Voluntary tender offers (VTOs) are regulated by the Communiqué on Tender Offers1 issued by the Capital Markets Board (MB) in accordance with the Capital Markets Law2. The communiqué entered into force on January 23 2014 and regulates the principles applicable to mandatory tender offers and VTOs in public companies.

VTO process

A VTO can be launched for the acquisition of all or part of a public company's shares. However, if a partial VTO results in the acquisition of 'management control'3 over the target, the offeror must make a mandatory tender offer for the target's remaining shares. On the other hand, if management control is acquired following a VTO made for all shares in the public company, a mandatory tender offer is not needed.

The VTO application must be submitted to the CMB with the documents listed in the communiqué and the VTO must be launched within six business days of the CMB's approval. The offeror can withdraw from the VTO up to the launch date.

The offer period must be between 10 and 20 business days. Upon the target's application, the CMB can extend the offer period for a maximum of 30 business days to enable the target's general assembly to evaluate the offer.

New role for board members

In the event of a VTO, the target's board of directors must prepare a report on the offeror's strategic plans towards the target and the potential consequences thereof, including the board's opinion on the VTO. This report must be publicly disclosed on the business day before the VTO's launch date.

Offer price

The communiqué sets forth no benchmark for the VTO price and states that the offeror can increase the price up to the business day before completion of the offer period. If the VTO price is increased, the offer period is extended for two weeks. If some shareholders sold their shares to the offeror before the increase, the difference must be paid to such shareholders within two business days of completion of the offer period.

If, after the announcement of the VTO and within three months of completion of the offer period, the offeror (or parties acting in concert with it) purchases the shares at above the VTO price, the offer price must be redetermined. This must not be less than the highest price paid by the offeror for the acquired shares.

Competing offer

The communiqué introduces the 'competing offer' concept into Turkish legislation. Accordingly, a third party can launch a competing offer within the offer period and the shareholders that have accepted the original VTO can refrain from selling their shares to the original offeror to the extent that:

  • they accepted the original VTO before the announcement of the competing offer; and
  • the share transfer has not been completed.

Comment

The communiqué clarifies the principles applicable to VTOs and mandatory tender offers and strengthens the protection of minority shareholders. In the near future competing offers may be made in VTOs, which will shed light on the CMB's approach on the matter.

Footnotes

1. Published in the Official Gazette on January 23 2014.

2. Published in the Official Gazette on December 30 2012.

3. Under the Communiqué, the acquisition of management control is defined as the acquisition (whether directly or indirectly, single-handedly or together with others acting in concert) of

  • shares representing at least 50% of the company's share capital or the voting rights; or
  • regardless of share percentage, privileged shares entitling the holder to appoint or nominate the majority of the board of directors.

© Kolcuoğlu Demirkan Attorneys at Law, 2014

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