Squeeze-out Mergers: Supreme Court's View On Valuation Issues

Originally published on International Law Office

Introduction

There are several reasons for launching a public takeover bid in order to acquire another company and the different parties involved may have different interests and objectives. For example, an offeror may wish to take complete control of a target with a view to integrating the target fully into its organisational group structure in order to reduce costs. Conversely, an offeror may want only to control a target, which can be accomplished by holding more than 50% of the voting rights, as this will allow it to control the composition of the target's board of directors. However, in targets with an atomised shareholder base and low attendance rates at shareholder meetings, it may be possible to achieve effective control with a smaller share of the voting rights – which is reflected in the fact that a mandatory public offer is triggered at the lower threshold of 33.3% of the outstanding shares.