Germany be ready for the opportunity

get going. Thank you, Nick. Hello to Germany. Hello from Germany. Hello from Berlin. My name is Dirk Hamann. I'm a corporate partner here in Berlin, and thank you for joining in. This is for an elite group of people who have an interest in this very specific topic of public M&A. Are there many people familiar with the topic? No, there aren't. Why is that? Because this is a very specific part of M&A business, obviously, and not many people are interested in buying, for example, a publicly listed company, one of the DAX 30 enterprises, for example, or other enterprises listed on a stock exchange in Germany. And even those who might be interested in doing that, who can not have the resources of doing this, they will not be familiar with the topic and a lot of bad reasons. So this is for an elite group of people who would like to look into the issues. I thought it's a good idea to prepare for this topic given the current situation throughout the world and in particular in Germany. You may know that the securities index, the DAX performance index, dropped to 8,000 points or something, 8,400 on 17th of March this year. It recovered since then, but it's very volatile and there are some companies that are hard hit by the coronavirus crisis. Nobody really knows who is going to be in difficult waters in the months to come. Things will get really serious again if the coronavirus should come back with stronger force later this year because of the opening of societies again, because of the end of the shutdown procedures slowly here in Germany and elsewhere. So those who have an interest in and an eye on those potential target companies, publicly listed, should prepare for this. There may be opportunities ahead. You may also know that, for example, a private investor in Germany has bought massively into Lufthansa shares. Recently, obviously expecting this company to be rescued by the German government and by obtaining billions of rescue money from Germany. They're still waiting for the approval from the EU Commission, but this is a good example that there are some predators out there that sense an opportunity here and there to buy such entities. Okay, in order to cover the basic aspects of public takeover laws in Germany, this on the screen is the agenda I would like to go through with you slowly. Firstly, how to prepare and what to prepare for the pre-offer phase. Certainly, there will be a number of advisors to be appointed for strategic purposes for legal preparation of any substantial transaction. And I will tell you what types of offers you need to differentiate, what is the situation in contacting the target company possibly in the pre-offer phase, what kind of pre-offer agreements are being discussed or will be, will likely be to have concluded with various parties. What about the subject of due diligence for a publicly listed enterprise? Then obviously there is disclosure obligations that you need to be aware of. And some of you will have heard about irrevocable undertakings. What is this? Can they be entered into and with whom? After that pre-offer phase, I will briefly take you to the— through the overview of the takeover procedure as such. And then we will cover some aspects of the offer phase as such, commonly starting with the publication of a decision to make an offer, the so-called Section 10 statement. We will look into some aspects of the offer document. We will shed some light on the role of the supervisory authority. The supervisory authority here in Germany is the Bundesanstalt für Finanzdienstleistungsaufsicht. As you know, all of these M&A aspects are strictly ruled and overviewed and monitored, other than in private M&A dealings. We look into the forms of consideration that the offeror will will offer to the other shareholders. These mainly large transactions will have to be financed. What about financing? What about certain aspects of the conditionality of an offer? And assuming that we get through all of these aspects in time, there will obviously be some post-offer measures that need to be taken into account and maybe some other aspects as well. So let's start with the pre-offer phase. All of this is covered by the Securities Acquisition and Takeover Act. That's the German Wertpapiererwerbs- und Übernahmegesetz. And basically there are 3 kinds of offers that one needs to differentiate. There's the voluntary takeover offer. Mandatory offer to be made, and then there is a third section, simple general purchase offer. The voluntary takeover offer, that is aimed at or directed at actually obtaining control over the target company. And control is a defined term under the German law. Control is already in place where a party has 30% or more of the voting rights in a target company. Those who are not familiar with the topic, why it's only this low threshold of 30%, quite obviously, the, in practice, the practical experience with the figures of shareholders showing up at the general meeting, which is the controlling, the main body, you know, of stock corporations, It's not 100%, much lower than that, so that someone who has already 30% of the voting rights under its own control controls basically the company and can push through votes in a general meeting that require only simple majorities of votes cast, so that that is deemed to be control of a company already. Now, a mandatory offer needs to be made by a person who has obtained such control for the first time other than by priorly having made a voluntary takeover offer. And it doesn't really matter whether this control has been obtained directly or indirectly because there is comprehensive regulations in place for the attribution of voting rights For example, if someone acts in concert jointly with another person, or voting rights are being held by subsidiary within a group of companies. So there's many examples why the attribution of voting rights takes place. Not very common, not very often used is a simple general purchase offer. That obviously can be made by someone who is interested interested to acquire shares in a publicly listed company but does not aim to obtain control, or someone who has already obtained control, so he has a stake that is representing more than 30% of the voting rights, just because he wants to build up the stake in the, in the company, in the target company, but he has got already control. Um, in all these cases, you need to Bear in mind that a person making an offer needs to think carefully about it because if the offer fails, the person is prevented from making another offer for 1 year. So it's a 1-year exclusion period that kicks in when an offer has been made and failed to be accepted or has been rejected by the supervisory authority for certain reasons. Obviously, when trying to take over control or take over a publicly listed company, the question arises whether the target company shall be and can be contacted in the pre-offer phase. So basically talking to the management board, the board of directors, or possibly first with the chairman of the supervisory board in order to test whether it makes sense at all to go for such an offer. There's no legal obligation to contact the target company for doing this. This is not very common if it's, if an offeror does not contact the target company, it is because it wants to keep this confidential as long as possible. And that is being defined as a hostile takeover offer because the purpose of contacting the target obviously is to talk if the target board is agreeable to starting talks. On the conditions and how this can be organized and whether the target board will recommend to the shareholders at the end of the day, the supervisory board as well, to accept such a deal. So common practice is to contact the board to explore the situation and whether the board will support the offer and under which conditions. And if the target board is acceptable agreeable to such an approach, that may be the beginning of the negotiation of something that's called the business combination agreement, in which the details of the intended deal are being defined and set out. You will always have to bear in mind that the management board of a German stock corporation is strictly bound by the stock corporation rules, it is bound to protect the interests of the company and its shareholders strictly and cannot accept certain arrangements that would not be in the best interest of the company. Otherwise, the management board who does not comply with this legal obligation to protect the interests of the company can be made personally liable for any wrongdoing if that caused some damages to the company and indirectly to its shareholders. The, uh, given that general principle under German stock corporation law, it's quite understandable that the target board has no obligation to even talk to an offeror. So even with it being approached, they are not obliged to do that if they believe this is to be in the best interest of the target not to talk to the potential offeror. In cases in which the potential offeror in this phase targets the board or approaches the board of the target, to be precise, and the board refuses to talk to the offeror, In practice, there are some measures that are called bear hug, that is increasing the pressure on the management board to accept at least talking with the offeror, basically by increasing the offer price to such a level that it is in the best interest of the target to at least listen to it. Most commonly then accompanied with intensified public communication so that the management board gets under severe pressure at least to listen to the offeror and to hear out what they are proposing. That may be in the interest of the company and they are obliged to follow the best interest of the company, so they need to do that. Obviously, In this arena with publicly listed companies, you are all aware of the insider dealing prohibitions and ad hoc public publication rules when it comes to insider information on a publicly listed company. So the question obviously is, when the management board of such an entity is being approached by a potential offeror, course of a takeover offer, will that have to be published as an ad hoc publication? Yes, this is something that needs to be taken into account because the potential offer from an offeror is something that is qualified as insider information and qualifies as such and the ad hoc publication regulations apply, the target board will have to consider whether it really should be in the best interest to do that ad hoc publication. There are strict rules for it, but basically they have to do this. But there may be circumstances in the individual case where it would be justified not to do it. And to approach the supervisory authority to get a delay in the obligation to disclose this circumstance and this approach. Also, again, if only if that is in the best interest of the target, not to have this sort of information becoming public knowledge at a specific time already. I mentioned that this is not only a theoretical exercise. Once a situation like this occurs, the target board and the supervisory board are very likely to appoint their own legal and financial advisors because in the course of the procedure for such an offer, they are being requested by law to comment on the later published offer from the offeror in order to inform the own shareholders and the employees and to take a view, take a stand on what they think is advisable in relation to the offer made. Is it recommendable to be accepted or shall it be opposed and In order to come to such a conclusion in such a complex situation, legal and financial advisors are called in and they produce very oftentimes so-called fairness opinions. We can turn this around and call it inadequacy opinions depending on what the management board or the supervisory board would like to achieve. At least they want to have an informed view on whether the price offered by the— to be offered by the offeror is adequate and fair, or whether there is good reason to believe it's not fair, it's unfair, and should be rejected in order to try to motivate the offeror to increase the purchase price. That brings us to— oops, that was too fast— to the pre-offer agreements. There are a number of them. Very familiar and known to most of you will be the non-disclosure agreements. This is an agreement that is only required when the board considers to enter into talks with the offeror and possibly to arrange for a certain, maybe even, maybe only limited, but at least due diligence exercise in order to provide the offeror with some more information that can be drawn and taken from publicly available sources. So this NDA then obviously, and other people call this confidentiality agreement, it needs to be entered into then. This is very often accompanied by a standstill agreement that the management board of the target company requires the offeror to keep the existing shareholding level in its target company as is during the negotiations, so not to change that, not to increase it. Or to decrease it in order to have a limited period of time during which negotiations take place where there is no specific and obvious dealing in the shares of the target company. I quickly also touched upon the business combination agreements. There's lots of stuff that can be agreed in that agreement. The target company, the management board will have to take into account in the interest of the company that once an offer is published, obviously other interested persons, companies will possibly show up and will also show an interest in acquiring the target company and may even be prepared to offer a higher price, a substantially higher price than the first offeror. So in this case, it would not be in the best interest of the company to stick to the first offer. And we call this fiduciary outs in case a better or competing offer comes in. And the management board of the target company has to look into that as the potentially better option for the company and its shareholder base. Also, what's quite common in normal private M&A deals is exclusivity arrangements for a certain period of time with an interested party. This is difficult to accept for a target board. Because you need to justify that this is also, but also being the interest and the best interest of the target. Exclusivity would naturally mean that the competing offer could not be dealt with if it comes in. And that is obviously not in the best interest of the target and the shareholders that a competing offer is being ruled out for a certain period of time. So you should not expect as an interested party in acquiring a publicly listed company, that the management board would accept some sort or any sort of exclusivity in these pre-offer agreements. Interested parties in particular coming from abroad, taking the German view, coming from abroad, may be familiar with break fee arrangements and whether this is also possible in Germany. So what are they? They are aimed at the penalty to be paid by the target company, actually, in case an offer fails due to intervention by a third party. The purpose of this agreement from the offeror's perspective obviously is to protect against enormous costs incurred as stranded investments into such a transaction if at the end of the day the offer and the deal falls through. That is something that's really uncommon in Germany and very legally very difficult to accept for Target as the German Stock Corporation Act generally does not allow extra benefits to be paid for shareholders outside normal dividends. And the situation oftentimes, obviously, or almost always is such that the offeror is a shareholder in the target company already and maybe has built up a certain percentage of shares in the company. We come to that in a minute. So that it's a shareholder, and the shareholder shall not be granted extra benefits. We have the, the basic principle of equal treatment of shareholders who must be complied with. Due diligence is also something that is more difficult in cases where a publicly listed company is involved. First of all, you need to understand that the target board is not at all obligated to grant due diligence opportunities to the offeror. If it does so, The due diligence exercise is, for various reasons, very limited. Obviously, there's no interest in the target company in accepting lengthy due diligence periods. So it will be, if granted at all, it will be a short period of time only for due diligence. And the data and information to be provided in a data room for the offeror is also limited in scope. Also depending a little bit on who is the offeror and whether it's a competing company, various markets, sensitive business data cannot be provided in the data room. An NDA obviously needs to be entered into any— how that arranges for the details of any such due diligence exercise. In scenarios where we come to that at this later point of view where the consideration that the offeror is prepared to offer to the shareholders of the target company is not only cash but possibly shares as a share swap in the offeror company, that can only be considered commended on by the management board of the target company if a reverse due diligence on the offeror is being arranged. So that complicates matters significantly because there is another due diligence that needs to be agreed that now applies to the offeror. The due diligence, that is also true for Private M&A deals needs to avoid cartel law problems. When it comes to the interesting information on a target company that may be competition relevant or has some sort of some other sensitivities to it that cannot just be shared with, should not be shared with an offeror. And some of you will be familiar with these concept of the so-called clean team arrangements. May be required, that is actually an arrangement where in relation to certain sensitive data, only a pre-qualified limited team from, for the potential purchaser has access to that sensitive data and needs to deal with it in a specific way so as to protect the interests of the target company that this is not going to be shared with certain people from the potential purchaser organization. This is also required from a cartel law perspective. If there's non-compliance with these arrangements, parties can actually get into real difficulties with— be fined by the cartel law office. Okay, let's leave due diligence aside and come to disclosure obligations. This is an aspect that needs to be reviewed by a potential offeror, as most of the potential purchasers will have a strategic concept behind the approach to offer the purchase and will want to build some certain stakes in the target upfront in order to be in a strong position as an important shareholder. Now, over the years in Germany, the relevant law that is here is the Securities Trading Act, German Wertpapierhandelsgesetz, has been tightened in order to protect stock corporations from surprise stakeholdings in the target company. And the law says that the obligation to disclose a shareholding that is directly or indirectly held in a target company, also here with comprehensive regulations on the attribution of voting rights of third parties acting in concert as such, at very low levels. It says the acquisition of or the possibility to exercise voting rights in the target company when it exceeds 3% already then it goes in stages, 3, 5, 10, 15, 20, 25, 30, 50, or 75, needs to be disclosed to the target company. The same is true if the thresholds will be missed, you are falling below the thresholds with the shareholding for various reasons, and the legal consequences for not complying with these regulations is so that you're, as a shareholder, no longer able to exercise validly your voting rights from your shares that you are holding in the target company. So it's very, very severe consequence for not complying with these disclosure obligations. And apart from directly holding shares in a target company, that is also true and applies for financial instruments. So that call and put options and others, the basic idea behind it is Whenever there is an opportunity to exercise voting rights easily by someone, this shall also fall into these regulations. The law pertaining to the financial instruments then kicks in with 5% in voting rights in a target company, but it's not much of a difference. 3% or 5% is not much of a difference. Now, the attribution of voting rights, obviously, that applies to, and is being extended to, persons acting in concert, that is subsidiaries mainly, trustees, and other persons acting jointly. There's no way to avoid the disclosing obligations here. This is pretty watertight meanwhile under the German law. And as a side remark, when dealing with the thresholds here, and the cartel law has specific requirements in various cases, says that even the very low shareholding of 10 to 15% of voting rights in a company can kick in and will have to do with cartel law aspects. That needs to be detailed and by specialists who deal with cartel law and anti-merger cases, but this is something that shall not be overlooked. Finally, with the pre-offer arrangements that you should have heard of is the irrevocable undertakings. Apart from just building a stake in a target by simply acquiring the shares from an existing shareholder already from good, a company, a purchaser can seek to talk to basic and important stakeholders whether they would be inclined to accept the offer that they have in mind once an offer is being made so that they have a pre-understanding of how many existing shareholders will at the end of the day already accept the offer that is to be put on the table so that they can be certain that the certain levels of acceptance rate that they would like to have for the offer can be achieved. The irrevocable undertakings just mean that the existing shareholder is not already selling and transferring its shares for good. It is just saying that they are making an offer to transfer the shares for a given share price in the case of the offer being made and the acceptance rate having been achieved. So that is a condition that is, as I say here, is subject to success of the offer in short terms. All right, once the purchaser has gone through all these considerations and aspects, and strategic thinking for a potential offer to be made, the German law requires the decision to make an offer to be published. That is the so-called Section 10 statement, which is so important under German law because the timeline for the takeover procedure starts with this publication. The publication needs to be made within 7 calendar days in case of a mandatory offer. So once someone reaches or exceeds this threshold of 30% in voting rights control in the company, he's got 7 days within which he is forced to publish the decision to make an offer. Following that publication, the offeror has only 4 weeks for preparing an offer document. And we will see that the offer document itself falls under strict regulations and has to comply with certain elements for minimum information in the document. So, that the 4 weeks seem to be quite ambitious. And an offeror, in my view, should start earlier in thinking about and putting together an offer document, even in cases where the decision to make an offer has not actually been made. Of course, the 4 weeks can be quite short for some. Some of the cases. The, after the 4 weeks, at the latest after the 4 weeks, the offer document needs to be submitted to the supervisory authority, to the BaFin, and to the stock exchange boards where the target company shares are listed. The supervisory authority has got then a maximum of 15 working days to check the offer document. And the offer document obviously also has to be submitted to the target board without undue delay after the publication has been made. And I'm mentioning here already, the target board and the supervisory board will have 2 weeks in order to come back with reasoned statements what they think of the offer now being in the public domain. Once the offer document has been approved by the supervisory authority, it needs to be published. And the— with the publication of the public offer, the acceptance period starts, and this takes usually 4 to 10 weeks initially. It can be prolonged in certain circumstances. Whatever the initial period is, At the end of this period, the preliminary result of the acceptance rate needs to be published as well. And the acceptance period will then be prolonged for 2 weeks for those who did not accept the offer in the first acceptance period. So people who think, hmm, let's wait how many other co-shareholders will accept this offer and whether it's likely that the success of the offer is so overwhelming that I should better also sell my shares will then have 2 weeks after the preliminary result of the acceptance whether they would like to join in accepting the offer. After that 2 weeks, the final result will be published and the deal will be implemented. Now let's go into the— some details and aspects of the offer phase. Once the decision to make an offer has been published, this is binding on the offeror. The offeror cannot withdraw from that obligation now to make an offer. If it doesn't do so, it's breach of its obligations and it can be punished for that. So the supervisory authority obviously can block the that specific offeror of making an offer for a certain period of time. And so that the offeror is then blocked, obviously, to participate in this dealmaking for some period of time. All these pre-offer arrangements are the basic ones that have been negotiated. Some of them will be signed in parallel in practice. And in particular package deals and irrevocable undertakings will then be signed because without the publication of the decision to make an offer, without the start of the actual offer procedure, obviously all these deals are possibly irrelevant. The offer document is a voluminous comprehensive document where there is a specific ordinance in Germany giving guidance on what's to be— what needs to be the contents of this offer. In practice, this is sort of standardized nowadays. I have listed here a number of the aspects that need to be set out in the offer document. So the details on the offeror as such, on the target company, on potential persons acting in concert, specific terms of the offer, the price, how the offeror has come to the price, has the— what kind of evaluation method has been used, what is the acceptance period, obviously, what is the consideration offered, is it cash only or is it maybe a share swap, The people obviously need to know whether there's any condition for the implementation of the offer, in particular, the minimum acceptance levels that are required to be met as a result of the offer. Otherwise, this would fall through. The details of measures taken to finance the offer have to be part of the offer document. The consequences for the target and the offeror company in case of a successful offer will also have to be described, meaning impact on the businesses involved and many more things. In order to do that, the offeror has to describe its intentions that it has with the target business once acquired. What is about board appointments for the management board and the supervisory board? So, will there be names that can be mentioned already as designated members of the board? Will there be changes in the management board structure? Also, because this is an element that has to do with the correct pricing of the offer, they have to disclose prior share dealings in the target within the 6 preceding months of the offer. And obviously, the— if there's a share swap, there needs to be much more information on the offeror in order to enable the potential accepting shareholders to understand what they are getting as a consideration for the sale and transfer of their own shares or swap of the shares as a new shareholder in the offeror company. This all needs really time to be carefully prepared. As I said, you— the offeror needs to think about early and start early just in case. I believe even before the decision to actually publish the intent to make an offer because you need to appoint advisors, legal advisors, financial advisors, and will very carefully be orchestrated in order to make that strategic move. In particular, obviously, if a major transaction like trying to get control over a DAX company is in your mind. Just to give you some flavor to it, these offer documents can easily exceed 100 pages, and this is something that is done by written overnight, you know, this needs to be done carefully and checked and double-checked. Also because the offeror is liable for its content, for the completeness and correctness of information that is being listed or mentioned in the offer document. Now the supervisory authority, as we, as we have seen, will check the offer document, but it will not check the offer document for its correctness. It will just check whether it's complete given the requirements of the statutory requirements and other compliance with statutory laws. So whether the facts stated in the offer document are correct is none of the business of the supervisory authority. That also explains why the period for doing this check for the supervisory authority is only up to 15 days. Within 15 days, obviously, it's possible to check whether— tick the box whether all the standard required information to be put into the document have been met and other aspects of the form of the offer document. Now, let's just assume for the time being that such a document is being approved by the authority, then it needs to be published without due delay. Some aspects regarding the adequate consideration that the offeror needs to offer, and there's only the possibility of offering cash for the shares to be acquired or share swap or combinations thereof. There is detailed regulation in place regarding the minimum price that needs to be offered for the shares to be acquired, it needs to be the higher of the weighted average stock exchange price preceding 3 months of the offer, or the price the offeror or persons acting in concert for that purpose paid or agreed within preceding 6 months prior to the publication of the offer document. Argument. So in order to be aware of what at the end of the day, setting aside then later changes to the offer and an increase of the price, maybe if there's a competing offer coming in that you need to consider whether to increase the price to match that or to be better than the competing offer. Apart from that, you need to be well aware of the calculation basis for the minimum price that the offeror needs to, wants to offer to the shareholders. It really depends obviously on the case. If this is a mandatory offer where someone has maybe even by default exceeded the threshold of 30% of voting rights in the target company and is therefore required to make that offer and doesn't want to increase its shareholding actually, then obviously the purchase price that's being offered will be substantially lower than in the other scenario where there's actually the firm intent to become the controlling shareholder and maybe even not only 30% or much more than that in order to then go for other corporate structuring exercises with the target company. So, but this is the minimum obviously that the German law requires to be put into the offer document. A share swap can actually in principle only work when the offered shares are listed at an organized market in the EU. Are in the European Economic Area. And where this is not the case, this is permitted, it can be done. For example, for the share swap with shares of the offeror coming from the US. But the offeror has then to provide for an option for the shareholders of the target company to accept a cash offer so that they have the full choice to accepting cash rather than the shares in a company that's not listed in the EU or the European Economic Area. And then there is regulations to and obligations to offer cash in certain cases where the offeror initially only offered a share swap but then decided to acquire shares in the target company with cash within 6 months. So that the offeror itself deviates from its initial offering of a share swap only, and that requires him to also then make and to change the offer. To accept or to offer to pay in cash. Obviously, depending on how the offeror behaves during the offer period or subsequently to the takeover process, that can lead to an increase of the price as well. So if the offeror decides to buy some additional shares during the offer period, regardless of whether it's via the stock exchange or outside of the stock exchange, this will trigger a price increase. Or, and that kicks in for the year following the takeover procedure, if in that case limited to the positions outside of the stock exchange. If that is being done, that also triggers an increase in the, in the price to be paid to the shareholders that accepted the initial offer. Financing. Suffice it to say that the offeror needs to provide evidence that the financing of the offer is secured. And that needs to be attached to the publication of the decision to make an offer. If for this reason banks obviously are being involved, then you will require a bank, financial institution, mostly a bank, to come up with a written financing confirmation that also needs to be attached to the offer document so that everybody knows there is a bank behind it. if the offer is being accepted with the minimum acceptance rates and levels, this is going to be paid and no one has to be concerned about getting its consideration from the shares transfer. Is it possible to put the offer under certain conditions? Meaning if the conditions are not being met, the offer then is being withdrawn and no longer relevant? Yes, it's possible. It's not possible for all sorts of conditions, but it's possible obviously in common practice for certain mandatory regulatory approvals. Cartel law I mentioned. FDI, that stands for Foreign Direct Investment laws in Germany. I have given a webinar on the Foreign Direct Investment regulations in Germany a couple of weeks ago. Of course, there is a new development in Germany where these laws and regulations will be tightened as well. The German government obviously is afraid of certain takeover attempts, not only relevant for companies publicly listed, but for all sorts of companies in whatever form. And depending on whether these companies operate with their business in certain sensitive areas like military or defense sector or critical infrastructure. So depending on who the target company is and in which business areas it operates, foreign direct investment regulations also need to be complied with, but I'll leave that aside for this webinar. Common practice obviously is minimum acceptance levels to be set out in the offer. If they are not being met, the offer Obviously, it can be improved. It's possible. If the acceptance level was set at a very high— at the high end to begin with, it can be lowered in order to get to a successful offering and avoid the offer falling through. But minimum acceptance level is obviously quite common. Material levels change is a concept that is not new. This is normal stuff for MLA business. Needs to be defined very carefully what kind of events would trigger that material adverse change in order not to be obligated anymore to buy these shares. Also, a condition in the offer document can be the fact that the target needs to refrain from introducing so-called poison pills, so measures somehow to be arranged or to be started to arrange only after the beginning of the publication of the offer document. The management board of the target company is basically obligated to be neutral in the best interest of the company, but many of these, I think every major company that's publicly listed in Germany has already introduced within the framework of the German law what's possible and can be used as poison pills. But there are some elements that can be considered to be taken by the management board, like for example selling off particular strategic assets of the company only after the publication of the offer. That would frustrate the motivation and the reasoning of the purchaser why they are making this offer for getting the target, something like this, that can be and needs to be very carefully phrased and as a condition in the offer documents in order to be protected from the perspective of the offeror. What's not possible as a condition is what in private M&A deals is sometimes common is the so-called Financing out. That's very self-explaining. The German statutory requirements are to provide for the financing for the deal. So the failure to have the financing available for paying the consideration is an aspect that cannot be used as a condition for the offer document. So the takeover offer as such obviously could lead to a situation where certain post-offer measures will be possible for the acquirer, and sometimes the offer is exactly aiming at creating a situation where these corporate measures can be taken. This is in particular true for so-called squeeze-out procedures in order to gain, at the end of the day, 100% control over the target company and then to get rid of any remaining minority shareholders in a publicly listed company. We have in Germany, we do have 3 different sorts of squeeze-out procedures that are quite similar but not identical. One is set forth in the Stock Corporation Act where the, I'm just giving you the principle here, where you will have to have at least already 95% of the shareholding in a company to then initiate a squeeze-out procedure. One squeeze-out procedure is being established in the so-called Transformation Act, and that kicks in already when there is only, only 90% of shareholding in a company. But that needs to be combined with an upstream merger of the target company into the offeror, and this can only be achieved where the offeror that is a German corporation or a European stock corporation for that purpose. And the takeover law we are dealing here with also provides for a squeeze-out opportunity and kicks in with 95% of the shareholding in the target company, but that needs to be the result of a takeover offer, and that is in practice almost never achievable because the acceptance rate is below that level. And then obviously, if you are at 90% and you acquire additional shares, then you can get to it, but then you would not apply the takeover law. You would have to apply the stock corporation act. There's a number of other issues that needs to be considered, has to do with general corporate governance structures in German stock corporations. So I've picked to hear the topic of the board of directors and the supervisory board. Sometimes that is, even big companies from abroad are not familiar with what's going on in Germany here and have to explain how this works. Just because someone has control over a German stock corporation, publicly listed, does not mean that you can just directly remove directors and appoint those because this is being done exclusively by the supervisory board of that entity. So you need to be aware that you will have to have control over the supervisory board in the target company, and that can be achieved with your voting rights in the general meeting of the target company in order then to appoint and remove the supervisory board members. And once you've got the majority secured in the supervisory board, the supervisory board will have to deal with the issue of board members' appointment or removal. Sometimes this is difficult because other aspects, legal aspects, also have to be taken into account, like employee representation in the supervisory boards, for example. It needs to be carefully analyzed and how this can be achieved in a smooth way. One aspect that shall not miss here is the delisting. Obviously, if there is, as opposed to other measures being, squeeze-out is being achieved, then this is an automatic consequence, legal consequence. If there's no shares to be traded on any stock exchange anymore, the stock exchange boards will delist the company automatically. And otherwise, obviously, you can apply for— the target company can apply for delisting from the stock exchange. But you need to be aware that this is being done by the target company, and the target company is being run as a stock operation by the management board. The management board is, absent any specific other arrangements in place like domination agreements, is under its own responsibility to run the business affairs of the stock operation and cannot be instructed or directed to do so. So you need to be careful in knowing beforehand with the right people on the board what you can achieve with the approval of the board. Board members. Just a heads up, you're at the hour. Okay, that's good timing because the aspects that I'm mentioning here, the miscellaneous actions of the Foreign Direct Investment Regulations and the merger filings, I have already mentioned. So that brings me to the end of this overview on public takeover law in Germany. And I hope that was of interest to you, and thank you very much for listening and being part of it. Obviously, if there is any detailed interest in these topics, let us know. We are here to help. Thank you so much. Thanks for attending, everyone. Keep an eye on your emails for the certificate. If you have any questions, it'll also have a way to contact Dirk. And thank you for attending. Have a great day.