Pricing Risks Connected to Exchange Offers in Finland

Background

The acquisition of public limited liability companies in Finland usually follows the classic four-step structure. The first step is for the buyer to acquire the shares of major shareholders in the target company. Next, a voluntary public tender offer ("voluntary offer") is usually launched, followed by the launch of a mandatory public tender offer ("mandatory offer") governed by the Securities Market Act (the "SMA"). The obligation to launch a mandatory offer arises from the provisions of the SMA, which stipulate that any shareholder whose holding in a public limited liability company exceeds two-thirds of the votes in the company, must offer to purchase also the target company’s remaining shares and securities entitling to shares at fair market value. The final step of the takeover is the squeeze-out of minority holdings pursuant to the provisions of the Companies Act, laying down that a shareholder holding more than nine-tenths of all shares and voting rights of a