they are „„ follow up announcements on the:
not common, why not?
†† submission of the offer memorandum for approval;
†† certain funds;
Hostile bids are allowed under Dutch law. They are still common
†† continuation of the offer; and
in the M&A market, although no hostile bids took place in 2010
(see Question 1). †† offer period;
„„ the offer period, including the:
Regulation and regulatory bodies †† best price rule;
†† duration of the period; and
4. How are public takeovers and mergers regulated, and by
whom? †† extension of the period;
„„ an extraordinary general meeting of the target’s
shareholders.
Legislation
In The Netherlands, the key provisions governing public takeovers „„ The Dutch Civil Code. This contains rules which are of
are contained in: general relevance, in particular rules contained in the
following:
„„ The Financial Supervision Act (Wet op het Financieel
Toezicht). The Financial Supervision Act regulates listed „„ Book 2. This focuses on the law of legal entities, and
companies, including public takeovers. It contains contains relevant provisions on:
specific provisions in relation to public offers on securities †† squeeze-out provisions, particularly following a
concerning: public offer;
„„ mandatory public offers (see Question 2, Public offers); †† the powers of corporate bodies;
„„ the offer memorandum and its approval (see Question †† resolutions that require shareholder approval (such
14, Offer memorandum). as a change of control);
Country Q&A
The Financial Supervision Act also contains general †† resolutions of corporate bodies and the grounds/
provisions that are relevant to public takeovers and mergers, procedures for annulment of those resolutions;
concerning:
†† statutory mergers (see Question 2, Statutory mergers);
„„ prospectus requirements, including: †† financial reporting; and
†† contents; †† directors’ liability for mismanagement;
†† approval; „„ Book 6. This focuses on the law of obligations, and
†† disclosure. contains relevant provisions on:
„„ issuing certificates of approval of the prospectus for use †† contractual obligations, including liability for
in other jurisdictions (EU passport); breach of contract;
„„ market abuse (prohibition of insider trading and market †† liability for torts, in particular for misleading adver-
manipulation); tising (which applies to prospectuses).
„„ continuing and periodic disclosure requirements for „„ The Works Council Act 1979 (Wet op de
share issuers; Ondernemingsraden) and the SER Merger Rules 2000
(SER Besluit Fusiegedragsregels 2000). These deal with
„„ notifications by issuers, shareholders, and independent
aspects of employees’ representation and contain provisions
directors of:
on consultation rights and notification obligations to trade
†† voting rights; unions, work councils and the Social and Economic Council
†† share capital; (De Sociaal-Economische Raad) (SER).
†† control; and
†† capital interests.
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3. Mergers and Acquisitions 2011/12
Country Q&A
Regulators satisfactory outcome of due diligence. The bidder and target must
The two major financial regulators in The Netherlands are: take adequate measures to prevent the use of inside information
gathered in the due diligence process (see, for example, the
„„ The Netherlands Authority for the Financial Markets Numico decision of the Dutch Supreme Court).
(Autoriteit Financiële Markten) (AFM). The AFM focuses
on supervision of market conduct and is the main regulator Hostile bid
monitoring public takeovers. It approves prospectuses and Hostile bidders are not usually permitted to perform due
offer memoranda. It can approve the offer memorandum if: diligence. There is case law available, based on the Dutch
„„ the target’s securities are listed in The Netherlands; or principles of reasonableness and fairness, suggesting that the
board of directors has a duty to:
„„ the target company’s registered office is in The
Netherlands, where securities are also listed in other „„ Take into account the legitimate interests of potential
EU jurisdictions. bidders.
The AFM can impose fines if the relevant provisions are „„ Not frustrate possible bids or resist a level playing field.
breached.
It has been argued that the effect of this requires the board of
„„ The Dutch Central Bank (De Nederlandsche Bank)
directors, in certain circumstances, to:
(DNB). The DNB has authority over, among others, banks,
investment firms or insurers with registered offices in „„ Provide non-public information to a hostile bidder.
The Netherlands. A bidder must obtain a statement of no
„„ Allow limited due diligence.
objection if it wishes to acquire one of these entities (see
Question 25). „„ Provide a hostile bidder with the same information provided
to an original friendly bidder.
In addition, the following can be relevant:
This duty will not exist if the:
„„ The Netherlands Competition Authority (De Nederlandse
Mededingingsautoriteit) (NMa). The NMa is the regulator for „„ Hostile bidder is not a serious bidder.
national competition law matters (see Question 25).
„„ Hostile bidder lacks sufficient funds to support the offer.
„„ The Enterprise Chamber of the Court of Appeal of
„„ Hostile bidder’s intentions are contrary to the target’s interests.
Amsterdam (Ondernemingskamer). The Enterprise Chamber
has an important role in public takeovers, and has
Public domain
jurisdiction over:
Due to increasing disclosure and transparency requirements
„„ matters concerning the mandatory offer, such as: based on relevant EU Directives, listed companies disclose a
†† enforcing the mandatory offer; significant amount of information to the market on a continuing
Country Q&A
and periodic basis. This includes:
†† granting dispensation from the mandatory offer;
„„ Quarterly, half-yearly and annual accounts (disclosed on the
†† determining a reasonable price;
company’s website and on the public trade registry).
„„ squeeze-out procedures following a public takeover (see
„„ Inside information through press releases (disclosed on the
Questions 16 and 20).
company’s website).
See box, The regulatory authorities. „„ An annual document containing an overview of disclosed
information over a period of 12 months (disclosed on the
Pre-bid company’s website).
Due diligence „„ The initial public offer (IPO) prospectus (on the company’s
website).
5. What due diligence enquiries does a bidder generally make „„ Notifications on voting rights, capital, control, insider
before making a recommended bid and a hostile bid? What transactions (on the AFM register on the AFM’s website (see
information is in the public domain? box, The regulatory authorities)).
„„ Articles of association (on the trade registry and on the
Recommended bid company’s website).
Only limited due diligence takes place before the initial „„ On the trade registry, a corporate profile containing general
announcement of the intended public offer. It becomes more details on the company’s:
intensive during the stage following the initial announcement and
before publication of the offer memorandum. „„ share capital;
„„ registered office; and
A friendly bidder is usually permitted to perform full-scale due
„„ members of the board of directors (and supervisory
diligence before making a recommended bid as the public offer
board, where relevant (see Question 23, Other
cannot be made conditional on subjective conditions, such as the
measures) and their powers.
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4. Mergers and Acquisitions 2011/12
Country Q&A
Secrecy indirect obligation to disclose irrevocables under the continuing
requirement to disclose inside information (see Question 6).
6. Are there any rules on maintaining secrecy until the bid is Following the initial announcement of the bid, the bidder and
made? 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).
In the period preceding the actual bid, both the target and
the bidder gather inside information. A listed company must Stakebuilding
immediately make inside information generally available to the
public (Financial Supervision Act). However, disclosure can be 8. If the bidder decides to build a stake in the target (either
postponed if, among other things: through a direct shareholding or by using derivatives),
before announcing the bid, what disclosure requirements,
„„ Postponement serves a legitimate interest. A legitimate
restrictions or timetables apply? Are there circumstances in
interest is present, according to the Transparency Decree
which shareholdings, or derivative holdings, of associates
(Besluit uitvoeringsrichtlijn transparantie uitgevende
could be aggregated for these purposes?
instellingen Wft), if:
„„ the outcome of negotiations could be influenced by
disclosure; General disclosure requirements
„„ the required supervisory board approval has not yet The following groups of persons with securities in the target have
been granted; and notification obligations to the AFM (Financial Supervision Act):
„„ an announcement of the inside information could „„ Shareholders.
distort the public’s view of the proposed merger. „„ Holders of depository receipts (certificates representing
„„ The company can guarantee the inside information’s economic interest in a number of underlying shares (see
confidentiality. Question 23, Depository receipts).
„„ Holders of other securities which grant a right to acquire
Therefore, it is essential that insider lists are kept and updated
shares or depository receipts.
regularly and insiders bound to a confidentiality agreement.
„„ Other persons with voting rights.
From the bidder’s perspective, gathering inside information
„„ Holders of shares which grant the holder a special right of
means that the bidder is prohibited from engaging in insider
control.
trading and cannot build its shareholding before the bid takes
place. This is usually guaranteed by a standstill agreement (see
These persons must notify the AFM immediately if:
Question 8, Restrictions).
Their ownership of the target’s shares or voting rights passes
Country Q&A
„„
Agreements with shareholders the following thresholds: 5%, 10%, 15%, 20%, 25%,
30%, 40%, 50%, 60%, 75% and 95%.
7. Is it common to obtain a memorandum of understanding or
undertaking from key shareholders to sell their shares? If so, „„ They acquire shares which grant the holder special rights of
are there any disclosure requirements or other restrictions on control.
the nature or terms of the agreement?
In some circumstances, ownership of securities or voting rights
can be attributed to other parties (see below).
A bidder can approach key shareholders, if knowledge of the
shareholders’ intentions is reasonably required for the decision to
Aggregation of shareholdings or derivative holdings
make a public offer. This approach is explicitly exempt from the The general disclosure requirements in the Financial Supervision
prohibition on providing inside information to third parties (tip- Act contain rules for attributing ownership of securities or voting
offs) (see Question 6). After this approach, the key shareholders rights held by one party to another, such as:
possess inside information, and cannot carry out any further „„ Voting rights granted under a share pledge or right of
transactions in securities, except to enter into an agreement usufruct (vruchtgebruik) are attributed to the pledgee or
with the bidder. This agreement must create an irrevocable holder of the right of usufruct.
undertaking (irrevocable) to sell a specified number of shares if
the offer is pursued. „„ A subsidiary’s voting rights and securities are attributed to
the parent company.
The buyer usually considers it essential to obtain these irrevocables
„„ Voting rights and securities held by third parties (legal
from the key shareholders. In practice, these undertakings are
ownership) are attributed to the beneficial owner.
not actually irrevocable if the current bidder increases its bid, or
if another bidder offers more. „„ Voting rights under an agreement containing a long-term
common policy on exercising the voting rights or power of
There is no direct obligation to disclose irrevocables under the attorney are also attributed to the beneficial owner.
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
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5. Mergers and Acquisitions 2011/12
Country Q&A
In addition, the Financial Supervision Act contains a definition „„ no material adverse change;
of “persons acting in joint consultation” which includes natural „„ fulfilment of conditions in financial documentation;
persons, legal persons or companies, collaborating under an
„„ the approval of the competition authorities; and
agreement to either:
„„ acceptance of the offer by a minimum percentage of
„„ Acquire predominant control in a public limited company.
shareholders.
„„ Where the target is one of the collaborators, to frustrate an
„„ An obligation for the target to recommend the offer. The
announced public takeover bid.
board of directors of the target must recommend the bid
to its shareholders in the mandatory extraordinary meeting
Predominant control is defined as 30% or more of the voting rights
where the bid will be discussed. This will be an essential
(see Question 2, Public offers). To establish the requirement to
condition for the bidder.
make a mandatory offer, the persons acting in joint consultation
must combine their interests. „„ Exclusive dealing arrangements (that is, no-shop, no-talk,
and so on). Exclusive dealing arrangements are usually
Restrictions included in the Merger Protocol. However, they may
The following restrictions apply: conflict with the duty of the board of directors to take into
account the legitimate interests of potential bidders and
„„ Insider trading. A restriction on stakebuilding flows from the
not frustrate possible bids. The board of directors must
insider trading prohibition (see Question 6). In the case of a
therefore examine other potential bids carefully before
friendly bid, the bidder is usually bound to a confidentiality
concluding any exclusive dealing arrangements.
and standstill agreement that prohibits any stakebuilding
before announcing the bid. In the case of a hostile bidder, „„ Break fees. See Question 10.
there is not normally any restriction on stakebuilding, as
knowledge of one’s own proposed transactions does not Break fees
qualify as inside information.
10. Is it common on a recommended bid for the target, or the
„„ Price restrictions. Price restrictions for the purpose of equal bidder, to agree to pay a break fee if the bid is not successful?
treatment of owners of securities that are subject to the If so, please explain the circumstances in which the fee is
offer do not restrict stakebuilding before announcement of likely to be payable, and any restrictions on the size of the
the offer. payment.
Agreements in recommended bids
It is common to agree on a break fee in the Merger Protocol if the
9. If the board of the target company recommends a bid, is it bid is not successful. Trigger events could be:
common to have a formal agreement between the bidder and
target? If so, what are the main issues that are likely to be The approval or recommendation by the target’s or the
Country Q&A
„„
covered in the agreement? To what extent can a target board bidder’s board of directors of a third-party transaction.
agree not to solicit or recommend other offers? „„ Revocation of the target board’s recommendation of the
offer.
It is usual to have a formal agreement between a friendly bidder „„ Termination of the Merger Protocol on (other) specified
and the target. These agreements are usually called merger grounds.
agreements or merger protocols (Merger Protocols). However,
Merger Protocols are not required, and the parties should carefully As the bidder and/or target will have incurred substantial costs
consider whether it is desirable to limit their freedom in relation in preparing the offer, the break fee arrangement normally
to the offer, its conditions, and so on. In The Netherlands, a sets out in detail what penalties and/or damages will apply.
Merger Protocol is not a public document, unlike the US where There is no case law setting out requirements for break fees.
it would be filed with the US Securities Exchange Commission. However, it is thought that the rules for anti-takeover measures
apply by analogy, meaning that the break fee is unlawful if it
A Merger Protocol will generally cover the following: is disproportionate for a potential bidder. In addition, directors
can be liable for mismanagement if they harm the interest of
„„ An obligation for the bidder to make the offer within a
the company by agreeing excessive break fees as these may be
certain time limit. This is to reduce uncertainty for the
considered contrary to the corporate interest.
target as, under the Financial Supervision Act and Public
Offer Decree, the bidder has several ways to delay or to
Committed funding
abort the offer process.
„„ Conditions for making and pursuing the offer. Common 11. Is committed funding required before announcing an offer?
conditions include:
„„ obtaining the approval of the works council (a body On applying for approval of the offer memorandum to the AFM,
elected by a company’s employees); the bidder must ensure it has acquired the necessary funds and
„„ complying with the Merger Protocol; has published a certain funds announcement, which can be
made after the initial public announcement (see Question 12,
„„ the AFM approving the offer memorandum;
Initial public announcement and Certain funds announcement).
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6. Mergers and Acquisitions 2011/12
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If a share issue is part of the financing, a notice of an extraordinary Publication of the offer memorandum
general meeting of shareholders for that purpose must have been Within six business days of the AFM’s approval of the offer
issued on making the certain funds announcement. The meeting memorandum, the bidder must publish the offer memorandum
itself can be no later than seven days before expiry of the offer and make an announcement in relation to that publication. If the
period (see Question 12, Offer period). The AFM does not carry offer is not continued, the bidder must make an announcement
out any due diligence in relation to financing, but does examine to that effect.
the certain funds announcement.
Offer period
Announcing and making the offer The offer period must be between four weeks and ten weeks, and
can be extended once. If a competing offer is announced during
Making the bid public
the offer period, the bidder can extend the offer period according
12. Please explain how (and when) the bid is made public to the offer period of the competing offer.
(highlighting any relevant regulatory requirements), and
The target must call a shareholders’ meeting at least six business
set out brief details of the offer timetable. (Consider both
days before expiry of the offer period to discuss the offer on
recommended and hostile bids.) Is the timetable altered if
the basis of a reasoned opinion, which must have been made
there is a competing bid?
available to its shareholders at least four business days before the
meeting. If a share issue forms part of the financing, the bidder
Initial public announcement must call a shareholders’ meeting at least seven business days
before expiry of the offer period (see Question 12).
In the case of a recommended bid, the bidder and the target
must jointly announce a non-mandatory public offer on reaching Completion
agreement. The announcement must contain the price or
On the third business day after the offer period has expired, the
exchange ratio and the conditions to concluding the offer, such
bidder must:
as the approval of competition authorities and works council
approval (see Question 9). „„ Announce whether the offer will be pursued.
„„ Disclose the value, number and percentage of its
In the case of a mandatory public offer (see Question 16), the
shareholding following the offer period.
bidder must announce the offer 30 days after acquiring the
required level of control.
At this stage, the bidder can grant a final extension of the offer
Finally, a non-mandatory hostile offer is deemed to be announced period for up to two weeks, allowing shareholders that have not yet
if the bidder has disclosed specific information concerning the offered their shares to still offer them. Following that extension,
proposed public offer, such as the name of the target company the bidder must update its announcement on its shareholding.
and a price or exchange ratio.
Country Q&A
Offer conditions
The bidder and target should carefully observe insider trading
13. What conditions are usually attached to a takeover offer (in
rules which may require announcement of the contemplated
particular, is there a regulatory requirement that a certain
offer before any statutory maximum period has expired (for
percentage of the target’s shares must be offered/bid)? Can
example, where confidentiality of the transaction can no longer
an offer be made subject to the satisfaction of pre-conditions
be guaranteed, or a leak has occurred).
(and, if so, are there any restrictions on the content of these
Follow up announcement pre-conditions)?
The bidder must make a follow-up announcement within four
weeks after the initial public announcement, stating that the There are two types of conditions, pre-conditions and conditions
bidder will either: for completing the transaction.
„„ Submit the offer memorandum for approval to the AFM
within a specific number of weeks (which cannot exceed 12 This distinction is important, as the conditions for completing the
weeks). transaction may not be under the bidder’s control.
„„ Not apply for approval of the offer memorandum. Common conditions for completing the transaction include that:
Certain funds announcement „„ The number of offered, acquired and committed shares
amounts to a minimum percentage of capital interest (95%
On applying for approval of the offer memorandum (see below,
is common with a view to a successful squeeze-out, but
Approval of the offer memorandum), the bidder must ensure that
lower percentages are sometimes used).
it has obtained sufficient funding and must publicly announce
this (see Question 11). „„ No material adverse change has occurred.
„„ No competing offer has been made by a third party.
Approval of the offer memorandum
The AFM reviews and approves the offer memorandum within ten „„ The approvals of competition authorities have been
business days. This period can be extended if the AFM requires obtained.
additional information.
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7. Mergers and Acquisitions 2011/12
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Bid documents „„ An opinion of the board of directors in relation to the:
„„ offer price or exchange ratio; and
14. What documents do the target’s shareholders receive on a
recommended and hostile bid? „„ 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
The following documents will be provided to the target’s must be of the current financial year).
shareholders throughout the public bid (in chronological order).
„„ Where the target has obtained a third party’s fairness
Offer memorandum opinion on the merits of the offer, the target must disclose
It is prohibited to make a public offer without publishing an offer the identity of this third party and the opinion’s conclusions.
memorandum approved by the AFM or a financial regulator of
Employee consultation
another EU (or EEA) member state. The bidder is responsible
for the offer memorandum, but in the case of a recommended
15. Are there any requirements for a target’s board to inform or
bid, this is in practice a joint effort by the target and the bidder.
consult its employees about the offer?
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:
For both hostile and recommended offers the relevant trade
„„ The terms related to the offer, including: unions and works councils of the bidder and the target should be:
„„ whether it is a friendly offer; „„ Informed about the proposed takeover, before an agreement
is reached between the bidder and the target.
„„ the offer period;
„„ the funding of the offer; „„ Provided with the offer circular immediately after it
becomes available to the public.
„„ the rationale for the offer and intentions in relation to
the continuation of the target’s activities; Targets that are the subject of a recommended bid must give their
„„ the offer price and its rationale; and works council an opportunity to advise on any planned decision
concerning a transfer of control. This must be done once the
„„ the required minimum tendered shares and further bidder and the target have entered into a conditional agreement.
conditions. If the advice of the works council is negative, and that advice is
„„ Terms related to the bidder and target, including: not or only partially followed, the transaction must, in principle,
be delayed for one month, allowing the works council to appeal
„„ their names, registered office, and legal forms;
the decision to the Enterprise Chamber of the Court of Appeals in
„„ their mutual capital interests; Amsterdam. The employee representatives must be provided with
Country Q&A
a statement of the:
„„ securities in the target held by directors and members
of the supervisory board and compensation that will be „„ Grounds for the decision.
paid on their resignation (where applicable); and
„„ Anticipated consequences for the persons who work for the
„„ the proposed composition of the target’s and bidder’s undertaking and the projected measures concerning those
board and supervisory board after the bid. consequences.
Prospectus A target that is involved in a hostile bid must comply with the
In the case of an exchange offer, securities are offered to the trade union’s consultation procedure before communicating its
public. This requires an approved prospectus. There is an position to its shareholders and the public. Consultations with the
exemption for a public offer that applies where a document trade unions must be confidential (SER Merger Rules).
is generally made available containing information that the
competent authority regards as being equivalent to that of the Mandatory offers
prospectus. This can be the offer memorandum, if it contains the
required information. However, there is currently no EU regulation 16. Is there a requirement to make a mandatory offer? If so,
and EU passport for this equivalent document, as the European when does it arise?
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 Obligation to make a mandatory offer
(Prospectus Directive). This causes uncertainty as to whether the Any party that, either on its own or together with persons with
exemption will apply in another member state. which it acts in “joint consultation”, acquires, either directly or
indirectly, “predominant control” over a public limited company,
Target’s memorandum must make a public takeover bid for all the shares and all the
The target must publish a memorandum four business days depositary receipts (certificaten) for shares issued with the public
before its mandatory extraordinary meeting of shareholders (see limited company’s co-operation.
Question 12, Offer period). The memorandum must contain,
among other things, the following:
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8. Mergers and Acquisitions 2011/12
Country Q&A
Joint consultation and predominant control have the following „„ Share and cash offers.
meanings: „„ Offers of choice, which will allow the target’s shareholders
„„ Joint consultation. Persons acting in joint consultation are to opt for their preferred consideration.
defined as natural persons, legal persons or companies that
are collaborating under a contract with the aim of either:
18. Are there any regulations that provide for a minimum level of
„„ acquiring predominant control in a public limited consideration?
company; or
„„ frustrating the success of an announced public
If the bidder declares the full offer unconditional, the bidder:
takeover bid for that company, if the target is one of the
collaborators. „„ Must pay consideration for all securities registered in
connection with that full offer. This consideration must
Joint consultation should be established according to
correspond to the higher of:
objective criteria; the intentions of the parties are not
relevant. Acting in joint consultation is interpreted in „„ the consideration specified in the offer document, plus
a broad sense and can also be established on a non- any subsequent increases;
permanent (incidental) basis.
„„ the highest consideration paid by the bidder after the
„„ Predominant control. Predominant control is defined as initial public announcement, except for transactions
the right to exercise 30% or more of the voting rights conducted as part of the regular trade on markets for
in a general meeting of shareholders of a public limited financial instruments (regular transactions).
company. It is not relevant whether the voting rights are „„ Cannot, for one year after the offer document was made
or will ever be exercised. Holders of depository receipts generally available, directly or indirectly acquire securities
(issued with the company’s co-operation) can also be of the type to which the public takeover bid related, at
obliged to make a mandatory offer, since Dutch corporate conditions more favourable than applied under the bid.
law grants them the right to request a proxy for their There are exceptions (see Question 28).
depository receipts. However, this right may be limited
under circumstances that prevent the obligation to make a
mandatory offer from arising. 19. Are there additional restrictions or requirements on the
consideration that a foreign bidder can offer to shareholders?
Exemptions
There are certain exemptions to the obligation to make a
mandatory offer. For example, an obligation to make a mandatory There are no additional restrictions or requirements on the
offer does not apply if predominant control is acquired: consideration.
Country Q&A
„„ In a closed-end investment company.
Post-bid
„„ Following a public bid.
„„ By an independent legal person as an anti-takeover 20. Can a bidder compulsorily purchase the shares of remaining
mechanism. That person may hold the shares for a minority shareholders?
maximum period of two years after the announcement of a
public takeover bid.
A shareholder who, after a public offer, has obtained at least 95%
„„ By an intra-group transaction. of the shares, can:
„„ Over a public limited company that has been granted a „„ Buy out minority shareholders within three months of the
provisional moratorium or has been declared insolvent. expiry of the offer period. If the acceptance under the offer
exceeded 90%, the price to be paid is the offer price. The
„„ By hereditary succession.
remaining minority shareholders must accept the offer price
on the squeeze-out.
Consideration
„„ Be required by minority shareholders who have not
previously reacted to the offer and who have the right of
17. What form of consideration is commonly offered on a public
sell-off to buy their shares. To claim this right, the minority
takeover?
shareholders must file a claim with the Enterprise Chamber
within three months of the expiry of the offer period.
Four types of consideration are commonly offered on a public
At any time, any shareholder holding 95% or more of the issued
takeover:
share capital can initiate squeeze-out proceedings with the
„„ Cash offers. Enterprise Chamber. The Enterprise Chamber determines the
cash price payable for the shares. This procedure takes at least
„„ Exchange offers. An exchange offer can include shares,
six months.
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)).
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9. Mergers and Acquisitions 2011/12
Country Q&A
The last option for a bidder to squeeze out minority shareholders Protective preference shares
is through a statutory merger. The target merges into its parent The target issues preference shares to an independent special
company and the minority shareholders receive shares in the purpose foundation. The preference shares are issued at par
parent or holding company. However, the Supreme Court has value, with only 25% of the nominal value paid-up by the
ruled that it is not permitted to use a statutory merger if the sole foundation. The following requirements apply:
purpose is to get rid of minority shareholders.
„„ The majority of the board members must be independent.
21. If a bidder fails to obtain control of the target, are there any „„ The shares are issued on the basis of a call-option
restrictions on it launching a new offer or buying shares in agreement between the target and the foundation.
the target? „„ The foundation obtains external financing to purchase the
preference shares.
Unsuccessful bidders, who abandon their initial plans, are not „„ If the foundation holds more than 30% of the outstanding
required to observe a cooling-off period before launching a new shares it must issue a mandatory bid. If the preference
offer. In a recommended bid, the bidder and the target can agree shares are issued following the announcement of a hostile
to a standstill period during which the bidder is not permitted to bid, the foundation is exempt from this requirement for two
make an offer without the target’s approval. years. In that case, the foundation can hold up to 50% of
the outstanding shares.
Where the offer is declared unconditional, the bidder cannot
acquire shares at more favourable conditions for one year after Priority shares
the offer document is publicised (see Question 18). This does not A priority share provides its holder with special voting powers on
prevent the bidder from entering into a statutory merger with the certain issues, such as the right to:
target (see Question 2, Statutory mergers).
„„ Propose an amendment to the articles.
De-listing „„ Approve the issuance of shares.
22. What action is required to de-list a company? „„ Nominate candidates for appointment to the board.
These special voting powers are set out in the articles.
De-listing requires termination of the listing agreement with The
Netherlands’ stock exchange NYSE Euronext Amsterdam (see Depository receipts
box, The regulatory authorities). In the case of a successful public Dutch corporate law allows the separation of voting rights
offer, de-listing is only allowed if the (Announcement 2004-01): from the financial interest in shares. The holders of depository
receipts (which can be listed) do not have the right to vote
„„ Bidder has acquired at least 95% of the shares (or
Country Q&A
on the underlying shares. The voting rights on the shares for
depository receipts).
which depository receipts have been issued are exercised by a
„„ Issuer agrees with de-listing. foundation that has issued the depository receipts.
After obtaining a positive decision from Euronext on the The foundation can issue blanket proxies for a shareholders’
application for de-listing, Euronext: meeting to those holders of depository receipts that request this.
However, the foundation can restrict the rights of depository
„„ Officially announces the de-listing.
receipt holders to exercise their proxy rights if one of the following
„„ Issues a joint press release with the issuer. applies:
„„ A public offer has been made or has been announced (or
In addition to terminating the listing agreement, the formal
an offer is expected), without the bidder having reached an
approval of the general meeting of shareholders is required.
agreement with the target.
Target’s response „„ One or more holders of depository receipts working in
concert hold 25% or more of the outstanding depository
receipts.
23. What actions can a target’s board take to defend a hostile bid
(pre- and post-bid)? „„ 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.
Dutch case law recognises the legitimate interest of a company’s
board of directors and/or supervisory board to use protective Other measures
measures if this is in the interest of the company and its In certain cases, targets have taken other measures which may
stakeholders. Those measures should be adequate, proportional, make an offer less attractive for the bidder, for example:
and limited in duration (and therefore reversible). The most
common measures are discussed below. „„ Selling certain assets.
„„ Hiving out certain assets or subsidiaries to an independent
foundation.
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10. Mergers and Acquisitions 2011/12
Country Q&A
These measures may require shareholder consent. Lower thresholds can be imposed on specific categories of
undertakings for a period up to five years. The Minister of
Certain provisions of the Dutch corporate code can act as Economic Affairs has temporarily (until 31 December 2012)
protective measures against hostile bids when combined with imposed lower thresholds on the healthcare sector. Prior
applicable provisions in the articles. For example, companies notification of a concentration in the healthcare sector is now
falling under the “large company regime” must have a two tier- mandatory when, in the preceding calendar year:
board consisting of a board of directors and a supervisory board.
„„ The aggregate turnover of the participating undertakings
The supervisory board has the power to appoint and dismiss
exceeded EUR50 million.
managing directors, to nominate members for the supervisory
board and to approve certain actions of the board of directors. „„ At least two of the undertakings involved had individual
The large company regime applies to companies that have: turnovers in The Netherlands exceeding EUR10 million.
„„ An issued share capital and reserves of EUR16 million. „„ At least two of the undertakings involved each realised a
EUR5.5 million turnover by healthcare activities.
„„ A works council in the group.
„„ At least 100 employees in The Netherlands in the group. Concentrations that fall within the European Commission’s
jurisdiction need not be notified to the NMa.
The articles of a company can provide limited protection against
a hostile bid by, among others things: Substantive test. The test the NMa applies to decide whether
a licence is required is whether a particular concentration will
„„ Including majority voting requirements.
significantly restrict effective competition on the Dutch market
„„ Delegating exclusive authority to propose amendments to or any part of it, because of the creation or strengthening of a
the articles to the board of directors. dominant position.
„„ Providing delegated authority for the board to issue shares.
If the creation of a joint undertaking gives rise to the co-
ordination of the joining companies’ competitive behaviour, the
Tax NMa considers whether it is compatible with Article 6 of the
Competition Act, which prohibits restrictive agreements and
24. Are any transfer duties payable on the sale of shares practices.
in a company that is incorporated and/or listed in your
jurisdiction? Can payment of transfer duties be avoided? 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
No transfer duties are payable on the transfer of shares in The January 2012.
Netherlands, except for the transfer of a substantial shareholding
Country Q&A
in a real estate company. Filing procedure. The investigation procedure can be divided into
two phases:
Other regulatory restrictions „„ Notification phase. No concentrations that fall within the
scope of the Competition Act can be implemented before:
25. Are any other regulatory approvals required, such as merger „„ they have been notified to the NMa; and
control and banking? If so, what is the effect of obtaining
„„ a period of four weeks has passed.
these approvals on the public offer timetable?
The NMa issues a formal decision as whether or not a
licence is required within these four weeks. If no licence is
Competition clearance required, the concentration can be implemented. During the
The NMa (see box, The regulatory authorities) is responsible notification procedure, the NMa can suspend the four-week
for deciding whether a concentration between undertakings period if it requires additional information.
is permitted under the Netherlands Competition Act 1997 The NMa processes mergers using a short-form procedure
(Competition Act). unless:
Thresholds for notification. Concentrations must be notified to „„ a licence and further investigation are required;
the NMa when in the preceding calendar year: „„ interested parties have raised objections to the merger;
„„ The combined worldwide turnover of the participating or
undertakings exceeded EUR113.45 million. „„ the short-form procedure deviates from advice about the
„„ At least two of the undertakings involved each had an merger from the:
individual turnover in The Netherlands exceeding EUR30 †† Post and Electronic Communications regulator;
million.
†† 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.
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11. Mergers and Acquisitions 2011/12
Country Q&A
The regulatory authorities
Authority for the Financial Markets (Autoriteit Financiële The Merger Committee (Geschillencommissie Fusiegedragsregels)
Markten) (AFM) Address. Bezuidenhoutseweg 60
Address. Vijzelgracht 50 PO Box 90405
PO Box 11723 2509 LK The Hague
1001 GS, Amsterdam The Netherlands
The Netherlands T +31 70 349 9559
T +31 20 797 2000 F +31 70 383 2535
F +31 20 797 3800 E serfusie@gw.ser.nl
E info@afm.nl W www.ser.nl
W www.afm.nl
Main area of responsibility. The Merger Committee administers
Main area of responsibility. The AFM supervises market conduct the SER Merger Rules (SER Besluit Fusiegedragsregels 2000).
in the savings, lending, investment, and insurance markets
under the political responsibility of the Minister of Finance. The The Netherlands Competition Authority (De Nederlandse
AFM is the main regulator monitoring public takeovers and is Mededingingsautoriteit) (NMa)
competent to approve prospectuses and offer memoranda. Address. Wijnhaven 24
PO Box 16326
NYSE Euronext Amsterdam 2500 BH The Hague
Address. Beursplein 5 T +31 70 330 3330
PO Box 19163 F +31 70 330 3370
1000 GD Amsterdam E info@nmanet.nl
The Netherlands W www.nmanet.nl
T +31 20 550 4444
F +31 20 550 4953 Main area of responsibility. The NMa enforces fair competition
E info@nyx.com in the Dutch economy and brings actions against parties who
W www.euronext.com participate in a cartel or who abuse a dominant position. The NMa
reviews concentration notifications submitted by the parties to a
Main area of responsibility. Euronext Amsterdam NV organises proposed merger.
the Official Segment (Officiële Markt) of the Stock Market in
Amsterdam and supervises information provided to investors.
Country Q&A
„„ Licensing phase. If the NMa decides that a licence is required, Exemptions. Certain transactions do not constitute a concentration
the undertakings involved must submit an application for requiring notification. Two important examples of these transactions
a licence with the NMa. Within 13 weeks of receipt of the are:
application, the NMa must decide whether a licence is:
„„ The acquisition of shares by credit institutions or other
„„ granted;
financial institutions that hold securities in the course of
„„ denied; or their normal activities on a temporary basis, with a view to
„„ granted subject to certain conditions. reselling those securities without exercising the voting rights
attached to them, provided these institutions:
Public bid. The prohibition against implementing an intended „„ do not exercise the voting rights in respect of those
concentration before the four-week notification phase has ended securities to determine the competitive behaviour of the
does not apply to a public takeover to acquire participation in an
relevant undertaking(s);
undertaking’s share capital. However, the NMa must be notified
immediately and the acquiring party cannot exercise the voting „„ exercise the voting rights only with a view to preparing
rights attached to the acquired shares. On the request of the for the sale of those securities and any such sale takes
party notifying the concentration, the NMa can decide that voting place within one year of the date of acquisition.
rights can be exercised to maintain the full value of the party’s
„„ The acquisition by venture capital undertakings of
investment.
participating interests in capital, provided the voting rights
If the NMa decides that a licence is required: attached to those participating interests are exercised only
to maintain the full value of the investments.
„„ 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.
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12. Mergers and Acquisitions 2011/12
Country Q&A
Other regulatory clearances Although the market supervisor proposal was rejected, the
The bidder must obtain a statement of no objection from the DNB Minister of Finance did indicate that the public offer rules would
for proposed acquisitions of financial institutions with registered benefit from amendments that would:
offices in The Netherlands (see Question 4, Regulators). „„ Streamline the offering process.
„„ Increase transparency before and during the offering process.
26. Are there restrictions on foreign ownership of shares
(generally and/or in specific sectors)? If so, what approvals „„ Make the rules concerning mandatory offers more specific.
are required for foreign ownership and from whom are they „„ Adjust the rules on buy-out and consignment.
obtained?
The proposed amendments to the public offer rules, include:
There are no general restrictions on foreign ownership. The „„ A “put up or shut up” rule is introduced, under which the
articles can provide for certain requirements that shareholders AFM can at the request of the target require a potential
must comply with, such as being resident in The Netherlands or bidder to make a public announcement within six weeks
being an EU national. Such restrictions are uncommon. either:
„„ announcing the public offer; or
27. Are there any restrictions on repatriation of profits or „„ that no intention exists to make a public offer.
exchange control rules for foreign companies? If so, please
„„ A public offer will be deemed to have been first announced
give details.
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
There are no restrictions on repatriation of profits or exchange
information concerning the substance of the intended
control rules, but certain formalities may apply.
public offer.
„„ The limitation that the offer price may only be increased
28. Following the announcement of the offer, are there any
once after the offer has been announced will be removed
restrictions or disclosure requirements imposed on persons
and offer prices may be increased without limitation.
(whether or not parties to the bid or their associates) who
deal in securities of the parties to the bid? „„ 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%.
Once a bid has been declared unconditional, the bidder is
„„ Underwriters will be exempted from the mandatory offer
prohibited from directly or indirectly acquiring shares in the
obligation, provided dominant control will be lost within one
target on terms that are more beneficial for one year after
Country Q&A
year and the underwriters will not exercise voting rights.
publication of the offer document. Exceptions apply for shares
acquired through:
Proposed amendments to corporate governance rules
„„ Ordinary trade on the stock exchange. A legislative proposal is currently being submitted to the Dutch
„„ A squeeze-out procedure (see Question 20). Lower House of Parliament on the relation between the board of
directors and the shareholders and shareholder activism:
„„ A statutory merger (see Question 2, Statutory mergers).
„„ The threshold for notification of capital interest by a
shareholder of a listed company (see Question 8) will
Reform decrease from 5% to 3%.
29. Please summarise any proposals for the reform of takeover „„ The company must publish its strategy on its website,
regulation in your jurisdiction. and shareholders with a capital interest of at least 3%
must publicly disclose whether or not they agree with the
company’s strategy.
Proposed amendments to public offer rules „„ Listed companies will be able to establish the identity
On 11 June 2010 the Dutch Ministry of Finance launched a of their shareholders through a right of inquiry with the
consultation on proposed amendments to the public offer rules, Securities Depository.
which followed previous discussions on introducing a market
„„ The threshold requirement for placing an item on the
supervisor (marktmeester) along the lines of the Takeover Panel
agenda of the general meeting of shareholders will increase
in the UK to the Dutch public offer rules. The consultation period
from a 1% capital interest to a 3% capital interest.
ended on 26 July 2010.
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13. Mergers and Acquisitions 2011/12
Country Q&A
ContRibutoR detAilS
FeRdinAnd MASon bAStiAAn kout
Boekel De Nerée NV Boekel De Nerée NV
t +44 207 337 2507 t +44 207 337 2503
e ferdinand.mason@boekeldeneree.com e bastiaan.kout@boekeldeneree.com
W www.boekeldeneree.com W www.boekeldeneree.com
Qualified. The Netherlands, 1992 Qualified. The Netherlands, 2004
Areas of practice. M&A; capital markets. Areas of practice. M&A; capital markets.
Recent transactions Recent transactions
„ Represented New World Resources (listed FTSE100) in „ Represented New World Resources (listed FTSE100) in
the launch of a EUR500 million high-yield bond. The the launch of a EUR500 million high-yield bond. The
bankers involved were Goldman Sachs, Morgan Stanley bankers involved were Goldman Sachs, Morgan Stanley
and JP Morgan. and JP Morgan.
„ Dutch counsel to JP Morgan, Citi and BXR, the „ Dutch counsel to JP Morgan, Citi, and BXR, the
underwriters of NWR’s US$1.2 billion unsolicited bid for underwriters of NWR’s US$1.2 billion unsolicited bid for
Bogdanka. Bogdanka.
„ Acting as issuer’s counsel for a proposed listing of a Dutch „ Acting as issuer’s counsel for a proposed listing of a Dutch
NV on the WSE. NV on the WSE.
Country Q&A
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