[Last updated: 1 June 2022, unless otherwise noted]

There are two main forms of takeover bids in France:

• a voluntary takeover bid in which a bidder voluntarily makes an offer for all the shares issued by the target company (and all the securities issued by the target company conferring the right to acquire its shares, regardless of whether or not they are listed); and
• a mandatory takeover bid that a bidder is required to make if, as a result of an acquisition of securities, a shareholder crosses (alone or in concert with others) a threshold of 30% of share capital or voting rights of the target company, or if it increases, within 12 consecutive months, its shareholding by more than 1% in shares or voting rights while holding a shareholding between 30% and 50% in shares or voting rights.

Both forms of takeover bids can be followed by a squeeze-out bid whereby a shareholder holding 90% of the share capital and voting rights of a company governed by French law can squeeze out the remaining holders of voting securities.

A bidder that intends to launch a takeover bid must appoint a presenting bank in order to guarantee the offer consideration. Unlike most EU jurisdictions, there is no regulatory or stock exchange requirement for debt financing to be provided on a certain-fund basis but the presenting bank usually requires the benefit of a cash guarantee or any other back- to-back guarantee. Only financial intermediaries authorized to provide the investment service of underwriting in France are allowed to act as presenting banks.

4.1 Voluntary public takeover bid

• Offers must be unconditional and irrevocable. The bidder is, however, free to make the takeover bid subject to merger control clearance, a minimum acceptance level (the statutory success threshold is 50% + one share but the bidder can set a higher threshold within the limit of 66²/₃%), governmental approval and approval of the bidder's shareholders. No other condition precedent such as financing or absence of a material adverse event are allowed.
• The bidder is, in principle, free to determine the price and the form of consideration offered to the target shareholders (absent any pre-existing controlling interest in the target):
  • The offered price may be paid in cash, securities or a combination of both. However, such securities have to be (i) regarded as liquid by the AMF and (ii) listed or admitted to trading on a regulated market in one of the EU or EEA member states for the takeover bid to be approved. As a result, where the bidder which is offering consideration in the form of securities is from outside the EU or EEA, it must seek a listing in the EU or EEA (preferably in France, failing which the AMF usually requires the implementation of a sale facility to allow the former shareholders of the target to promptly dispose of their newly-received securities following the settlement of the operation at no cost) for the securities it plans to offer as consideration. This will require the preparation of a prospectus. If the offered securities do not meet these conditions, the bidder must offer a cash alternative to all the target company shareholders. The bid may also provide for a choice or a mix of alternative consideration, i.e., cash and/or securities at the option of the target company's shareholders and/or within the limits set by the bidder.
  • If the bidder or persons acting in concert with the bidder have acquired securities giving access to more than 5% of the share capital or the voting rights of the target company for cash, they will have to offer an unlimited cash alternative to the target company's shareholders as part of the takeover bid.
  • There is no minimum price for a voluntary takeover bid. The offer price may be set at the discretion of the bidder and is not subject to the approval of the AMF. The AMF will, however, systematically ensure that (i) the offer price complies with the general principles governing public offers (including, in particular, equal treatment of all shareholders and the fairness of transactions among bidders), and (ii) the information with respect to the offer price disclosed in the offer document, particularly the valuation, and in the fairness opinion is complete and coherent.
  • The target's board must appoint, on the proposal of an ad hoc committee composed of at least three members and including a majority of independent members, an independent expert to deliver a fairness opinion for transactions which are likely to raise a conflict of interest or interfere with the equal treatment of the holders of the targeted securities. Independent experts are, in practice, more often "boutique" financial or accounting experts rather than mainstream banks.
  • If there are different categories of securities, different prices for each category can only be based on the characteristics of such categories.
  • If, during a 12-month period preceding the takeover bid period (starting on the date of the formal offer notice to the AMF), the bidder or persons acting in concert with the bidder have acquired securities to which the takeover bid relates, then the offered price must be at least equal to the highest price paid during this period. However, the AMF may request or authorize the amendment of the proposed price if this is justified by a manifest change in the target company's characteristics or in the market for its securities.

4.2 Mandatory public takeover bid

• A mandatory takeover bid is triggered under the following alternative conditions:
  • a person or a group of persons acting in concert acquire 30% or more of the share capital or voting rights of the target company;
  • a person or a group of persons acting in concert holding between 30% and 50% of the total number of shares or voting rights of the target company increases its shareholding by more than 1% of the total number of shares or voting rights of the target company within a 12-month period; or
  • if the AMF requires it, when a person or a group of persons acting in concert controlling a listed company decides to dispose of the majority of the assets of this company. The disposal is also subject to prior consultation of the ordinary shareholders' general meeting of the
• The mandatory takeover bid is unconditional and no condition precedent is allowed, subject to the legal condition of the minimum acceptance level, see below.
• The mandatory takeover bid must be filed with the AMF within a reasonable period of time from the triggering event, i.e., up to 4-6 weeks in practice.
• If there is a failure to file a mandatory takeover bid complying with applicable requirements, the shares in excess of the 30% threshold will be automatically deprived of voting rights and the AMF may request the issuance by a court of an injunction to file the mandatory takeover bid.
• The AMF may grant an exemption from the requirement to conduct a mandatory takeover bid in certain situations. However, the AMF has a discretionary power to refuse to grant an exemption. A key factor in its decision making is the impact of the transaction on the minority shareholders. The main exceptions to the takeover bid obligation include situations where:
  • the 30% threshold is crossed by a shareholder acting in concert with either:
    • a person (or a group of persons acting in concert) holding the majority of the target company's share capital or voting rights, provided that such shareholder(s) remain(s) predominant in the group acting in concert; or
    • a person (or a group of persons acting in concert) holding between 30% and 50% of the target company's share capital or voting rights, provided that (i) such shareholder(s) maintain(s) a larger holding than the shareholder joining the group acting in concert, and (ii) such shareholder(s) do(es) not cross either of the triggering thresholds of 30% or 1% over a 12-month period. However, only the latter threshold (1% over 12 months) is actually applicable since the group already holds more than 30% of the target company's shares or voting rights;
  • the threshold (30% or 1% over a 12-month period) is crossed temporarily, i.e., where the crossing results from a transaction that is not intended to gain or increase control of the company and lasts no longer than six months, provided that the person (or a group of persons acting in concert) crossing the threshold undertakes not to exercise the corresponding voting rights (exceeding the threshold) prior to the resale of the relevant stake;
  • the gratuitous transfer of securities between individuals;
  • the stake is acquired within the framework of a subscription to a capital increase with preferential subscription rights for the shareholders that has been decided upon by the general shareholders' meeting, i.e., a rights offering;
  • the stake is acquired within the framework of a subscription to a capital increase by a target company in financial difficulties that has been decided upon by the general shareholders' meeting;
  • the involuntary crossing of the threshold, i.e., reduction of the total number of shares or voting rights of the company;
  • the stake is acquired by a person (or a group of persons acting in concert) holding more than 50% of the share capital or voting rights of the target company;
  • the stake is acquired within the framework of an acquisition of control, merger or contribution of a company (i) which directly or indirectly holds more than 30% of the target, and (ii) of which the target does not constitute an essential asset; and
  • the stake is sold or otherwise disposed to individuals or companies belonging to the same group.
• In terms of the price offered and the form of the consideration, the same rules apply as in the case of a voluntary takeover bid. In addition:
  • The mandatory offer price must at least equal either:
    • the highest price paid by the bidder (or any person acting in concert with it) during a period of 12 months preceding the triggering event of the takeover bid, i.e., threshold crossing; or
    • absent such previous transaction in the preceding 12 months, the minimum price is set according to a multicriteria valuation.
  • The AMF may either increase or decrease the minimum price in the event of a significant change in the characteristics of the target or the market for its securities, such as:
    • an event materially altering the value of the target company that occurred over the previous 12 months;
    • the target company being distressed;
    • the reference price relates to a complex transaction, i.e., including specific covenants and representations and warranties.
  • Whenever an independent expert must be appointed, the AMF will review the offer price in light of the fairness opinion.
  • The consideration offered must consist of cash.
  • The legal minimum acceptance threshold is 50% of the total number of shares or voting rights of the target company. If this minimum level is not reached, the bid lapses with the following consequences:
    • the voting rights attached to the shares held by the bidder in excess of the 30% threshold (or in excess of the shareholding of the bidder prior to the offer where it was already holding between 30% and 50% of the target's share capital or voting rights) are suspended;
    • the bidder is no longer permitted to acquire any shares in the target company (even within the limit of 1%) unless it informs the AMF and initiates a new takeover bid; and
    • the suspended voting rights are only reinstated in the event that the new offer is successful, i.e., it reaches the 50% minimum threshold.

4.3 Follow-on squeeze-out and delisting

Following a successful takeover bid, a bidder will be able to squeeze out the residual minority shareholders if it holds, alone or in concert with others, at least 90% of the share capital and voting rights of the target company. The squeeze-out is effected at the price offered in the takeover bid. In order to effect a follow-on squeeze-out, the bidder should reserve the right to do so in its takeover bid (see 7.1 below).

Concurrently with the completion of the squeeze-out, the shares of the target company will be delisted from Euronext Paris.