4.5  Introduction to Public Takeovers	125

scope of acting in concert, came into force inAugust 2008; further changes regarding notification requirements will come into effect on 1 February 2012.

The Public Takeover Act contains detailed rules on public offers, the obligation to launch a mandatory offer, exemptions from that rule and the supervision of public offers and acquisitions of control over German listed companies by the German authorities. A public offer/bid is mandatory if a bidder has acquired a controlling interest of more than 30% in the target company). The Public Takeover Act is supplemented by a number of ordinances (Verordnungen) such as the Public Takeover Act Offer Ordinance (WpÜG-Angebotsverordnung), containing rules for supplementary information to be provided in offer documents and pricing rules for takeover offers and mandatory offers. In addition, certain provisions from the German Stock CorporationAct (Aktiengesetz, AktG) and the German Securities TradingAct (Wertpapierhandelsgesetz, WpHG), dealing with insider issues, are of relevance for public takeovers.

4.5.1  Scope of the Public Takeover Act

The Public TakeoverAct generally applies to all public offers for shares in German stock corporations (Aktiengesellschaften, AGs) or (though much less frequently) for shares in German partnerships limited by shares (Kommanditgesellschaften auf Aktien, KGaAs) whose shares are listed on a regulated stock exchange in Germany or a Member State of the EU.2 Under certain circumstances, the Public Takeover Act also applies to public offers for shares of companies incorporated in the European Economic Area (EEA) whose shares are listed in Germany but not in their home jurisdiction.

The Public Takeover Act not only regulates so-called takeover bids, i.e. bids for listed companies targeted at the acquisition of control, in other words at least 30% of the shares of the target company, ‘acquisition of control’.3 Rather, it also applies to all other bids for listed companies where the bidder intends to acquire only part of the shares and mandatory bids. All these public offers must comply with certain minimum requirements regarding, e.g., transparency, content, offer price, disclosure requirements and the equal treatment of stockholders in the target company.

4.5.2  Requirements for the Bidding Process

4.5.2.1  Mandatory Offer

The main purpose of a mandatory offer pursuant to the Public Takeover Act is to protect the minority stockholders of the target company against a new owner who might use its controlling interest to the detriment of the minority. The mandatory

2  See Sec. 1 Public TakeoverAct. 3  See Sec. 29 Public TakeoverAct.

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offer gives the minority stockholders the opportunity to sell their shares at a certain minimum price. As stated above, a mandatory offer to all stockholders is always triggered if the bidder acquires a ‘controlling’ interest in the target company.4 The Public Takeover Act defines ‘controlling interest’as having been achieved if a bidder acquires, directly or indirectly, at least 30% of the voting rights.5 When calculating the 30% threshold, the bidder’s own voting rights, and such voting rights attributed to the bidder according to the Public Takeover Act, must be taken into account.6

Pursuant to the Public Takeover Act, a stockholder must publish the fact that it has acquired control of a target vis-à-vis the target company and the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). Such publication must be made without undue delay but, in any case, by no later than seven calendar days after the stockholder(s) became aware of the acquisition of control.7

4.5.2.2  Offer Document

In the offer document, which is a necessary part of the bidding process, the bidder must provide the stockholders of the target company with all information necessary to decide whether or not to accept the bid.8 The framework for the content of the offer document is set out in the Public Takeover Act and the Public Takeover Act Offer Ordinance including, e.g., details of the bidder and the target company, the acceptance period, the consideration to be given, how the bid is to be financed, conditions of the bid and the bidder’s future plans for the business.9 This information must be true and complete and the issuers of the offer document are held liable for any incorrect, misleading or incomplete statements in the offer document.10 The offer document must be approved by the Federal Financial SupervisoryAuthority.11

After the offer document has been published, the management board (Vorstand) and the supervisory board (Aufsichtsrat) of the target company must each issue a detailed statement evaluating the offer.12 The management board must append to its own statement any statement on the offer issued by the target’s work council.13 The members of the management board of the target company must pass their statement on to the relevant works council (Betriebsrat) without delay. If no works council exists, then the statement must be provided to the employees directly.14

4  See Sec. 35 para. 2 Public TakeoverAct. 5  See Sec. 29 para. 2 Public TakeoverAct. 6  See Sec. 30 Public TakeoverAct.

7  See Sec. 35 para. 1 Public TakeoverAct. 8  See Sec. 11 para. 1 Public TakeoverAct.

9  See Sec. 11 para. 2 and 3 Public TakeoverAct. 10  See Sec. 12 Public TakeoverAct.

11  See Sec. 15 Public TakeoverAct.

12  See Sec. 27 para. 1 Public TakeoverAct. 13  See Sec. 27 para. 2 Public TakeoverAct. 14  See Sec. 27 para. 3 Public TakeoverAct.