CMS Expert Guide to Public Takeovers in Colombia

 Yes, Decree 2555 of 2010 (“Decree 2555”) governs takeovers of companies listed on the Colombian Stock Exchange. 

In order to launch a takeover offer, the offeror must obtain prior authorisation from the Colombian Financial Superintendency (“CFS”).  

1. Acquisitions in which a person or group of persons acquire, directly or indirectly, 25% or more of the outstanding voting shares of a listed company;
2. Acquisitions in which a person or group of persons, that already own 25% or more of the outstanding voting shares of a listed company, acquire, directly or indirectly, an additional 5% or more of the outstanding voting shares of the listed company; 
3. Acquisitions in which a person or group of persons voluntarily makes a takeover offer for a number of shares that does not fall within the mandatory thresholds described above. 

Yes, offerors must engage a stock broker dealer (sociedad comisionista de bolsa) duly licensed by the CFS. These advisers will need to: 

• Serve as conduit by means of which the prospective offeror launches the offer to the holders of the voting securities of the target company. 
• Maintain all the information on the offer available to the shareholders in the target company, especially the offer document that has to be prepared by the offeror with all the information related to the offer. 

Yes, a mandatory offer is required if a person or group of persons acquire, directly or indirectly: 

• 25% or more of the outstanding voting shares of a listed company; or  
• where such person or group of persons already own 25% or more of the outstanding voting shares of a listed company, an additional 5% or more of the outstanding voting shares of the listed company. 

Takeover offers are publicly disclosed through an Offer Notice (Aviso de Oferta) in which the offeror offers to purchase the specific percentage of the target company shares provided therein, and it may include a floor and a cap (i.e to purchase between 50% and 70% of the outstanding voting shares of a public listed company). 

The Offer Notice must contain the number of shares that the offeror seeks to acquire, the price per share, the method of payment (local currency, foreign currency or other securities), the term in which the offer is binding and other material aspects of the offer. 

There is no concept equivalent to a UK scheme of arrangement for the acquisition of 100% of a listed company. 

Within its own team (advisers, funders etc), an offeror may maintain confidentiality. Additionally, if the offeror is also a registered securities issuer in Colombia, it will have to request the CFS for a waiver of the requirement to disclose the potential transaction as material information that has to be disclosed to the market. 

In addition, once the offeror has submitted an authorisation request to the CFS to launch a public takeover offer, such information will become public; and once the CFS approves, the terms of the takeover offer must be publicly disclosed by the offeror to the market, in general, and the target company shareholders, in particular. 

Yes, a mandatory takeover  offer must be made when any person seeks to acquire a number of shares that fall within the scenarios described in (a) and (b) of the answer to Question  2. 

As to how, please refer to Question 5 above.  

Yes, the offeror may include conditions to the validity of the offer, and such conditions must be disclosed in the Offer Notice. 

Yes, the offeror must provide to the Colombian Stock Exchange, any guarantees requested by it. Such guarantees may be in the form of a funds deposit, stand-by letter of credit, an insurance policy or government bonds. 

Yes. 

• If, within the 3 months preceding the offer, an offeror has acquired securities of the same kind as the ones the subject of the offer, then the offer price cannot be less than the maximum price paid by the offeror in that period. 
• If there is a private pre-arranged price with a shareholder of the target, the offer price cannot be less than the price agreed with the shareholder of the target. 
• In some cases (indirect acquisitions following a merger or when a shareholder obtains more than 90% of the outstanding shares), the price has to be determined by an independent advisor. 
• As explained in Question 5 above, the consideration may be in local currency, foreign currency or other securities (in this case, such securities have to be publicly traded on a Colombian Stock Exchange or on an internationally renowned stock exchange in compliance with criteria set by the CFS). 

No. 

No, but once a target company discloses information to one potential offeror, it must disclose the same information to all potential bona fide offerors which may emerge. 

None, especially considering that, once the takeover offer has been launched through an Offer Notice, the board of directors and management of the target company cannot take, implement or execute any decision that may affect the result of the offer. 

No, the target directors do not need to engage with a potential offeror and once the offer has been launched through an Offer Notice, the board of directors and management of the target company cannot take, implement or execute any decision that may affect the result of the offer. 

Yes, from the moment in which the potential offeror submits its approval request to the CFS to the date the offer is closed, the offeror cannot deal in the target company shares.  

Target shareholders may give irrevocable commitments or statements of intent to accept an offer if made or once made. 

No. However, management dealings may need to be reported to the CFS or authorised by the board of directors of the target company. 

D – 10 (best case scenario): Submission by potential offeror of offer documentation  

D – 5: authorisation of CFS to launch the public takeover offer 

D: First mandatory publication of Offer Notice, and formal offer documentation 

D + 5: Second mandatory publication of Offer Notice 

D + 5: First possible date for beginning of offer acceptance term 

D + 10: Third mandatory publication of Offer Notice 

D + 17: first possible closing date for acceptances  

D + 42: last possible closing date for acceptances and maximum term for any extension of the offer 

D + 60: last possible date for payment 

of consideration, if the offer is successful 

• Offer Notice 
• Description of the Offer (Cuadernillo de Oferta) 

• Competitive offers cannot be launched by any person that is, or is controlled, by the same ultimate beneficial owner as the original offeror  
• The first Offer Notice must be publicised a maximum of two business days before the expiration of the term of the original offer 
• The competing offer cannot be made over a lesser amount of securities than the original offer nor at a lower price per share. 
• The competing offer must have more advantageous terms to the securities holders than the original offer (i.e. the offer price is at least 5% greater than the original offer, the amount of securities to be acquired is 5% more than the original offer, or the floor of securities is less than the one provided in the original offer). 

No, the offer is irrevocable. However, it may be modified so as to be the same terms that are required for competing offers, as described in answer 20 above. 

No. However, when the same person or group of persons acquires more than 90% of the outstanding voting shares of a listed company, shareholders that hold at least 1% of the outstanding voting shares have the right to require the majority shareholder to launch a public offer for the outstanding voting shares. 

No. 

To de-list a company, voluntarily, the following steps must be taken: 

• Summon the shareholders general assembly to discuss the de-listing of the company from the stock exchange, including the publication in two national newspapers; 
• Disclose such summoning as relevant information to the market; 
• The de-listing must be approved by the general shareholders assembly with the majorities contemplated in the bylaws; 
• Shareholders that have approved the de-listing must launch a public offer addressed to such shareholders that voted against or that did not attend the shareholders meeting; 
• File a de-listing request before the stock exchange; 
• Once the de-listing request has been filed, within the next 5 days, the company must publicise the decision in two national newspapers; 
• The next day after the publication, file with the CFS the cancellation of the securities in the securities national registry.