the complexity of the pricing calculation mechanism.the level of sophistication of the advisers/parties.the nature of the seller (eg, private equity funds generally prefer a competitive sale, unlike family-owned companies).Target's status: In the case of a takeover bid, the target becomes a subsidiary while in the case of a merger, it ceases to exist.ġ.3 What factors commonly influence the choice of sale process/transaction structure?.
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Exit right: A takeover bid allows free shareholders to leave the company while in a merger, an exit right is granted to free shareholders only in specific cases.However, there is an express exemption where one-third or one-half of the voting rights in a listed company are exceeded as a result of a merger. Minimum price: Unless a voluntary takeover bid complies with the price requirements for a mandatory takeover bid, a subsequent mandatory takeover bid must follow.Consideration: A takeover bid allows the consideration to the target's shareholder to be paid in cash, securities or a combination of both while in the case of a merger, consideration consists in shares of the company (and cash amounts paid cannot exceed 10% of the nominal value of the shares assigned to each shareholder).Process: A takeover bid is a regulated acquisition process that takes place under the strict supervision of the CMVM while a merger is an acquisition process that is privately negotiated between the boards of directors and shareholders of the participating companies, although some disclosures are also mandatory and the CMVM is also involved in the process.In public M&A transactions, the main differences between a takeover bid and a merger are as follows: The latter model does not represent a material change in the structure, but is generally considered to involve the avoidable duplication of documents.
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If conditions precedent to closing apply, transactions that are structured in line with international standards (ie, with three phases – signing, interim period and closing) involve less paperwork than transactions based on a promissory sale agreement and a sale agreement. Bilateral processes tend to be faster and cheaper but they increase the risk of the seller not extracting the maximum value, due to only one potential buyer being engaged in the process. Private tenders generally offer a greater opportunity for the seller to maximise the price, due to the competitiveness of the process but they are generally costlier and more time consuming. In the case of private M&A transactions, we will focus on the sale of shareholdings, as the choice of a merger or demerger is typically made based on specific objectives (eg, business combination or preparation for a partial sale of the business). 1.2 What are the key differences and potential advantages and disadvantages of the various structures? There are a few precedents of mergers between listed companies, but these are uncommon. This consists of a public offer addressed to the holders of the securities of a listed company to acquire some or all of those securities, under a strict process supervised by the Portuguese Securities Market Commission (CMVM). Public M&A transactions entail the acquisition of control of a listed company, typically through a takeover bid. In this case, additional formalities apply, including a publicly registered merger and/or demerger plan. prepare for a subsequent partial transfer of business (in the case of a demerger).expand the target and increase its market share through a business combination of two entities (in the case of a merger or demerger followed by a merger) or.M&A transactions may also be structured as merger or demerger operations to: In this case, signature of the agreement and completion of the transaction take place simultaneously.
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In simpler transactions, there can be a ‘one-shot' agreement. There is a tendency among less sophisticated parties to complete the transaction through a promissory sale agreement, followed by a final sale agreement.
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The most common structure involves a three-phase process: