Greece: M&A in a re-emerging market
Lately, domestic and international financial and corporate players have been looking to the Athens Exchange for safe yet high return investment opportunities in Greece and south east Europe. They are seeking to make takeover bids on securities of companies established in Greece and listed on the local exchange with significant presence in the wider region. It is common knowledge that M&As are the most transparent and efficient way to gain control of the desired target company, following a public offer on all or a part of the target's capital. However, this does not seem to be their unique advantage in the Greek legal order. The speed of their conclusion, with an average duration of two months, allows the investor to begin their business quickly and efficiently. The investor will be in a position to choose a board of his own preference within a few days of the expiry of the public offer, and to focus on what matters: building the business. The Greek legal framework on takeover bids (mainly 3461/2006 as in force – the Law) harmonises local law with the relevant EU Directive 2004/25/EC. The Law distinguishes between mandatory and voluntary offers. The former is necessary whenever an investor gains direct or indirect control of more than a third of the voting rights in a company, and as a result the control of that company. In this case, the investor is obliged, within 20 days of the acquisition, to make a public offer (mandatory bid) for the remaining shares of the company. The same obligation lies with every shareholder who holds more than a third but less than half of the voting rights of the target company, if within six months said shareholder acquires (alone or with others), securities of the target company which represent more than three percent of the voting rights. Voluntary offers can be submitted at any time, and refer not only to voting, but also to non-voting shares. The bidder can stipulate a minimum and a maximum quantity of shares that the bidder is willing to acquire.
Within those 20 days, or when the bidder plans a voluntary offer, they must inform the Hellenic Capital Market Committee (HCMC) with the submission of the bid's offer document. Within 10 days, the HCMC has to approve it, or return it for adjustments. The offeree's period of acceptance of the bid can vary from four weeks to eight weeks after the publication of the approved bid's offer document. Competitive bids can be submitted within seven days before the expiry of the bid. Also, five days before the expiration of the initial offer, the bidder can submit a revised offer with improved terms.
During this period, the target's management may adopt a hostile or friendly attitude towards the bid. The management must prepare in writing (and make public) its opinion on the bid and the reasons on which it is based, including its views on the effects of implementation of the bid on all the company's interests, with special attention on the impact on the company's employees, and on the bidder's strategic plans for the target company.
Finally, if the bidder gains more than 90% of the voting shares, they are entitled to squeeze out the minority shareholders, whereas a sell-out right is also ensured for the initially dissenting shareholders. Both rights can only be exercised within three months of the takeover.
The three main advantages of the legal framework are: transparency in the process through the offer document; speed, so that the target's activities are not postponed and their financial and credit position is not affected; and protection of minority shareholders' rights.
As Greece appears to be emerging from a dramatic six years' recession, with the need for new direct foreign investments, opportunities in the Athens Exchange have been created, where leadership and know-how in business is equally important as capital. Public M&As may prove to be the ideal vehicle for investors who wish to establish their position in the south east European market.
Panagiotis Drakopoulos and Evangelos Margaritis