CMS Expert Guide to Public Takeovers in France

Yes – the Règlement Général de l’Autorité des Marchés Financiers (“RGAMF”), the French Commercial Code and the French Monetary Code govern public takeovers of French and foreign companies listed in France and certain unlisted companies.  The operation of the RGAMF is overseen by the French Market Authority the Autorité des Marchés Financiers (“AMF”). 

• Takeover / Exchange / Withdrawal / Squeeze-out offers 
• Mandatory takeover offers resulting from acquisitions which result in the acquirer and persons “acting in concert” with it holding more than 30% (of the shares or voting rights) of the target company or a 1% in less than 12 months increase in an existing holding which is between 30% and 50%. 

Financial adviser. The offeror must appoint a financial adviser (i.e. a bank or an investment services provider, known as a ”sponsor”) to file the offer with the AMF on behalf of the offeror, provide a valuation of the target company to justify the offer price, execute some specific due diligence and provide the AMF and the public with statements in respect of certain matters relating to the offer. The sponsor may provide additional services to the offeror, such as advice on the financial structuring of the offer. 

Independent appraiser. The target company must appoint an independent appraiser if the transaction is likely to cause conflicts of interest within its board of directors, supervisory board or competent governing body that could impair the objectivity of the reasoned opinion that such corporate body must provide in the offer documents or jeopardise the fair treatment of shareholders or bearers of the financial instruments subject of the offer. The independent appraiser will deliver a fairness report and statement that will be included in the response to the offer filed and published by the target company. The following situations, in particular, constitute situations where such conflicts of interest may arise:  

• if the target company is already controlled by the offeror before the offer is launched;  
• if the senior managers of the target company or the persons that control it have entered into an agreement with the offeror that could compromise their independence;  
• if a controlling shareholder does not tender its securities to a buyback offer launched by the company for its own securities;  
• if the offer is related to one or more transactions that could have a significant impact on the price or exchange ratio of the proposed offer;  
• if the offer pertains to financial instruments in multiple categories and is priced in a way that could jeopardise the fair treatment of shareholders or bearers of the financial instruments targeted by the bid;  
• if non-equity financial instruments that give or could give, direct or indirect, access to the shares or voting rights of the offeror or of a company belonging to the offeror's group, are provided as consideration for the takeover of the target company;  
• before the implementation of a squeeze-out.  

The independent appraiser shall be appointed by the competent corporate body of the target company (i.e. in most cases the Board of Directors), on the proposal of an ad hoc committee composed of at least three members and comprising a majority of independent members. This committee shall conduct the follow-up of the appraiser's work and prepare a reasoned draft opinion. Where the target company is not able to set up the above-mentioned ad hoc committee, it shall submit to the AMF the identity of the independent appraiser it is considering appointing. 

A mandatory offer, which must include a cash only option, must be made if any person (whether alone or together with persons acting in concert with that person) increases his direct or indirect percentage holding of the shares or voting rights (whether as a result of a purchase of shares or a corporate action such as a share buyback) in the target company: 

• to more than 30% for companies traded on a regulated market (50% for companies traded on a multilateral trading facilities - “MTF”); or 
• where the combined holding of shares or voting rights in the target company is between 30% and 50%, by 1% in less than 12 months for companies traded on a regulated market (not applicable to companies traded on an MTF). 

If a person holds more than 50% of the shares in the target company, that person is then free to acquire further shares in the company (provided the holding remains always above 50%) at any time. 

There are limited circumstances where the AMF may grant an exemption or a dispensation from the requirement to make a mandatory offer, including: shareholders who already hold in concert more than 50% of the voting rights or shareholding joining together and remaining preeminent in the concert party; investing in a company facing bankruptcy; merger; and cancellation of shares (the full list is set out in articles 234-7 and 234-9 of RGAMF). 

Normal procedure, when the offeror does not already control the target company: counteroffers are possible. 

Simplified procedure (most frequent case: the offeror already controls the target company): shorter timeframe and no counteroffers. 

Only a squeeze-out procedure can guarantee 100% of the shares at the end of an offer. Following any public takeover offer and within 3 months of the close of the offer, securities not tendered by minority shareholders may be transferred to the offeror, provided that they represent not more than 10% of the shares and voting rights, in return for compensation. Where a draft offer is filed, the offeror must inform the AMF whether it intends, depending on the result of the offer, to implement a squeeze-out. The AMF will review the squeeze-out procedure at the same time as it reviews the offer. The appointment of an independent appraiser who will provide a statement of fairness on the squeeze-out price is mandatory. 

Within its own parties (advisers, funders etc), an offeror may maintain confidentiality. However, in the event of a leak (whether or not identifying the offeror) or untoward movement in the price of the target company’s shares (which is indicative of a leak), an announcement naming the offeror and stating its potential interest may be required. 

Once the target company has been approached, the target company is free at any time to announce that it has received an approach from the potential offeror, naming the potential offeror. A potential offeror is not able to prevent or restrict a target company from making such an announcement (though in practice, most target companies will also prefer to keep discussions as confidential as possible). For a friendly offer, non-disclosure agreements (NDAs) are possible. 

The parties must also comply with the disclosure obligations under the Market Abuse Regulation (“MAR”).  

Rumour control: put up or shut up: When the market for the financial instruments of an issuer is subject to large price swings or unusual trading volumes, the AMF may require persons to publicly disclose their intentions within a set deadline, where there is reason to believe they are preparing a takeover offer, either alone or in concert with others. This is the case, for example, in the event of discussions between the companies concerned or the appointment of advisors with a view to preparing a public offer. Where these persons state their intention to file a draft offer, the AMF sets the date on which they must publish a release describing the terms of the draft offer, or, depending on the circumstances, file a draft offer.  

If these persons indicate that they do not intend to file a draft offer, or if they are deemed not to have such an intention, they may not file a draft offer for a period of six months starting from when they made their statement or from the expiry of the deadline set by the AMF, unless they provide evidence of major changes in the environment, situation or shareholding structure of the persons concerned, including the target company itself. 

Pre-offer period: stop trading: When a person is suspected of preparing to make a draft offer public, notably when subjected to rumours, including the nature of the offer and the planned price or exchange ratio, that person shall immediately notify the AMF and the AMF shall so notify the market by means of a publication. This publication shall mark the beginning of the pre-offer period. The pre-offer period is the period of time between the publication by the AMF and the start of the offer period (see below) or, if a draft offer is not filed, the publication by the AMF that no offer would be filed. During the pre-offer period, the offeror and persons acting in concert with it may not acquire any of the securities of the target company. 

Offer period: from the AMF notice of the filing of the draft offer to the publication of the result of the offer. The offeror and persons acting in concert with it may acquire the securities of the target company after the start of the offer period until the opening of the offer (unless (i) the offeror has filed simultaneous offers on several target companies or (ii) the offer is subject to antitrust control proceedings, or (iii) if offeror shares are offered as consideration for the offer). 

An offer under the normal procedure will become void if at its end the offeror holds less than 50% of the shares or the voting rights of the target company, unless the AMF agrees to lower this threshold in special circumstances. If this was a mandatory offer, the offeror’s voting rights will be capped to either 30% or the percentage between 30% and 50% held before crossing the 1% limit in any 12 month period, depending on the event having triggered the mandatory offer. This deprivation of voting rights in general meetings lasts as long as the offeror does not hold at least 50% of the target company’s total shares or voting rights  (the only option is to launch a new takeover offer). 

For voluntary offers, the offeror may stipulate in its offer that it must obtain a certain number of shares, expressed as a percentage of the target company’s shares or voting rights, below which it reserves the right to withdraw its offer. 

For voluntary offers on several distinct companies, the offeror may make its offer conditional on the success of some of the other offers. 

For offers subject to anti-trust proceedings, the offeror may make its offer conditional on the positive results of such proceedings. 

For exchange offers, the offeror may make its offer conditional on the positive vote of its shareholders’ in general meeting on a capital increase in order to issue the shares proposed under the exchange offer. 

The offeror may withdraw its offer if the conditions listed in Q21 are met. 

No condition may be applied to a mandatory offer (other than for any required anti-trust proceedings). 

The offeror’s financial adviser/sponsor is required to publicly confirm that the offeror has the available finance to pay the cash consideration payable under the offer in full. 

For voluntary offers under the normal procedure: no constraints on the price. However, if an independent appraiser was appointed, the fairness statement will de facto affect the pricing of the offer. 

For voluntary offers under the simplified procedure: unless the AMF agrees, the offer price may not be lower than the price determined by calculating the volume-weighted average share price over the 60 trading days preceding publication of the notice following rumours or, failing that, the notice of filing of the draft offer. 

For mandatory offers: the offer price must be at least equal to the highest price paid by the offeror, acting alone or in concert, over a period of twelve months preceding the event giving rise to the obligation to make the mandatory offer. 

A mandatory offer must be in cash only. 

No. As a general rule, all information and opinions relating to an offer must be made available to all target company shareholders and to the general public at the same time, usually by means of an announcement or press release. But for transactions that happen before the offer (i.e., off-market purchases of shares to increase the pre-offer holding of the offeror), the offer itself must be the same for all shareholders and the general public. 

No, but once a target company discloses information to one potential offeror, it must disclose the same information to all potential bona fide offerors which may emerge. 

Restrictions on special deals with shareholders and management: the offeror is generally prohibited from entering into any “special deals” with anyone regarding the target company shares. Where the target company managers hold shares, the offeror can agree incentivisation arrangements with them but details must be disclosed to all the target company shareholders and in some circumstances a shareholder vote must be taken to approve the arrangements. Generally it is inadvisable for the offeror to make promises to the target company managers – even privately – about their roles and incentive arrangements after the transaction completes unless it is prepared for such discussions to be publicly disclosed. 

Under the RGAMF and other applicable French law, the target company board of directors is under no obligation to engage with a potential offeror or facilitate its offer (such as by providing due diligence information). However, the target company directors remain subject to their general duties to act in the company’s and shareholders’ best interests and therefore may be in a position where those duties require them to engage to some extent. The board of directors of the target company will have to issue an opinion on the offer and the opportunities or lack thereof provided by the offer to the target company. 

Any measure that may impede a takeover offer must be disclosed by the target company in its universal recording document, such as: pre-authorised issue of securities, share repurchase scheme, etc. 

From the start of the pre-offer period (see Q7) to the opening date of the offer, the offeror may not buy shares of the target company. 

Target company shareholders may give irrevocable commitments or statements of intent to accept an offer if made or once made. In the case of target company directors, these undertakings are limited to acceptance of the offer as a shareholder, and not to taking any action, as a director, to support the offer. 

Target company shareholders may not sell or agree to sell their shares to the potential offeror outside the offer process. 

Purchase of shares of the target company must be disclosed everyday by the offeror to the AMF during the offer period. As the case may be, shareholders may have to declare shareholding threshold crossings and/or dealings in the company’s securities if they are corporate officers, high ranking executives or related parties thereof. 

The AMF publishes the timetable of the offer. It depends on the procedure to which the offer belongs. For a takeover offer or exchange offer under the normal procedure (mostly: when the offeror holds less than 50% of the share capital or voting rights of the target company), the offer is open for 25 trading days. It may be subject to a reopening, an improved offer or a counteroffer filed by a third party. In the case of a simplified offer (mostly: when the offeror holds more than 50% of the share capital and voting rights of the target company), the offer is open for at least 10 trading days (15 days in the case of an exchange offer). At the end of the offer period, the AMF publishes the result of the offer on its website. In the case of a cash offer made by an offeror who holds more than 50% of the share capital and voting rights of the target company, the offer price may not, unless the AMF gives its consent, be lower than the price determined by calculating the average stock market prices, weighted by trading volume, for 60 trading days prior to the publication of the AMF notice that triggers the pre-offer (see above) or, failing that, prior to publication of the AMF notice of filing of the draft offer. 

The AMF controls all public offers for securities listed on the regulated market (Euronext), but also on the MTF market Euronext Growth. It ensures compliance with the principles (free play of bids and counteroffers, equal treatment and information, transparency, market integrity, fairness in transactions and competition) and rules applicable to bids, particularly with regard to price. The AMF has 10 trading days from the beginning of the offer period to determine whether the draft offer complies with applicable laws and regulations. However, where an independent appraiser has been appointed and/or where the offer is subject to the review by the works council of the target company, the statement of compliance (visa) cannot be issued earlier than 5 trading days after the target company has filed its draft reply document. In all cases, the AMF may request any supporting documentation or guarantees that it deems appropriate, as well as any further information that it needs for its assessment of the draft offer, the draft offer document or the reply document. In this case, the time period is suspended. It resumes once the information requested has been received. Once all information is properly filed, the AMF will deliver the statement of compliance and visa number on the offer. 

Opinion on the offer by the works council of the target company– Impact on timetable: in most cases, the works council of the target company will have to be consulted after the filing of the offer, and they must provide an opinion on the offer within a month unless they require the assistance of a chartered accountant, which prolongs the process by another month. Since the opinion of the works council will have to be included in the note in response by the target company to the offer memorandum filed by the offeror, the AMF visa necessary for the opening of the offer will not be issued until the works council’s opinion has been received. 

• Offering memorandum by the offeror 
• Memorandum in response to the offering memorandum by the target company 
• Document containing relevant financial, accounting and legal information pertaining to the offeror 
• Document containing relevant financial, accounting and legal information pertaining to the target company 

The target company must provide the same due diligence information to any bona fide potential offeror if requested. This may limit the amount of non-public information the target company is willing to share with the offeror. 

Competing offers, counter-offers and offer increases can be under the normal voluntary procedure. 

The AMF will align the closing dates of competing offers to the latest closing date of all the competing offers. 

Once the offeror has announced a firm intention to make an offer, it is irrevocable and there is virtually no way out unless a regulator blocks the deal or shareholders vote against it. No financing conditions are allowed and it is very difficult for the offeror to terminate an offer on the grounds of material adverse change. 

However, the offeror under a voluntary offer may: 

• Withdraw its offer within five trading days of publication of the timetable for a competing offer or improved offer. It shall inform the AMF of its decision, which shall be published. 
• The offeror may also withdraw the offer if the offer becomes moot, or if the target company's actions change its structure during the offer or if the offer is unsuccessful, or if the measures taken by the target company make the offer more expensive for the offeror. The offeror may only exercise this right with the prior approval of the AMF. 

A voluntary simplified offer may only be withdrawn if set conditions precedent are not met (see Q8). 

A mandatory offer is irrevocable. 

Only if a squeeze-out procedure is implemented (see Q5). 

See Q8.

To delist a company from the regulated Euronext market, an offeror must file a withdrawal offer including a squeeze-out procedure. 

To delist a company from the Euronext Growth MTF, a withdrawal offer must also be filed, but it will only be controlled by the market company Euronext, not by the AMF. 

There is technically another method available which is by petitioning the market company Euronext for delisting, based upon the illiquidity of the securities issued by the issuer. This is, however, seldom granted.