The Norwegian Securities Trading Act of 2007 (“STA”) has implemented the MiFID, the Takeover Directive and the Transparency Directive. Consequently, the Norwegian takeover rules to a large extent correspond to the rules within the EU. Notwithstanding this, there is some local variation within the EU and EEA. Further, there are always some cultural differences as well as differences in market practice. Below is an outline of certain key topics in a typical process of acquiring a company listed on the Oslo Stock Exchange.
There are two regulated markets in Norway, the Oslo Stock Exchange and the Oslo Axess. There are currently 179 companies listed on the Oslo Stock Exchange, of which 140 are Norwegian companies. On the Oslo Axess 32 companies are listed, of which 24 are Norwegian companies. The Norwegian takeover regulations also generally apply, with some exceptions, to foreign companies listed on one of the Norwegian regulated markets. Exceptions may also apply if such company is also listed on another regulated market.
The ownership of the companies listed at the Oslo Stock Exchange was per the end of May 2014 split as follows: the Norwegian State and municipalities 37.6 %, private companies 13.7 %, foreign investors 36.0 %, private citizens 3.5 % and private pension funds/life insurance/mutual funds 7.8 %.
Due diligence. A target company may give a bidder access to non-public information for the purpose of conducting due diligence investigations, as long as the target company deems this to be in the best interest of the company. A target company would normally not accept giving a bidder access to detailed information about its operations unless there is a high probability that an offer will be successful. Consequently, the most usual approach is for a bidder to conduct its due diligence after the offer has been made.
Disclosure to a bidder is subject to procedural rules and strict insider trading provisions. To the extent the bidder receives inside information (i.e. precise information about the company or other circumstances that may noticeably influence the pricing of the financial instruments), this would prevent the bidder from trading until the information is made public. The disclosure requirements for listed companies refer to the same definition, i.e. a listed company shall immediately disclose to the market any inside information related to the company as soon as it receives such information, unless the rules on delayed publication (described below) may be applied. In theory this should mean that a due diligence should not uncover any inside information. In reality, this is not necessarily the case. To avoid that finding of positive information about the company which is regarded as inside information would prevent the bidder from trading until the information has been shared with the market, the scope and structure of a due diligence investigation varies. The bidder will usually require target to disclose to the market, or permit the bidder to disclose in the offer document, any finding, thereby eliminating the bidder’s position as an insider in relation to the company.
Stake building or voluntary offer. A bidder may choose to acquire shares in the market up to a certain level. The bidder will need to comply with the disclosure requirements, giving the market notice when its ownership reaches or passes either of the relevant thresholds (5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 and 90%). Further, a mandatory offer obligation is triggered at 1/3 of the voting shares, see below. Most takeovers, however, start with a voluntary offer. Voluntary offers may be conditional, and usual conditions include 2/3 or 90% acceptance (usually 90% to allow for a subsequent squeeze-out of the remaining minority shareholders), no MAC, ordinary course of business, satisfactory due diligence and regulatory approvals. The offer period in a voluntary offer shall be no less than two and no more than ten weeks.
In the Norwegian market, a bidder will normally contact major shareholders with the intention of obtaining hard (unusual) or soft (fairly usual) irrevocable pre acceptances, and will also inform the company on a more general basis of its intention to make an offer. In some instances, the bidder enters into a dialogue with board members of the target company to explore the possibilities for a successful offer and seek the board’s backing of the contemplated offer. Such processes involve complex considerations as to what time the target company’s disclosure obligation with respect to inside information is triggered. The target may have a different view on this than the bidder, and should always act with caution in such processes. The company may delay disclosure if disclosure would prejudice its legitimate interests, always provided that such delay would not be likely to mislead the public, and provided that the company is able to ensure confidentiality. The target would in such instance need to immediately inform the Oslo Stock Exchange of the delayed publication and the reasoning for this. The Oslo Stock Exchange may, at least in theory, choose to disclose the information if it does not agree with the decision of the target. In friendly takeover processes, the bidder and target will generally have ongoing discussions on these disclosure issues. The company has an ongoing obligation to maintain lists of all persons that have access to inside information about the company.
Pursuant to the securities trading regulations, the regulated market may impose a mandatory offer obligation if a person’s acquisition of rights to shares has to be regarded as an effective acquisition of shares, and such person would pass the mandatory offer threshold by exercising said rights.
Mandatory offer obligations. Any person who through acquisition(s) becomes the owner of shares representing more than 1/3 of the voting rights in a Norwegian company whose shares are listed on a Norwegian regulated market is obliged to make an offer for the remaining shares in the company, or to dispose of a sufficient number of shares so that the person owns 1/3 or less of the voting rights. The offer shall be made – or shares disposed of – within four weeks after the obligation was triggered.
Under the mandatory offer rules, shares owned or acquired by close associates – including concert parties – are considered equal to a shareholder’s own shares. A mandatory offer obligation will apply whether it is the shareholder or a close associate that acquires shares, resulting in the mandatory offer threshold being passed.
The mandatory offer must be made without undue delay and no later than 4 weeks after the obligation was triggered. The offer shall be for all outstanding shares and cannot be made conditional in any respect. The offer price must be at least equal to the highest price paid or agreed to be paid by the bidder during the six month period prior to the obligation being triggered. The offer shall be cash settled, however, alternative consideration may be offered, as long as there is a cash alternative. The offer period must be no less than four weeks and no longer than six weeks. Further acquisitions made by the bidder after the end of the mandatory offer period will not have an effect on the price payable to the shareholders having accepted the mandatory offer.
Public approvals. Approval from the Norwegian Competition Authority is often required. Further, there may be a need for a competition filing with the EU Commission. If this is in fact required, there is no need to seek the Norwegian competition clearance. With respect to financial institutions and investments firms, further approval from the Ministry of Finance/The Financial Supervisory Authority of Norway will be required, if the bidder will reach the relevant thresholds (10%, 20%, 30% (financial institutions only), 33% (investment firms only) and 50%) of the capital or votes.
Squeeze-out. If a bidder acquires more than 90% of the share capital and voting rights of a Norwegian limited liability company, the bidder may acquire the remaining shares through a squeeze-out. If the price offered for the shares is not accepted by all shareholders, an independent valuation may be required, and this shall in the outset be conducted at the bidder’s expense. Provided that the bidder initiates the squeeze-out within four weeks after the completion of the voluntary offer resulting in the 90% threshold being passed, the bidder may (on certain further conditions) do so without first making a mandatory offer.
Terje Gulbrandsen, e-mail: firstname.lastname@example.org, mobile: +47 48 01 65 88
Erik Lind, e-mail: email@example.com, mobile +47 48 01 65 67