Exclusion of US-Holders in Cross-Border Takeover Bids and the Principle of Equality in Tender Offers
16 Pages Posted: 8 May 2009
Date Written: May 7, 2009
Abstract
To avoid the cumulative application of takeover regulation of more jurisdictions, it is common practice to exclude from the offer shareholders resident in countries adopting extraterritorial conflict rules. Among such countries, the most significant case is that of US securities regulation: according to US case-law, in order to avoid the application of US takeover regulation and anti-fraud provisions, bidders should completely exclude any publicity of the offer in the US or to US resident and consider acceptances from US residents as void.
However, such restrictions could be at odds with the principle of equal treatments of target’s shareholders, provided for by the EU Takeover Directive. In the paper I argue that only restrictions to dissemination could be reconciled with the equality principle. On the contrary, restrictions to acceptance represent a clear violation of such principle, which can be admitted only if the cumulative application of US law would make the offer unfeasible.
Keywords: Cross-border tender offers, choice-of-law, US securities law, EC Takeover Directive, exclusion of US holders
JEL Classification: K22, K33
Suggested Citation: Suggested Citation