SECTION 1: Market overview
1.1 What have been the key trends in the M&A market in
your jurisdiction over the past 12 months and what have been
the most active sectors?
The Austrian M&A market has been growing continuously
for the past few years. Same as in 2016, 2017 showed a constant
number of transactions with a massive increase in transaction
value. The most active sectors in 2017 were the real estate,
technology and industry sectors. According to the Ernst &
Young market analysis for 2017, of 345 transactions which took
place in 2017, 86 concerned the real estate market followed by
76 transactions in technology and 60 in industry.
Another trend that has been going on for the last few years
is the increasing interest among foreign investors to enter the
Austrian market. Meanwhile more than one third of all deals
with Austrian relevance concerned foreign investments in
1.2 What M&A deal flow has your market experienced and
how does this compare to previous years?
The number of M&A transactions completed on the Austrian
market has been steadily increasing. In 2017, pursuant to the
Ernst & Young market analysis for 2017, 345 transactions
took place which corresponded approximately to the number of
transactions completed in the year 2016. M&A deals in
Austria reached an aggregate transaction value of €14.7
billion in 2017, which is an increase of 37 % as compared to
2016. This trend in significant increase in transaction volume
has been continuing since 2016 where a 10-year high was reached
with a transaction volume of €10.7 billion corresponding
to an increase of 66.2 % compared to 2015.
1.3 Is your market driven by private or public M&A
transactions, or both? What are the dynamics between the
Most transactions on the Austrian market are private M&A
transactions, whereas public M&A deals have not played a
big role in the last few years. 2017 was, in this regard, an
exception as the largest deal – the takeover of Buwog
by Vonovia with a transaction value of €5.6 billion
– was a public M&A transaction. However, the
prevailing number of M&A transactions on the Austrian
market are private.
1.4 Describe the relative influence of strategic and
financial investors on the M&A environment in your
The influence of financial investors in the Austrian M&A
environment is relatively slim. Only 20 out of 345 deals in
2017 were financial investments. On the other hand, strategic
investments play a very large role on the Austrian M&A
market. In 2017 the majority of transactions were performed by
SECTION 2: M&A structures
2.1 Please review some recent notable M&A transactions
in your market and outline any interesting aspects in their
structures and what they mean for the market.
2017 has seen four major transactions, which caused the
aggregate transaction value of Austrian M&A transactions to
(i) The takeover of Buwog by Vonovia (transaction value of
(ii) The acquisition of UPC Austria by T-Mobile Austria
(iii) The acquisition of the Russian gas field
Juschno-Russkoje by OMV (€1.7 billion) and
(iv) The acquisition of the real estate portfolio of RFR
Holding by Signa (€1.5 billion).
The majority of transactions was performed by means of a
share deal, which is generally the typical means of acquisition
of an Austrian company. An interesting aspect of M&A deals
performed in Austria in 2017 was the continuing increase of
foreign investments – outbound as well inbound
– and a significant reduction of purely domestic
transactions. This shows that the Austrian market is getting
increasingly interesting for foreign investors in particular on
the real estate sector where higher margins as opposed to
traditional financial investments can be achieved.
2.2 What have been the most significant trends or factors
impacting deal structures?
Most investments in the Austrian M&A market are
strategic investments with an insignificant number of financial
investors playing a role. It can be perceived that due to the
low interest rates and high liquidity in the market investors
are searching for projects with higher achievable margins,
which can be found in the Austrian real estate sector. Due to
the continuing digitalization, the technology sector has also
become more and more interesting over the years.
SECTION 3: Legislation and policy changes
3.1 Describe the key legislation and regulatory bodies that
govern M&A activity in your jurisdiction.
Austrian law does not have one specific law regulating all
issues on the acquisitions of companies, but rather various
different statutes apply, depending on the specific type and
form of an acquisition.
For asset deals, in particular the regulations of Sec 1409
of the General Civil Code and Sec 38 of the Commercial Code are
pertinent. Sec 1409 of the General Civil Code provides that a
purchaser generally is jointly and severally liable with the
seller towards the seller's creditors for any liabilities of
the acquired business having their origin prior to the
acquisition. The purchaser's liability is limited to the
current net asset value of the acquired assets and applies in
case the purchaser knew or should have known at the time of the
purchase of the pre-existing liabilities. Sec 1409 of the
General Civil Code is mandatory law and cannot be waived or
amended by contract. Liability can be reduced if the purchase
price payable by the buyer is used to pay off the debts of the
business sold. Sec 38 of the Commercial Code provides that a
legal entity, which acquires and continues a commercial
business, is liable for all debts the former owner incurred in
the course of business conduct, meaning even those which are
not contractually agreed to be taken over by the buyer. Unlike
liability under Sec 1409 of the General Civil Code, liability
under the Commercial Code is not limited to the value of the
acquired assets. Nevertheless, under Article 38 of the
Commercial Code the seller and the buyer can agree to limit
liability of the seller, such limitation of liability, however,
being only valid if a timely notification to the commercial
register is submitted or otherwise made public.
A key regulatory authority with regard to M&A
transactions is the Federal Competition Authority
(Bundeswettbewerbsbehörde), which is competent
for the clearance of mergers if the transaction volume does not
exceed the thresholds of the EC Merger Control Regulation, but
exceeds the thresholds under Austrian competition law. Further
relevant authorities are the Commercial Register Courts
(Firmenbuchgerichte), which register and publish
transactions and reorganizations in the Austrian commercial
register, and the Financial Market Authority
(Finanzmarktaufsicht), which reviews banking
acquisitions. Public M&A transactions regarding listed
joint stock corporations (Aktiengesellschaft) are also
subject to the supervision of the Austrian Takeover Commission
(Übernahmekommission), which monitors compliance
with the Austrian takeover regulations and decides on all
matters related to the Takeover Act.
|NB: Values may exclude
certain transactions, for example asset
3.2 Have there been any recent changes to regulations or
regulators that may impact M&A transactions or activity and
what impact do you expect them to have?
A recent change, which has been made to the Austrian Cartel
Act and which applies to all transactions closing after
November 2017, extended the scope of transactions for which
clearance by the Federal Competition Authority needs to be
Another major change that will affect public M&A
transactions as of January 3 2018 is the introduction of the
possibility of a de-listing in the Austrian Stock Exchange Act
(BörseG), which was introduced in order to adopt new EU
investor protection and capital markets transparency
regulations. The requirements for such a de-listing process is
the affirmative resolution of a qualified majority in the
annual general meeting and the prior active official listing
over a period of three years. Besides this regular de-listing,
a so-called "cold de-listing" (meaning de-listing due to
corporate law measures such as a merger) was also introduced.
The motivation for such delisting could be rooted in economic
factors, such as conflicts between the supply and demand sides
or due to company internal initiatives to avoid the
transparency rules and competitive disadvantages associated
with the stock exchange regulation.
3.3 Are there any rules, legislation or policy frameworks
under discussion that may impact M&A in your jurisdiction
in the near future?
In October 2017, federal elections took place in Austria,
which brought a change of political power. The new government
was established in December 2017. It remains to be seen which
changes with relevance to the Austrian M&A market the new
government intends to implement. According to the government
program, the new government intends to dissolve hurdles and
simplify administrative proceedings, which might also have an
effect to M&A in Austria.
SECTION 4: Market idiosyncrasies
4.1 Please describe any common mistakes or misconceptions
that exist about the M&A market in your jurisdiction.
The Austrian legal system has a few peculiarities, which are
commonly misunderstood. As most M&A deals in Austria are
private M&A transactions, where the target company is an
Austrian limited liability company, the share deal must be made
in the form of a notarial deed in front of an Austrian notary
public. Typically, such notarial deed needs to be drawn up in
German. With the increasing foreign involvement in Austrian
M&A transactions, it has become more and more common that
such notarial deeds may also be drawn up in English.
Misconceptions also exist with regard to the fact that
certain transactions in Austria are subject to Austrian stamp
duty tax. Typically, stamp duty tax becomes payable upon the
simple fact that a written document on a transaction is being
drawn up in Austria. A lot of misunderstandings with regard to
stamp duty tax can be resolved if professional advice is sought
at an early stage.
4.2 Are there frequently asked questions or often
overlooked areas from parties involved in an M&A
The concept of the Austrian stamp duty tax often requires
specific legal advice in particular as to possibilities to
legally avoid such stamp duty tax.
For real estate transactions, it is advisable to seek
preliminary advice in order to properly structure the acquiring
vehicle to minimize possible tax implications connected with
4.3 What measures should be taken to best prepare for your
In order to best prepare for Austrian particularities and
idiosyncrasies, it is advisable for foreign investors to seek
legal and tax advice by Austrian specialists at an early stage.
That way the acquisition of a possible Austrian target company
can be structured in the best possible way to meet the
investor's needs and comply with Austrian particularities.
SECTION 5(a): Public M&A
5.1 What are the key factors involved in obtaining control
of a public company in your jurisdiction?
Most determinants regarding the acquisition of a controlling
stake in a public company are regulated in the Austrian
Takeover Act. A compulsory public offer has to be made to the
other shareholders when a shareholder acquires a stake of 30 %
5.2 What conditions are usually attached to a public
Pursuant to Sec 5 para 2 of the Austrian Takeover Act, the
intention to acquire a stake in a public company needs to be
communicated as soon as there are rumours that could alter the
stock price. The bidder who is intending to place an offer also
has to inform the target's representatives immediately,
notifying them that the executive board and the supervisory
board have decided to place such offer, or that conditions have
been met that oblige them to place an offer. Public takeover
offers need to be executed in a way that minimise market
manipulation and insider trading. The members of the target
company also have corresponding secrecy and transparency
duties. A further condition is the notification of the workers
council pursuant to Sec 11 para 3 of the Austrian Takeover Act.
A financial expert must also be included in the public takeover
5.3 What are the current trends/market standards for break
fees in public M&A in your jurisdiction?
Break fees or break-up fees, as well as termination fees,
have found their way into Austrian M&A practice especially
since the financial crisis. These fees can amount up to 20 % of
the transaction volume. In public M&A transactions, such
fees are rather uncommon, which is partly due to legal
restrictions, whereas in private M&A transactions, break
fees are more often agreed upon.
SECTION 5(b): Private M&A
5.4 What are the current trends with regard to
consideration mechanisms including the use of locked box
mechanisms, completion accounts, earn-outs and escrow?
The purchase price in private M&A transactions is
typically either fixed under a locked box mechanism or
determined at signing as a provisional purchase price pursuant
to a fixed calculation method which is then finalized on the
basis of financial accounts drawn up at closing. Earn-out
mechanisms are sometimes included as mechanisms to adapt the
purchase price after closing. It is also quite common to place
a certain percentage of the purchase price in escrow at
signing, of which a designated amount might also be used as
break fees in case the deal does not close.
5.5 What conditions are usually attached to a private
Typically, the private takeover offers are conditional upon
a satisfying due diligence and transaction documentation,
approvals of internal boards and committees, the conclusion of
certain side agreements which are deemed necessary and the
occurrence of no material adverse changes.
5.6 Is it common practice to provide for a foreign
governing law and/or jurisdiction in private M&A share
No, generally the parties of a private M&A share
purchase agreement agree on Austrian substantive law and
dispute resolution in Austria. This also relates to the fact
that mandatory Austrian laws apply to the acquisition of shares
in an Austrian company.
5.7 How common is warranty and indemnity insurance on
private M&A transactions?
W&I insurance as a tool coming from the Anglo-American
tradition is available but still not very common in the Austria
M&A market. However, throughout Europe it is getting more
and more common to make use of this useful tool. We believe
that this trend will gradually also be implemented in the
Austrian M&A market.
5.8 Discuss the exit environment in your jurisdiction,
including the market for IPOs, trade sales and sales to
IPOs do not play a significant role on the Austrian market.
Generally, a shareholder interested in selling his shareholding
will initiate a structured bidding process to which interested
parties are invited. As the Austrian market is rather small,
very often the shareholder will be aware of potentially
interested parties and address them directly.
SECTION 6: Outlook 2018
6.1 What are your predictions for the next 12 months in the
M&A market and how do you expect legal practice to
The Austrian M&A market will continue to be influenced
by macroeconomic developments (such as Brexit and general
economic developments). Due to the persistent low interest
rates and existing high liquidity in the market, investors will
keep searching for projects with higher achievable margins. We
believe that as in previous years, the focus will remain on the
real estate and technology sectors. We also expect that the
trends of previous years, relating to the continuing increase
of transaction volume, will continue into 2018.
Partner, Fellner Wratzfeld &
T: +43 1 53770 311
F: +43 1 53770 70
Markus Fellner is a founding partner and the head of
the firm's corporate and M&A practice who
specialises in banking and finance, insolvency law and
restructuring and dispute resolution. He was admitted
to the Austrian Bar in 1998 and lectures at various
institutions, having been awarded a Mag IUR from the
University of Vienna and a Mag RER SOC OEC from the
Vienna University of Economics and Business.
Partner, Fellner Wratzfeld &
T: +43 1 53770 372
F: +43 1 53770 70
Irena Gogl-Hassanin is contract partner at fwp
specialising in corporate and M&A, banking and
finance, insolvency law and restructuring, company law
and aviation law. She obtained her master of laws
degree from University College London. Irena
Gogl-Hassanin is author of several publications in her
areas of specialisation and a part-time lecturer for
finance at an Austrian university.