Canadian Going Private Transactions: Practices and Procedures - Hostile or Friendly?

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Hostile or Friendly?

See Chinese version below [中文版参阅下文].

In recent years, it has become less common for anyone interested in acquiring a Canadian public company to simply announce a hostile take-over bid. This is primarily because of the significant minimum bid period of 105 days and the fact that a friendly target board has the power to shorten the period to as little as 35 days. The preferred approach is almost always for the bidder to contact either the chairman or the chief executive officer of the target company and seek to open negotiations for a friendly transaction. The bidder will typically ask for a brief period to conduct due diligence on the target (likely two to four weeks) during which time the bidder will seek to negotiate a support agreement with the target leading to the announcement of a negotiated transaction.

In order to be allowed access to the target company’s confidential books and records for the purposes of conducting due diligence, the bidder will be asked to sign a confidentiality agreement. In many cases, the target company will insist on a standstill clause in the confidentiality agreement as the quid pro quo for the target company voluntarily disclosing its confidential internal records. The standstill provision will prohibit the bidder from, among other things, purchasing securities of the target or publicly announcing an intention to propose a transaction involving the target, without the approval of the board of directors of the target company. Otherwise, the target company board risks the embarrassment of having the bidder make an offer directly to the shareholders at a price that the board considers inadequate, after the board has cooperated with the bidder by providing access to its innermost secrets.  Some potential buyers will accept a standstill, others will not.

If the target company is not prepared to enter into negotiations for a sale, or the potential purchaser is not prepared to sign a standstill to be allowed access to a data room for due diligence, the buyer’s only option may be to make an offer directly to the target company shareholders without the benefit of a support agreement with the target company. This is the so-called “hostile” take-over bid.

恶意收购还是善意收购?

近年来,对于有兴趣收购一家加拿大上市公司的人来说,采取直接宣布一个恶意的要约收购的可能性微乎其微。其主要是由于有105天的最短要约期,而且善意收购的目标董事会有权将要约期缩短至35天。首选方法几乎总是让收购方与目标公司的董事长或首席执行官联系,并通过开展谈判方式来进行善意交易。收购方一般会要求在短期内对目标公司进行尽职调查(大概是2-4周),在这个时期内,收购方将争取同目标协商支持协议,从而宣布通过协商达成的协议。

为了能够索取目标公司的保密档案和记录以进行尽职调查,要约收购方须签署保密协议。在许多情况下,目标公司会坚持在保密协议中纳入静止条款作为其主动公开秘密记录的交换条件。在静止条款的诸项规定中,有一条是未经目标公司董事会的同意,要约收购方不得购买目标公司的股份或公开宣布提议同目标公司进行交易。否则,在董事会同要约收购方合作并透露了公司的保密信息之后,如果要约收购方直接向股东们开出令董事会不满的收购价格,董事会则将承担使之尴尬的风险。有些潜在的收购方会接受静止条款,而有些则不会接受。

如果目标公司不准备进行出售谈判,或潜在的买方并不打算签订静止条款以便获得尽职调查所需的信息,买方的唯一选择是直接向股东们开出收购条件。诚然,这样做就不具有同目标公司签订支持协议所具有的益处。这就是所谓的“恶意”收购。

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