Natural or legal persons directly or indirectly acquiring shares granting more than 33% of the vot-ing rights in a Romanian listed company are required to make a bid as a means of protecting the company’s minority shareholders. Under the European legal framework, the offeror must address that bid to all minority shareholders, offering to purchase all their holdings at an equitable price.
As a matter of principle, the highest price paid for the shares issued by the Romanian listed com-pany by the offeror over a 12-month period before the bid shall be regarded as an equitable price.
The Romanian Financial Supervisory Authority can impose an adjustment to the mandatory bid if it believes that acquisitions made by the offeror in the last 12 months have an impact on the fairness of the bid. In such a case, the bid must at least equal the highest of: (a) the average market price of the company’s shares in the 12-month period preceding the bid, (b) the net asset value per share booked in the company’s last annual financial statements, or (c) the price determined by a valuator.
What if the offeror has indirectly acquired shares in a Romanian listed company and no listed shares have been directly acquired in the last 12 months, as when, for instance, an offeror ac-quires 100% of the share capital of the majority shareholder of a Romanian listed company in a single transaction? While it may be argued that the price paid per listed share in an indirect acquisi-tion would better protect minority shareholders, as it basically offers them equal exit terms, the Romanian Financial Supervisory Authority does not take the indirect acquisition price into account when determining the mandatory bid. There have been cases where this position has been unsuc-cessfully challenged in court, with the courts holding the view that, as stated above, the price of the mandatory bids after indirect acquisitions must be at least equal to the highest of: (a) the average market price for the 12-month period preceding the bid, (b) the net asset value per share, or (c) the price determined by a valuator.
How about if the offeror has unintentionally acquired shares granting more than 33% of the voting rights, as where, for instance, the offeror owns 25% of the voting rights and as a result of a capi-tal increase with pre-emption rights only (where the offeror has exercised its pre-emption rights in full while other shareholders have not) its holding increases after closing the capital increase to more than 33% of the voting rights? In case of an unintended acquisition, the acquirer of more than 33% of the voting rights may choose between selling the shares exceeding said threshold or launching the mandatory bid. If the preferred option is to launch a mandatory bid, the above rules will apply when determining the price of that bid.
Considering the specific nature of Romanian law and the powers of the Romanian Financial Super-visory Authority to adjust bids when assessing the acquisition of more than 33% of the voting rights in a Romanian listed company, potential purchasers would be wise to consider the worst-case scenario. For the acquirer this is a mandatory bid that is the highest of: (a) the highest price paid by the offeror for the listed shares over a 12-month period before the mandatory bid, (b) the average market price for the 12-month period preceding the bid, (c) the net asset value per share, and (d) the price determined by a valuator.
By Narcisa Oprea, Partner, Schoenherr Bucharest
This Article was originally published in Issue 6.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.