CMS Expert Guide to Public Takeovers in Spain

Yes. Law 6/2023, of 17 March 2023, of Securities Markets and Investment Services and Royal Decree 1066/2007, of 27 July 2023, on the Takeover Bids Regime (the “Spanish Takeover Act”) governs public takeovers of listed companies with their corporate address in Spain. The Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores) (the “CNMV”) oversees compliance with the Spanish Takeover Act. 

Additionally, the Spanish Takeover Act governs companies not domiciled in Spain and not admitted to trading on other Member States’ regulated markets where the company’s corporate address is located, when: 

• the company's shares are only admitted to trading on an official Spanish secondary market; 
• when the shares were first admitted to trading on a regulated market on an official Spanish secondary market; 
• when the company's shares are admitted to trading simultaneously, in more than one Member State’s regulated markets and on an official Spanish secondary market, and the company decides to apply the Spanish Takeover Act by notifying the markets and their competent authorities on the first day of trading of its shares; 
• if on May 20, 2006, the company's shares hThe offeror is required to submit an evaluation report issued by an expert (i) for the calculation of the “equitable price” of a de-listing offer, if applicable; and (ii) when the consideration in cash for an offer is improved by adding a securities exchange alternative or component, even in competitive offer scenarios.  The target company will also commonly request an expert to be involved in the procedure for the completion of the board of directors’ report. ad already been admitted to trading simultaneously on regulated markets in more than one Member State and on an official Spanish secondary market and the CNMV had agreed so with the competent authorities of the other markets on which they had been admitted to trading or, in the absence of an agreement, the company had decided to do so. 

• Takeover offers;  
• Acquisitions which result in the acquirer and persons “acting in concert” with it holding 30% or more of the target company;  
• Partial offers. 

The offeror is required to submit an evaluation report issued by an expert (i) for the calculation of the “equitable price” of a de-listing offer, if applicable; and (ii) when the consideration in cash for an offer is improved by adding a securities exchange alternative or component, even in competitive offer scenarios.  

The target company will also commonly request an expert to be involved in the procedure for the completion of the board of directors’ report. 

A mandatory offer for 100% of the securities of a listed target company is triggered when:  

• any person (or any persons acting in concert) increases its shareholding and achieves a control position.  
  There is a control position when a natural or legal person holds, at least, 30% of the target company’s voting rights, by means of (i) direct or indirect, planned or unanticipated, acquisitions of shares or securities conferring voting rights (together, the “securities”); (ii) shareholders’ agreements concluded with the purpose of gaining control of the company (“acting in concert”); (iii) voting rights held by a group of companies; (iv) voting rights that may be exercised on a free and long term basis by virtue of a power of attorney, without any voting instructions; (v) voting rights held by a nominee; and (vi) voting rights held by virtue of pledges, usufruct, or any other contractual means. 
  Control is also deemed to arise when a person appoints more than 50% of the company’s directors in the 24 months following an acquisition of shares. 
• a company intends to de-list its shares from the Spanish Official Securities Market.  

The CNMV may exempt the making of a mandatory takeover offer if: 

• the threshold of 30% of the voting rights of the target company is reached but another person (natural or legal) holds a higher percentage of voting rights, provided the other person’s voting rights are not reduced below the potential offeror’s voting rights and the potential offeror is not appointing more than 50% of the target company’s directors;  
• the transaction is carried out by certain public bodies or entities; 
• the transaction results from the exercise of powers legally vested in public administrations; 
• all shareholders of the target company unanimously agree to transfer the securities or waive the public offerings regime obligation;  
• the acquisition is intended to secure the financial recovery of a company in financial distress by capitalising the company’s liabilities into shares in the listed company;.  
• the transaction is a “mortis causa” free acquisition; 
• there is an “Inter vivos” free acquisition, where the acquirer has not acquired shares during the 12-month period preceding the relevant free acquisition and there is no agreement between the acquirer and the transferor; 
• control is obtained as a result of a voluntary offer launched at an equitable price, accepted by security holders representing at least 50% of voting rights (excluding those already held by the offeror or parties acting in concert therewith); 
• in the case of merger transactions, provided that (i) the acquirer has not voted in favour of the merger; and (ii) the merger was carried out in order to achieve industrial and entrepreneurial goals rather than to obtain control; 
• where control is acquired indirectly and / or was unanticipated, as a consequence of carrying out other transactions, with no intention to acquire control, and voting rights are reduced below 30% or a shareholders’ agreement finalising control over the target company is reached within three months, provided that the voting rights exceeding 30% are not exercised in the meantime; or the CNMV approves the exemption from the mandatory offer obligation; 
• in case of de-listing, no mandatory offer needs to be made (i) if the requirements for a squeeze-out or a sell-out are met; (ii) the holders of the securities affected by the de-listing unanimously approve it and waive the application of the public offers regime; (iii) if the company ceases to exist as the result of a corporate transaction by virtue of which its shareholders receive shares in another listed company; (iv) if a prior public offer is to be launched and the intention to de-list the shares of the company has been announced; and (v) if the shareholders or the bond holders approve a transaction that, at the CNMV’s discretion, is deemed equivalent to a public offer. 

Voluntary takeover offers are usually encouraged as there is a simpler procedure, (e.g. there is no obligation to fix an equitable price and the conditions for the offer can be freely fixed). 

Any offeror can make a voluntary takeover offer when there is no mandatory takeover offer (see question 4 above). Voluntary takeover offers can be subject to a minimum acceptance rate as well as subject to any amendments to the articles of association and/or the approval of the offer at a shareholder’s meeting.  

If the minimum acceptance level is not achieved, the offeror can withdraw the offer, or accept and purchase the stakes of those shareholders that had accepted the offer. After a voluntary takeover offer, the CNMV may force a mandatory takeover offer if the offeror owns at least 30% of the target company. 

Spanish law does not provide for a scheme of arrangement in the context of a takeover for the acquisition of 100% of the target company. However, there are “friendly takeovers” in which the target company and the offeror agree how to implement the transaction and the offer price.  

Offerors may maintain confidentiality within its own parties (advisers, funders, etc).  

However, in the event of a leak of information (regardless of whether or not it identifies the offeror), the CNMV can request the issuance of an announcement identifying the offeror and stating its potential interest in the making of a takeover offer.  

Once a potential offeror has made an offer, the CNMV will announce that there is a new offeror, identifying the potential offeror and providing shareholders with the necessary information.  

The parties must also comply with the disclosure obligations under the Market Abuse Regulation (“MAR”) and applicable listing rules.  

In voluntary takeover offers, an offer must be made by the offeror after receiving prior approval from the CNMV, which is requested by means of an application letter including the name of the requestor, the main characteristics of the transaction, the decision to make the takeover offer, and all necessary information so that the addressees can make an informed decision.  

However, in the case of a mandatory takeover offer triggered by reaching the 30% shareholding threshold, the offer must be made within three months following the event that triggered the takeover obligation.  

• Mandatory takeover offers may be subject only to regulatory approval conditions.  
• Voluntary takeover offers can be subject to: 

1. a minimum acceptance level being achieved 
2. amendment to the articles of association of the target company 
3. the approval of the offer by the offeror’s shareholders at a general meeting 
4. any other conditions required to ensure compliance with applicable laws, as approved by the CNMV 
5. regulatory approval(s) 

Once the offeror makes its statement of a firm intention to make an offer, until the last possible date for the payment of the consideration if the offer is successful, the CNMV will require evidence that guarantees securing the fulfilment of the obligations resulting from the offer have been given.  

Depending on the nature of the offer, the CNMV may ask for different types of guarantees (e.g. in the case of cash consideration, a bank guarantee or performance bonds; if the consideration consists of issued securities, evidence of availability of such securities and their effect on the outcome of the offer must be justified).  

The CNMV may also require a guarantee covering damages as a consequence of the securities not being duly issued if it considers that the offeror directors are not acting consistently with the offer.  

In voluntary takeover offers the offeror can freely fix the price, however, in mandatory takeover offers an “equitable price” must be offered.  

As a general rule, the equitable price must not be lower than the highest price paid or agreed by the offeror (or any persons acting in concert with it) for the same securities in the 12 months preceding the offer announcement.  

In the event that no acquisition has occurred in the past 12 months, the equitable price will be fixed by the offeror by means of a valuation report justifying the price and based on: 

• the underlying book value of the target company and, where appropriate, of its consolidated group, calculated on the basis of the latest audited annual accounts and, if they are dated after these, on the basis of the latest financial statements; 
• the net asset value of the target company and, where appropriate, of its consolidated group;  
• the weighted average price of the target company’s shares during the six-month period immediately prior to the announcement of the delisting proposal through the publication of a significant event; 
• the value of any consideration previously offered, if a takeover offer has been made in the previous year; 
• other valuation methods applicable to each particular case and commonly accepted by the international financial community. 

The consideration for a takeover can generally consist of an acquisition, exchange or swap of securities or both, and must ensure the equal treatment of security holders. In any case, in the event of a mandatory takeover offer, an alternative cash consideration must also be offered. 

No, equal treatment of security holders in the same circumstances must be ensured. 

As a general rule, the target company’s directors and management are under a confidentiality obligation with regard to sensitive information. While there is no obligation to provide information for due diligence, the target company may permit a due diligence process if it deems this to be in the target company’s best interests. Any information provided in the context of the due diligence must be kept confidential by all parties, including the intention to launch a takeover offer. 

Once a target company discloses information to a potential offeror, it must disclose the same information when requested by any other potential good faith offeror who undertakes to keep the information confidential.

Target companies can enter into any agreements with any offeror, such as: 

• pre-launch stake building by the offeror is allowed under takeover law and insider regulations, however this may trigger a disclosure obligation of the offeror’s intention of making an offer;  
• irrevocable undertakings of shareholders are generally permissible but may trigger “acting in concert” obligations;  
• protective undertakings by the target company’s board of directors in favour of a particular offeror are only permissible if they are in the target company’s best interests (under the board neutrality rule). 

Under Spanish law, the board of directors of the target company will be under a mandatory duty of neutrality from the publication of the offer by the CNMV until the closing of the offer.  

Therefore, during the takeover process, the board of directors’ actions will be subject to prior authorisation at a shareholders’ meeting before implementing any action that may prevent the success of the offer. However, this neutrality obligation will not apply to offerors from states which have not implemented a board neutrality rule or equivalent rules.  

Accordingly with the above, the board of directors of the target company can deploy their defence from the moment they know that a takeover is being prepared until the publication by the CNMV of the takeover offer. Then, only the shareholders can approve any defensive action. As competitive offers are provided for under the Spanish Takeover Act, a target company, in the context of a takeover offer, may seek a “white knight”, a company that will make a competing offer on better terms than the original offer. 

The offeror or persons acting in concert with the offeror may not, in any case, sell or otherwise dispose of shares of the target company until the completion of the offer, even in the case of a securities exchange offer. 

The offeror may acquire target company securities during the offer process, provided it informs the CNMV. However, if the offer is subject to the fulfilment of any conditions, the acquisition of such securities will remove any established conditions, which will cease to apply. If the price paid by the offeror for the acquisition of any shares outside of the offer is higher than under the offer, an increase in the offer price will be required. Additionally, if the offered consideration consists of securities or a combination of cash and securities, and the offeror or persons acting in concert with the offeror acquires securities of the target company outside the offer, the offeror must offer all target company shareholders an alternative consideration in cash which may not be lower than the highest price paid for the securities acquired outside the offer.  

Irrevocable undertakings by target company shareholders in respect of a takeover offer are generally permissible but may trigger “acting in concert” obligations. 

The acquisition by an offeror of securities from target company shareholders outside the takeover offer may influence the terms of the offer and the conditions proposed to the CNMV for its approval of the informative prospectus. In addition, if the level of acceptance were to exceed the maximum limit established in the offer, the acquisition of securities outside the offer would result in a breach of the principle of equal treatment among the target company shareholders, which is subject to distribution and pro rata obligations, in addition to the conditions established by the offeror. As such, transactions carried out with target company shareholders outside the takeover offer will be subject to the offer modification regime (as explained in question 20). 

Information about any shares or other securities of the target company that belong to the offeror, or its directors must be included in the informative prospectus filed with the CNMV for the making of the offer. 

Additionally, during the takeover offer process, the disclosure obligations are stricter: (i) acquisitions of shares carrying 1% of the voting rights, and (ii) any transaction with shares in the event of current shareholders owning 3% or more of the voting rights both need to be notified to the CNMV in order to inform the market. 

The takeover offer process will take at least 3 to 4 months (delays in the process can be expected). 

• Public announcement of the decision to issue a takeover offer. 
• Filing of the offer with the CNMV (1 month from announcement). 
• Filing of additional information with the CNMV (7 working days). 
• Admission for processing by the CNMV (7 working days). 
• Authorisation by the CNMV (20 working days from the application or from the presentation of complementary documentation). 
• Publication of the offer (within 5 working days after notification of approval). 
• Acceptance of the offer: Established by the offeror, not less than 15 days and not more than 70 days from the first business day following the publication of the first announcement of the offer. 
• Report of the board of directors of the target company: Maximum period of 10 calendar days from the beginning of the offer acceptance period. 
• Deadline for submission of competing offers: Until the 5th day prior to the end of the acceptance period.  
• Statements of acceptance of the offer: As provided in the prospectus. 
• Information to the CNMV on the number of acceptances submitted and not revoked. 
• Publication of the result of the offer: 5 working days from the end of the acceptance period. 
• Offer Settlement. 
• Release of the offeror guarantee. 

An informative prospectus relating to the offer must be issued and presented before the CNMV for its approval.  

The prospectus must include the following information:  

• Persons responsible for the prospectus; 
• Applicable agreements, scope and legislation; 
• Information about the target company; 
• Information about the offeror and its group;  
• Agreements concerning the offer and the target company; 
• Securities of the target company belonging to the offeror; 
• Transactions in securities of the target company; 
• Activity and financial situation of the offeror; 
• Securities to which the offer is addressed; 
• Offered consideration; 
• Conditions which the offer is subject to; 
• Guarantees and financing of the offer; 
• Acceptance procedure; 
• Purpose of the transaction; and  
• Authorisations and other relevant information/documents.  

Additionally, the CNMV can request any additional information it deems appropriate. 

Competitive offers may only be made prior to 5 calendar days before the expected final date for the acceptance of the original offer, must be for at least the same number of securities as the original offer and there must be an improvement in comparison to the original offer (e.g. extension of initial number of shares, increase of the consideration or reduction of conditions to which the offer is subject).  

An offeror can modify the offer at any time prior to 5 calendar days before the expected final date for the acceptance of the offer, provided that such modifications are an improvement on the original offer (e.g. extension of initial number of shares, increase of the consideration or reduction of conditions to which the offer is subject to) and applies equally to all the offer addresses.  

An offeror can join with third parties for a revised offer, provided they assume joint and several liability and publish an annex to the prospectus detailing the identity and shareholding of the new offerors.  

Modifications to an offer must be included in a supplement to the prospectus and published within three days. 

An offeror is entitled to withdraw an offer in the following circumstances: 

• a competitive offer is approved; 
• antitrust authorities’ approval is required and the CNMC, prior to the expiry of the offer acceptance period (i) refuses the approval of the transaction; (ii) imposes conditions for the granting of the authorisation; or (iii) fails to issue a decision;  
• exceptional circumstances, outside of the offeror’s control, prevent the offeror from completing its offer, provided that the offeror has not intervened, directly or indirectly, and it has obtained prior approval of the CNMV. 

Offer withdrawals must be immediately communicated to the CNMV.  

In cases of takeover offers for 100% of the shares of a target company, in the three months following the end of the acceptance period, when provided for in the informative prospectus, any shareholders who did not accept the offer can be compulsorily squeezed out by the offeror at a price equal to the offer price, if (i) the offeror holds securities representing at least 90% of the voting capital of the target company; and (ii) the public offer has been accepted by holders of securities representing at least 90% of the voting rights of the target company. 

The same is applicable to shareholders’ rights to require the offeror to buy their securities.  

As a general rule, in the 6 months following the expiry of the acceptance period of an unsuccessful offer, the offeror, its group companies, board members, senior management personnel and those who have promoted the offer in their own name but on behalf of the offeror or in concert with it, may not make another takeover offer in respect of the same securities, nor acquire securities or reach any of the thresholds that would trigger an obligation to make a mandatory public offer. 

In order to de-list, a company has to make an offer to acquire its shares. In this regard, the offer must be directed to all shareholders (including shares without voting rights) and any holder of subscription rights to acquire shares in the company and can only be done as a purchase for cash. In addition, a general shareholders’ meeting must approve the de-listing and the offer and the price.