Most often control over a French public company is achieved through a voluntary or obligatory public tender. There is no ban on hostile takeovers in France, but they are not typical for this country and are more the exception than the rule. You can read more about these and other features of public M&A transactions in France in this article.
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The development of legislation on mergers and acquisitions reflects the real processes in the corporate restructuring market. The thirteenth EU Takeover Regulation is aimed primarily at regulating hostile takeovers. It includes provisions on "fair price", "crowding out procedure and the right to sell shares" concerning minority shareholders, "mandatory offer rule", etc.
A hostile takeover is an attempt to gain control over the financial and economic activities or assets of the target company in the face of resistance from the leadership or key members of the company.
The recognition of the nature of the transaction as "hostile" depends rather on the reaction of managers or shareholders/participants of the target company if the attacking company has complied with all the requirements of the regulatory authorities to advertise its actions.
As mentioned above, hostile takeovers through public M&A deals in France are permitted. However, the company they intend to acquire may resist. The board of directors can develop and implement an anti-takeover plan. For example, a board may reject a proposal without shareholders' consent if there is clear evidence that such action is in the company's best interest.
Below are just a few of the possible protections:
- the creation of double voting right if the offer of shares exceeds a certain period, so the bidder will not be able to claim it;
- shareholder agreements such as suspension or priority purchase agreements;
- existing shareholders can purchase additional shares at a reduced price;
- issuance of bonds with redeemable stock warrants;
- transformation of the company into a private limited company;
- purchase by the company of its own shares to reduce their number on the market;
- sale of assets of a public company in France: transfer of a strategic asset to a third party, which makes the offer interest-free for the bidder.
Deal protection from third parties
In the context of preliminary negotiations on a takeover bid for public companies in France, a potential tenderer may propose a separation fee, which is compensation paid to the tenderer or shareholders in the event of a refusal or blocking of the deal by an authority. Such provisions are not prohibited, provided that the freedom to conclude contracts and the principle of free interaction between the application and the counter application are preserved.
The share division fee paid by a publicly listed company to a bidder must be disclosed to the French Financial Markets Authority in the offering prospectus. The prospectus should describe the means of financing, their impact on the assets, business, and profit of the target company, and the bidder.
If you are interested in entering the French securities market, our specialists provide assistance in preparing an issue prospectus for entering the French securities exchange.
Financing a transaction involving a public company
Public tenders are not subject to funding conditions. In addition to public tender offers, if an investor wishes to conclude a sale and purchase agreement for shares of a French company with a shareholder, the parties can establish any financing conditions that do not contradict the current legislation.
Restrictions for foreign investors in France
In some protected sectors, specific laws prohibit or restrict the ability of foreign investors, mostly outside the EU, to obtain ownership of a French company. This list varies according to the origin of the investor, with stricter rules applicable to non-EU investors and deals with activities that affect public authorities, public security or national defense interests.
The Economy Minister can authorize investment in France's critical infrastructure and set conditions to ensure that it does not negatively impact national interests.
Prospectus for entering the French securities market
When the securities of the acquiring or target company are listed on a regulated market, such a company may be exempted from preparing a prospectus in the event of a merger, division, or partial contribution of assets, if it draws up equivalent documentation as a prospectus. This document should include the economic and legal aspects of the transaction, contributions, the outcomes for the target company shareholders, etc.
The prospectus must be submitted to the regulator no later than two months before the date of the general meeting convened to approve the transaction. It must be published in the national media, posted on the company's website.
Legal experts of our company follow the current legislative changes in the field of public mergers and acquisitions. If you need actual information and advice on the regulation of public M&A transactions in France do not hesitate to sign up for a consultation. Reach out to us using the contacts listed on the website.