CMS Expert Guide to Public Takeovers in Portugal

Yes. The Portuguese Securities Code (“PSC”) and related regulation govern public takeovers of Portuguese-listed companies. Takeovers of listed companies and the operation of the PSC are overseen by the Portuguese Securities and Exchange Commission - Comissão do Mercado de Valores Mobiliários (“CMVM”). 

The following transactions are regulated: 

• Public takeover offers, addressed to undetermined recipients, for the acquisition of shares or other securities granting subscription or acquisition rights (such as options and warrants) issued by listed companies; 
• Mandatory takeover offers; and  
• Squeeze-out arrangements. 

The engagement of specific advisers is not generally required.  

A mandatory offer must be made if a person exceeds, directly or indirectly, one-third or half of the voting rights corresponding to the share capital of the target company, in which case such person must immediately launch a public takeover offer for all the remaining shares issued by the target company and other securities issued by the target company granting the right to their subscription or acquisition. 

This rule is not applicable when the person who would be required to launch the mandatory offer proves to the CMVM that it cannot exercise dominant influence over the target company. 

The PSC provides an exemption from the obligation to launch a mandatory offer when the relevant threshold of the voting rights is exceeded as a result of: 

• the acquisition of shares as a result of a public takeover offer launched for all the securities of the target company, without any restriction as to the maximum quantity or percentage of securities to be acquired; 
• the implementation of measures aimed at rescuing a target company in financial difficulties, within the scope of any of the types of recovery or reorganisation provided for by law; 
• the merger of companies, if the resolution of the general meeting expressly states that the merger will result in a new controlling interest;  
• the acquisition of securities by inheritance or bequest, if the company’s articles of association provide for this. 

Takeovers are usually implemented in the following ways: 

• a series of acquisitions of shares until a mandatory offer is required;  
• launch of a public takeover offer to acquire all or part of the shares and voting rights of a target company. 

If a person reaches or exceeds 90% of the voting rights corresponding to the share capital of the target company through the takeover offer, that person may, in the following three months, acquire the remaining shares for cash consideration. 

The offeror, the target company, their respective shareholders and the members of their respective corporate bodies, as well as all those that provide services to it on a permanent or occasional basis, must maintain confidentiality about the preparation of the takeover offer until the preliminary announcement is made public. 

As soon as the offeror decides to launch a takeover offer, it must send the preliminary announcement to the CMVM, the target company and the managing bodies of the regulated markets on which the securities involved in the takeover offer or the consideration to be offered are admitted to trading, and must immediately proceed with its publication. 

The publication of the above preliminary announcement triggers the following obligations of the offeror: 

• to launch the takeover offer on terms no less favourable to the  addressees than those contained in that announcement; 
• to request the registration of the offer within 20 days, extendable by CMVM to up to 60 days in case of public exchange offers; 
• to inform the representatives of their employees or, in the absence of any such representatives, the employees, of the contents of the offer document, as soon as they are made public. 

There are no legal provisions specifying which conditions mandatory offers can be subject to. 

According to the PSC the takeover offer shall only be subject to conditions corresponding to the offeror’s legitimate interest and not affecting the normal functioning of the market. Additionally, the takeover offer may not be subject to conditions the verification of which is dependent on the offeror. 

Financing of a takeover offer is not specifically regulated.  

However, if the takeover offer provides for cash consideration, the offeror must deposit the total amount thereof with a financial institution or present an appropriate bank guarantee before registering the offer with the CMVM. 

If the consideration consists of securities, these should have appropriate liquidity and be easy to evaluate. Securities offered as consideration which have already been issued should be registered or deposited to the order of the offeror in a centralised system or with a financial intermediary and blocked in the relevant account. 

The consideration may consist of cash, securities already issued or to be issued, or a mix of cash and securities and there is no mandatory minimum price for a general public takeover offer.  

However, if the offeror, directly or indirectly, after publication of the preliminary takeover offer announcement, carries out acquisitions of securities of the same class as those covered by the offer or those that make up the offer consideration, which take place at a higher price than the consideration payable under the offer, the offeror shall be required to increase the consideration under the offer, to a price not lower than the highest price paid in such acquisitions. 

Additionally, there are pricing rules for mandatory takeover offers. In this case, the consideration may not be less than the highest of the following amounts: 

• the highest price paid by the offeror, or by any person with certain ties to the offeror as foreseen in the law, for the acquisition of securities of the same class or that the offeror or any of such persons undertook to pay, within the six months immediately preceding the date of publication of the preliminary announcement of the takeover offer; or 
• the average price of such securities, calculated on a regulated market during the same period of time. 

If the consideration cannot be determined by reference to the criteria described above or if CMVM considers that the consideration proposed by the offeror is not duly justified or equitable, as it is insufficient or excessive, the minimum level of consideration shall be calculated, at the offeror's expense 

by an independent auditor appointed by the CMVM. 

Any consideration, in cash or securities, proposed by the offeror shall be deemed inequitable in the following circumstances: 

• when the highest price has been set by means of an agreement between the offeror, as purchaser, and the seller through private negotiation; 
• when the relevant securities have low liquidity in relation to the regulated market on which they are admitted to trading; and 
• when such consideration is determined according to the market price of the securities in question, and such market price or the regulated market on which the securities are traded have been significantly affected by extraordinary events. 

If the consideration set by an expert is: 

• lower than the amount determined under the terms of bullet 1 above, the highest price paid, or agreed to be pay, by the offeror shall prevail; 
• lower than the amount determined under the terms of bullet 2 above, the value determined by an expert shall prevail. 

Yes. Public takeover offers must be conducted under conditions that ensure equal treatment of the  addressees and, as a rule, the takeover offer shall fix a single price. However, different prices may apply to different classes of securities, and should be determined in an objective manner and in accordance with legitimate interests of the offeror. 

There are no specific provisions on this. However, general provisions of law such as insider dealing provisions will apply. Additionally, the board of directors of the target company shall provide all the information requested by CMVM. 

Notwithstanding the fact that a specific rule on such a matter does not exist, the CMVM has accepted in the past that a voluntary offer is conditional upon the confirmation of relevant information regarding the target company. 

There is no established case law relating to deal protection measures. 

Please refer to Question 21 below for information on modification, review or withdrawal of offers. 

The target company directors have no obligation to engage with a potential offeror or facilitate its offer (such as by providing due diligence information). However, the target company directors remain subject to their general duties to act in the company’s and shareholders’ best interests and therefore may be in a position where those duties require them to engage to some extent. 

In addition, the board of directors of the target company shall send to the offeror and the CMVM, and shall disclose to the public, a report on the timeliness and on the terms and conditions which shall include an autonomous and reasoned opinion on, at least: 

• the type and amount of the consideration offered;  
• the offeror’s strategic plans for the target company;  
• the repercussions of the offer on the interests of the target company, in general, and, in particular, on the interests of its employees and their terms of employment and the locations where the company carries out its activity;  
• the intentions of the members of the management body, who are simultaneously shareholders in the target company, as to the acceptance of the offer. 

The report shall further include information on the way the voting rights were exercised in respect of the resolution of the management body that approved it, and shall set out any existing conflicts of interest between the target company’s directors and the target shareholders and other securities holders in relation to the offer, or confirm that no such conflicts exist. 

Between the publication of the preliminary offer announcement and the assessment of the outcome of the offer, the management body of the target company shall: 

• inform the CMVM on a daily basis of its members transactions in securities issued by the target company or by persons related to it;  
• provide all the information requested by the CMVM within the scope of its supervisory functions; 
• inform employee representatives or, if there are none, the employees of the contents of the offer documents and the report prepared by it, as soon as these are made public;  
• act in good faith, especially as to the accuracy of information and fairness of the behaviour. 

From the moment it becomes aware of the decision to launch a takeover offer for more than one third of the relevant class of securities, and until the assessment of the result or the prior termination of the offer, the target company’s board of directors may not perform acts that materially affect the target company’s financial position and which may significantly affect the objectives announced by the offeror, apart from those within the scope of normal day to day company management and those that fall under the following exceptions: 

• Acts resulting from the fulfilment of obligations undertaken before the launch of the offer was known; 
• Acts authorised by a general meeting convened exclusively for that purpose during the offer period; 
• Acts aimed at searching for competing offerors. 

The defences that a target company may deploy if it does not support the offer may result from certain provisions contained in its by-laws, which may allow restrictions on the transfer of shares, the effectiveness of which can be suspended for the purposes of transfers of shares in the context of a takeover offer or certain restrictions on voting rights (including those set out in shareholder agreements) the effectiveness of which can be suspended for the purposes of a shareholders meeting specifically convened during the offer period. However, if included in the by-laws, those provisions regarding the suspension of the effectiveness of the restrictions on transfers of shares and voting rights may only remain in force for a maximum period of 18 months, renewable by means of a new resolution of a general meeting of shareholders approved in accordance with the rules provided for amending the by-laws of the target company. 

The offeror shall be liable for damages caused by the suspension of effectiveness of shareholder agreements fully disclosed up to the date of publication of the preliminary offer announcement. 

The offeror shall not be liable for any damages caused to shareholders who have voted in favour of amendments to the articles of association for the purposes of allowing the suspension mentioned above and to persons with certain ties to shareholders as provided in the law. 

As from the publication of the preliminary offer announcement until the assessment of the offer's result, the offeror or any person with certain connections with the offeror as provided in the law:  

• cannot negotiate outside regulated market securities of the same class as those which are the object of the offer or those which comprise the consideration, except if authorised by CMVM; and 
• must inform the CMVM on a daily basis about the transactions carried out by each of them relating to the securities issued by the target company or of the same class as those which comprise the consideration. 

Acquisitions of securities of the same class as those covered by the offer or those that make up the consideration, carried out after the publication of the preliminary offer announcement, shall be included in the calculation of the minimum amount that the offeror proposes to acquire. In case these acquisitions take place at a higher price than the consideration for the offer, the offeror shall be required to increase the consideration to a price not lower than the highest price paid in such acquisitions. 

There are no specific provisions on “commitments to accept the offer”. 

However, as from the publication of the preliminary offer announcement until the assessment of the offer's result: 

• the offeror, or any person with certain ties to offeror as provided  in the law, [cannot negotiate outside regulated market securities] of the same class as those which are the object of the offer or those which comprise the consideration, except if authorised by CMVM; 
• acquisitions of securities of the same class as those covered by the offer or those that make up the consideration, carried out after the publication of the preliminary offer announcement, shall be included in the calculation of the minimum amount that the offeror proposes to acquire and if these acquisitions take place at a higher price than the consideration under the offer, the offeror shall be required to increase the consideration to a price not lower than the highest price paid in such acquisitions. In any case, the acceptance may be withdrawn by means of notification to the financial intermediary, delivered up to five days before the end of the offer period or within a shorter period as may be foreseen in the offer documentation. 

Between the publication of the preliminary offer announcement and the assessment of the outcome of the takeover offer:  

• the management body of the target company shall inform the CMVM on a daily basis of its members transactions in securities issued by the target company or by persons related to it;  
• the offeror or any person with certain ties to the offeror as foreseen in the law must inform the CMVM on a daily basis about the transactions carried out by each of them relating to the securities issued by the target company or of the same class as those which comprise the consideration under the takeover offer. 

The principal stages of the takeover offer process include: 

• D Day - Upon making the decision to launch a takeover offer, the offeror shall send the preliminary offer announcement to the CMVM, the target company and the market operators on which the securities covered by the takeover offer, or otherwise forming part of the consideration to be proposed under the takeover offer, are admitted to trading, and shall immediately proceed with publication of the offer announcement;  
• D + 8 - Issuing of an opinion on the mandatory offer by the target company’s board of directors eight days after receipt of the draft prospectus and draft offer announcement. 
• D + 20 - Submission to the CMVM of the application for registration of the mandatory offer within twenty days after the publication of the preliminary offer announcement; 
• D + 28 - Decision by the CMVM within eight days after receiving: (a) the application for registration of the mandatory offer, or (b) any additional information requested by CMVM. The CMVM may suspend this deadline if, for example, the offer is conditional on obtaining regulatory or competition approvals. 
• D + 28 plus 14 to 70 days - Offer period after registration of the offer with the CMVM: between 2 (two) to 10 (ten) weeks, which can be extended by decision of the CMVM or at request of the offeror in case of review of the offer, launch of a competing offer or if such extension is justified by the protection of interests of the  addressees. 

The key documents in a takeover offer are the following: 

• Preliminary offer announcement; 
• Draft prospectus; 
• Proof of the deposit of the consideration in cash or issuance of a bank guarantee securing its payment; 
• Proof of blocking of the securities already issued that form the consideration; and 
• Public announcement of the results of the offer. 

In addition to the above key documents, CMVM shall also be provided with the following complementary documents for registration purposes: 

• Copy of the resolution regarding the offer adopted by the offeror's relevant corporate bodies and of the applicable administrative decisions; 
• A copy of the articles of association of the target company; 
• A copy of the articles of association of the offeror company; 
• Updated commercial certificate of the target company; 
• Updated commercial certificate of the offeror company; 
• Copy of the management reports and financial accounts, reports of audit bodies and legal certification of the offeror's accounts for the periods required under the applicable European Union law; 
• Auditor's report/opinion; 
• Copy of the agreement signed with the financial intermediary assisting with the offer, if applicable; 
• Copy of the underwriting contract and of the underwriting syndicate agreement, if any; 
• Copy of the market making agreement, stabilisation agreement and green shoe agreement, if any; 
• Proforma financial information, when required; 
• Expert reports, when required. 

Yes. A competitive takeover offer must satisfy the following conditions:  

• the consideration shall be higher than the previously announced original offer, by at least 2% of its value;  
• It does not apply to fewer securities than those covered by the previously announced original offer; 
• Its success cannot be conditional upon a higher percentage of acceptances by holders of securities or voting rights than that contained in the previously announced original offer except when such a percentage is justified in terms of voting rights in the target company already held by the offeror. 

Competitive takeover offers shall be registered: 

1. by the end of the fifth business day prior to the end of the previously registered offer period; or 
2. only after the outcome of the previously registered offer is determined, if the deadline in the previous subparagraph is not possible. 

If the offer is registered pursuant to subparagraph (a) above: 

• the last day of any offer period must coincide; 
• acceptances can be withdrawn until the last day of the offer period; 
• addressees who have accepted the offer that does not satisfy the conditions for the respective settlement may, within two business days following the determination of the outcome, declare their acceptance in relation to an offer that has satisfied the conditions for this purpose. 

If the offer is registered pursuant to subparagraph (b) above, the offeror must, up to the fifth business day before the end of the previously registered offer period, inform the market about: 

• the final terms of its offer; and 
• the status of the fact-checking/due diligence process on which its launch depends, as well as an estimate of when it will be obtained. 

Yes. 

In the case of an unforeseen and substantial change in circumstances, known by the addressees (i.e. target shareholders and holders of other securities granting subscription or acquisition rights (such as options and warrants)), which have been the basis for the decision to launch the takeover offer, exceeding the risks inherent in the offer, the offeror may, within a reasonable period of time and with the CMVM's authorisation, change or revoke the takeover offer. 

Up to two days before the end of the offer period, the offeror may, with the authorisation of the CMVM, revise its terms and conditions, provided that it does not make it globally less favourable for the respective addressees. 

The modification of the offer or its revision constitutes grounds for extending the respective term, decided by CMVM on its own initiative or at the request of the offeror. Statements of acceptance of the offer prior to modification or revision shall be deemed effective for the modified offer. 

Yes, but only in a squeeze-out situation. 

If a shareholder becomes the holder of 90% or more of the voting rights of the target company following a takeover offer, the respective offeror may exercise a squeeze-out right over the remaining shares within the three following months. 

The minimum consideration amount to be paid in this case shall correspond to the highest offer consideration/price  paid under  the takeover offer and the consideration amount paid by the offeror or a related entity between the determination of the results of the takeover offer and the registration of the squeeze-out with the CMVM.  

Additionally, the minority shareholder(s) may also exercise a sell-out right over the shares within the following three months. For such purpose, minority shareholders must send a written invitation to the controlling shareholder/offeror to make a proposal to acquire their shares within eight days. 

Unless authorised by the CMVM in order to protect the interests of the target company and its shareholders, neither the offeror or any of the persons associated with it may launch a takeover offer, directly or indirectly, over securities of the  same class as the securities subject to the previous takeover offer or granting the right to subscribe or acquire such securities, in the 12 months following the publication of the result of the offer or the termination of the takeover offer’s registration process. 

A company can de-list if 90% of the target company’s shareholders (holding the same amount of voting rights) resolve to take it private.  

After the approval resolution, the delisting must be request to the CMVM within the following 20 days. 

The approval resolution of the delisting triggers the obligation of the target company which is delisting to acquire the shares of the shareholders that voted against delisting, within 3 months following the approval of the delisting by the CMVM. The target company may appoint a shareholder or even a third party to acquire the share until the relevant shareholders resolution for the acquisition is executed. 

Additionally, if there is a public offer where the offeror secures ownership of 90% of the voting rights and the offeror launches successfully a squeeze-out or if the minority shareholders launch successfully a buy-out, such squeeze-out / buy-out results in the automatic and immediate delist of the target company.