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Takeover bids in Spain represent a crucial mechanism within the legal and financial framework for the acquisition of shares of listed companies in the Spanish market.

What is a takeover bid?

A takeover bid is a transaction whereby all the shareholders of a listed company are offered to acquire its shares or any securities that in some way enable them to be acquired, with the shareholders receiving a price as consideration. This price may be cash, shares in another company or a mixture of both.

It is important to be clear that takeover bids, although targeted at all shareholders of the target company, may not be aimed at acquiring all the shares of the target company.

The regulatory framework for takeover bids in Spain is mainly set out in Law 6/2023 of 17 March on Securities Markets and Investment Services and Royal Decree 1066/2007 of 27 July on the rules governing takeover bids. These regulations establish the legal provisions and procedures to be followed by both the offeror and the listed company that is the target of the bid.

Types of takeover bids

The two main types of takeover bids are mandatory and voluntary.

If the purpose is to acquire direct or indirect control of the listed company (which determines what is meant by controlling interest in article 4 of RD 1066/2007), the delisting of the company or the reduction of its share capital through the acquisition of treasury shares, then we will be dealing with a mandatory takeover bid. In other words, the law makes it compulsory to acquire the shares of all the company’s shareholders when any of these three operations take place. In this type of takeover bid, the regulation requires a fair price to be offered and, in principle, the effectiveness of the bid cannot be subject to conditions.

Voluntary takeover bids, on the other hand, are not subject to any legal obligation, but simply the will of an investor to acquire a certain number of shares in a listed company. However, regulations on takeover bids are mandatory in this respect, although they are not subject to legal requirements on price, number of shares and conditions can be attached to the acquisition in any case.

Additionally, we can differentiate between:

  • Takeover bids to take control, which seek to allow the target company’s shareholders to transfer their shares at an equitable price once the bidder has control of the target company.
  • Competing takeover bids, which are those in which the takeover bid concerns securities for which another takeover bid has already been made before the end of the acceptance period.
  • Delisting takeover bids, which are those in which the objective is to allow shareholders to exit the company before it is delisted.
  • Friendly takeover bids, which occur when the bidder and significant shareholders or the board of directors of the target company agree on the terms of the takeover bid.

Takeover bid process

The takeover bid process in Spain starts with the announcement of the intention (when voluntary) or the obligation (otherwise) to make a public bid. This announcement must be made immediately after the decision to make a bid or as soon as the events requiring the formulation of a mandatory bid occur.

Following the announcement, the application for authorisation is submitted to the CMNV with the documentation necessary for the authority to analyse the transaction (including the prospectus for the offer, documentation evidencing the offer guarantee, audited accounts, etc.). It is important to clarify that, in addition to authorisation from the CNMV, authorisations may be required from other authorities or regulators, such as the CNMC, especially in cases where a concentration may violate antitrust regulations.

Once the offeror has received the favourable communication from the CNMV, it must disseminate the authorisation so that the market and, above all, the target company’s shareholders are aware of it.

For these purposes, such notice or announcement must be published within five working days of authorisation by the CNMV.

The shareholders of the target company are then given a period, which may not be less than 15 days from the stock exchange business day following the date of publication of the announcement referred to in the preceding paragraph, to accept or reject the bid. In addition, during this 15-day period, the target company’s Board of Directors must issue a report on its opinion of the transaction, including an indication by the members of the Board of Directors of what they will do with the target company’s shares, if they hold any.

Finally, the process ends with the conclusion of the acceptance period, the counting of acceptances received and the settlement of the acceptance.

As a final detail, it should be borne in mind that competing bids may arise in takeover bid procedures, i.e. new takeover bids may be made for the target company as long as the period for acceptance by the shareholders of the original bid has not expired. However, new bids must not have a lower number of securities than the previous bid or improve on the previous bid, either through a better price or by extending the bid to a larger number of securities.

Do you need advice? Access our areas related to takeover bids:

Commercial and Corporate law

M&A and Capital Markets

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