Etiqueta: Corporate

At the beginning of this year we are experiencing a great proliferation of takeover bids both in Spain and in the rest of the world. In recent weeks we have witnessed the takeover war for Applus, the Hungarian group DJJ’s preparation of a takeover bid for Talgo and rumours of a possible takeover bid for the pharmaceutical company Grífols, but the trend is generalised. And everything points to these types of operations being the main protagonists for at least the first half of 2024.

What is a takeover bid

A takeover bid is a stock market transaction whereby a person or entity makes an offer to buy all or part of the shares of a company at a specified price.

Advantages

For the acquirer, the objective of a takeover bid is to acquire many shares of a company in a quick and organised manner, at a fixed and more advantageous price. Because a large acquisition of shares through a large number of ordinary stock exchange transactions would cause the market to detect a continuous increase in demand and the price per share would gradually rise.

Shareholders who participate in the offer and sell their shares also benefit because the price offered in a takeover bid is usually 10-20% higher than the market price at the time.

How to make a takeover bid: the prospectus

The entity or person making the takeover bid has to submit a prospectus containing all relevant information:

• Target values
• Cash or non-cash consideration
• Expenditure
• Deadlines
• Conditions and purpose of the operation
• Acceptance and settlement procedures
• Etc.

This prospectus of the takeover bid must be approved by the National Securities Market Commission (CNMV) and is freely available for consultation.

Operation

In the event of a takeover bid, the shareholders of the target company can always choose whether or not to participate in the bid.

Partial takeover bids

In the case of takeover bids that do not reach 100% of the shares, three situations may arise:

• If the number of acceptances exceeds the minimum required, the shares are sold to the company that made the takeover bid.
• In the event that acceptances exceed the maximum requested, the price is prorated.
• If they do not reach the minimum, the acquirer can cancel the takeover bid.

Total takeover bids

In the case of takeover bids for 100% of the shares, if at the end of the period 90% or more of the shares have accepted the bid:

• The offeror can demand a sell-out from shareholders who have not taken part in the takeover bid.
• Any shareholder may require the offeror to buy his shares from him at the offer price (squezze out).

Types of takeover bids

Depending on the attitude of the board of directors of the target company, we can find a hostile takeover bid, when it does not agree with the operation, or a friendly takeover bid, when it is in favour and has reached an agreement with the bidder.

There are also competing takeover bids, where a second bidder makes a bid for securities that are already subject to a takeover bid and the acceptance period has not yet expired.

When is it mandatory to launch a full takeover bid

A takeover bid for 100% of the shares is mandatory in the following cases:

• When there is a takeover (acquisition) of more than 30% of a listed company.
• If a company decides to delist.
• In the case of a capital reduction, because it is a significant amendment to the articles of association.

In all cases it is essential to have legal and financial advice on corporate matters in order to negotiate with all the guarantees.

2024 promises to be another year full of uncertainties for companies from a legal standpoint. In addition to the economic and geopolitical changes in Spain, there will be a reactivation of legislative activity, which was paralysed for part of 2023 due to the general elections.

These are the main challenges facing businesses in 2024.

More M&A transactions 

Gradual growth is expected in the mergers and acquisitions sector, because both domestic companies and international private equity funds have the appetite and capacity to invest. Inflation is taking a breather and the Spanish transactional market reflects solidity and dynamism and the capacity to attract foreign investment and generate growth opportunities.

We will see major corporate restructuring operations, especially in the energy and digital infrastructure technology sectors, which will be the drivers of the economy. New legislative initiatives at European level for the reform of the electricity market, the renewable energy, gas and hydrogen regimes will give rise to new investment opportunities.

Real estate transactions and IPOs to grow

Commercial will be a particularly active area in 2024. Real estate transactions and the upturn in the IPO market will stand out in this area. In no other European country is there currently a waiting list of companies thinking of going public like the one that is forming in Spain. Some of the companies facing this challenge in 2024 are Puig, Cirsa, Volotea, OK Mobility…

New tax obligations for large corporate groups

In 2024, large corporate groups will face numerous tax challenges, adapting to new tax obligations such as international minimum taxation or country-by-country reporting.

Major changes in labour law

At the company level, there is concern about the possible reduction of the normal working week to 37.5 hours per week without any reduction in wages.

Other high-impact reforms will be those affecting trade union representation in management bodies, the increase in the maximum ceiling for social security contribution bases, new work permits and the structure of collective bargaining. Labour law is set to undergo major changes in 2024 and companies will require expert legal advice in this area.

More regulation in almost all areas

In general, the increase in the regulatory burden in Spain and Europe will continue in new and not so new areas such as data protection, ESG, technology, compliance, cyber risks, health, intellectual property, digital business, renewable energies and tourism. European regulation on AI is expected this year. In addition, new developments such as the Digital Services Act or the new sustainability reporting will start to be implemented this year.

In 2024, legal changes for companies will accelerate. Both at EU level and in Spain, where decree laws will proliferate.

Businesses will need legal advice to comply with changing regulations

In short, this is going to be a year of many changes in the regulations affecting companies in all areas of law. Especially the new developments and uncertainty in tax and labour law are already creating concern and doubts among entrepreneurs.

In an ever-changing regulatory environment, companies will need increasingly sophisticated legal services. That is why at Confianz we give our clients the ability to anticipate change with flexible, tailor-made solutions that are appropriate to their business and sector.

The European Union has set itself the objective of giving more and more weight to the sustainability of companies. And here the Business Register has a key role to play. As well as monitoring annual accounts, the recent Corporate Sustainability Reporting Directive (CSRD) stipulates that information on the sustainability of companies must be included in their management report in order to facilitate its scrutiny.

The CSRD sets out stricter requirements for sustainability reporting by companies. In this way it aims to promote greater transparency of information related to the environmental, social and governance (ESG) performance of companies. This will help investors and other stakeholders to compare data and enable them to make more informed decisions.

Timetable of the CSRD Directive

The CSRD entered into force on 5 January 2023 and the first declarations are expected to be published in 2024, following these milestones:

• 1 January 2024 for companies with more than 500 employees subject to the current non-financial reporting directive NFRD.
• 1 January 2025 for large companies not currently subject to the NFRD Directive with more than 250 employees and/or EUR 40 million turnover and/or EUR 20 million total assets.
• 1 January 2026 for small and non-complex credit institutions, captive insurers. The CSRD will also enter into force on 1 January 2026 for listed SMEs. But they will have an «opt-out» option available until 2028.

Who is affected by the CSRD?

The CSRD applies to more than 49,000 companies in the EU:

• Companies listed on regulated markets.
• Large European companies and those subsidiaries of non-EU companies operating in their territory if they meet at least two of the following requirements: a turnover of more than 40 million, a balance sheet total of 20 million or more than 250 employees.
• Insurance companies and credit institutions.

On the contrary, they are exempted:

• Subsidiaries if the parent company includes them in its report.
• Listed micro enterprises and unlisted SMEs, which may nevertheless choose to comply with the provisions of the CSRD on a voluntary basis.

Paradigm shift in sustaintability reporting

The European Union aims to put sustainability information on an equal footing with financial information. With this objective in mind, the deposit of non-financial information of companies will be promoted, together with financial information in the commercial registers. Data referring, for example, to the carbon footprint of facilities, energy efficiency certificates, etc.

In this way, the aim is to help encourage the channelling of funds, investment and financing towards activities that are considered sustainable. Because the Business Register provides public and transparent information that has been subject to the registrar’s impartial control of legality. It thus creates a space of legal certainty and confidence for contracting.

Against greenwashing

Incidentally, this avoids greenwashing fraud, a marketing tactic that consists of giving an image of sustainability and respect for the environment to products and services that do not always comply with these premises to the letter.

In the coming years, companies will face increasing sustainability due diligence obligations. Any announcements or statements about their performance in this area will need to be rigorously demonstrated to be true and backed up by information filed with the Companies Registry. In these times of increasing demands in terms of due diligence, Confianz gives you the peace of mind of knowing that you are complying with the current law at all times.