Brussels, 30/03/2004 (Agence Europe) - The Council has definitively adopted the directive on takeover bids, which aims to make the cross-border acquisitions of businesses on European stock exchanges easier.
After eleven years of discussions, this text still does not resolve the main point for which it was presented by the Commission in 1989: ensuring that shareholders, and not the managers, of a company have the final say in a hostile takeover bid. This proposal was strenuously opposed by Germany, and led the Parliament to reject the initial proposed directive in July 2001.
Parliament and Council currently agree, at first reading, to leave it up to the Member States whether or not to apply the rule obliging the board of a company thus targeted to have the prior approval of its shareholders before taking defence measures.
The obligation to freeze the special rights associated with certain shares (multiple voting rights, nomination rights, restriction of the transfer of a share) during the hostile takeover bid will also be "optional". More specifically, the States will leave it up to companies to decide whether to apply these two provisions.
Information for and consultation of workers will correspond to "relevant national provisions" and Community rules on the subject.
Remaining in this directive are provisions to reinforce the rules on information to shareholders on the offers on the table (acceptance period, compensation, funding of the offer etc). The acceptance period should be from two to ten weeks. The directive also specifies that the acquirer can demand or be obliged to buy the minority stakes for a "fair price", if they hold shares to at least 90% of the capital or of voting rights. The Member States can raise the threshold to 95%. The directive harmonises the definition of "fair price" to be proposed to shareholders, i.e. "the highest price paid for the same shares by the offeror (...) during a period determined by the Member States, from a minimum of six months to a maximum of twelve months before the offer". The national authorities can, however, authorise a price modification "in certain circumstances and according to defined criteria".
Member States have two years to transpose the directive. A revision clause provides for the Commission to propose changes to the text after five years if necessary, in the light of experience. It is worth noting that Commissioner Frits Bolkestein was reluctant to accept the Council and Parliament compromise, as he felt it "denuded the directive of all substance".