[Last updated: 1 January 2025, unless otherwise noted]

There are four main forms of public bids in Germany:

• Voluntary bids
• (Voluntary) takeover bids
• Mandatory bids
• Delisting bids

Voluntary bids fall under a more liberal legal regime, while (voluntary) takeover bids are already strictly regulated and mandatory bids are subject to the strictest level of regulation.

The main difference between such three types of offers relates to the principle of "acquisition of control". For the purpose of the Takeover Act, "acquisition of control" occurs if a Bidder acquires at least 30% of the voting rights in a target company ("Control"). For purposes of determining whether Control has been acquired, extensive attribution rules apply.

In voluntary bids, the acquisition of Control is not intended and does not occur. In a takeover bid, the acquisition of Control is the goal of the offer, i.e., the Bidder intends to acquire Control through or in conjunction with the offer. In a mandatory bid, the acquisition of Control precedes the offer and triggers an obligation to make the mandatory bid.

4.1 Voluntary bid

Voluntary bids are all offers not aimed at achieving Control. Basically, two different kinds of offers are covered:

• Offers to obtain less than 30% of the voting rights in a target company to build up a certain non-controlling stake.
• Offers to obtain further shares by a shareholder who already has Control, so-called add-on offers. For example, such add- on offers could occur if a Bidder were to make a public offer with the goal to increase its stake to 90% or even 95%, enabling the Bidder to squeeze out the remaining minority shareholders.

The provisions of the Takeover Act on voluntary bids are less strict than those on takeover and mandatory bids. For example, the Takeover Act does not restrict the Bidder's choice of the type and amount of consideration for a voluntary bid. In addition:

• unlike takeover and mandatory bids, voluntary bids do not have to extend to all shares of the target company. The Bidder may set a maximum offer volume. This is strongly recommended so that the Bidder avoids crossing the 30% threshold, which in turn would trigger an obligation to make a mandatory bid. In case the offer is accepted for more shares than the maximum, the volume of acceptances would then be reduced proportionally for each shareholder; and
• a voluntary bid and a takeover bid may also be made subject to conditions. The only restriction is that the Bidder may not have a direct influence on the fulfilment of these conditions.
• No conditions can be included where the bid is at the same time a delisting bid, because delisting bids must be unconditional.

4.2 (Voluntary) takeover bid

Takeover bids are made by a Bidder who does not yet have Control over the target company, but aims to acquire Control over the target company through or in conjunction with the offer. Takeover bids are voluntary. They must extend to 100% of the outstanding shares of the target company, but otherwise benefit from a somewhat more flexible regime compared to the one applicable to mandatory bids.

• Most importantly and unlike mandatory bids, takeover bids may be subject to the fulfilment of certain conditions. In practice, the most frequently used condition (besides merger control clearance) is a so-called minimum acceptance threshold. The Bidder can define a certain acceptance ratio, e.g., a minimum of 75% of the shares of the target company (including shares already held). If this threshold is not met and the condition is not waived, the offer lapses.
• It is also possible to make a takeover bid subject to a material adverse change condition, which will allow the Bidder to withdraw from the offer if certain clearly defined adverse events occur. However, the Bidder must not be able to withdraw from the offer at their own discretion. Therefore, conditions are only admissible if the Bidder has no direct influence on their fulfilment and if they are so clearly defined that there is no room for interpretation as to whether the conditions are met or not.
• The Bidder can waive the conditions during the offer period. For example, a Bidder may waive the minimum acceptance threshold.
• No conditions can be included where the bid is at the same time a delisting bid, because delisting bids must be unconditional.

4.3 Mandatory bid

• A mandatory takeover bid is triggered as soon as a person or group of persons acting in concert (or persons acting for their account) directly or indirectly hold(s) at least 30% of the (actual outstanding) voting securities of the target company.
• The mandatory takeover bid is unconditional (subject to certain very narrow exemptions such as regulatory approvals in special circumstances).

A mandatory takeover bid is not required if the Bidder has obtained control on the basis of a voluntary takeover bid or if BaFin has granted an exemption. There are two different ways in which a Bidder may be exempted even though they hold 30% or more of the voting rights.

Firstly, BaFin may decide that some or all of the voting rights are not to be taken into account when calculating whether the 30% threshold has been reached or not. However, this exemption is only available if the Bidder has acquired the relevant voting rights by way of:

• inheritance, donation between near relatives;
• change of the legal form; or
• restructuring measures within the group of companies to which the Bidder belongs.

Secondly, upon written request, BaFin may exempt the Bidder from the obligation to submit a mandatory takeover bid in certain cases, which are provided for in the Bid Regulation. BaFin may provide such exemption at its own discretion. In particular, an exemption will be considered if:

• the Bidder has acquired Control by way of inheritance or donation from someone who is not a relative;
• the Bidder intends to recapitalize a target company in financial difficulties;
• the Bidder has only indirectly acquired Control through the acquisition of another company (holding a controlling stake in the target company), and the book value of the stake in the target company held by the other company amounts to less than 20% of the entire book value of its assets;
• the Bidder has acquired the controlling stake only as a security;
• the acquisition of Control was triggered by a reverse share split of the target company;
• another shareholder holds a higher stake in the target company than the Bidder;
• on the basis of the attendance at the last three general meetings of the target company, it is unlikely that the Bidder will have more than 50% of the voting rights at the next general meeting; or
• the Bidder's stake has fallen below the 30% threshold immediately after it was reached.

4.4 Delisting bids

Under the Stock Exchange Act (Börsengesetz) it is a condition to a delisting application that the shareholders have an "exit" from the company through a voluntary bid, which is typically launched by a major shareholder or the controlling shareholder of the target company.

The delisting bid cannot, without exception, be made subject to any condition.

The key features are similar to the rules on mandatory bids, i.e., the bid must relate to all outstanding shares of the company not held by the Bidder and follow the minimum pricing rules for takeover bids with the following modifications:

• The cash offer consideration must be at least the volume weighted average stock price ("VWAP") over a period of six months (rather than three months).
• The offer consideration must be based on a company valuation where the issuer failed to publish inside information under Article 17 of MAR or the issuer or the Bidder have breached the prohibition of market manipulation under Article 15 of MAR or where the stock trading during the relevant period is illiquid.

Delisting bids could be combined with other bids, e.g., a takeover bid, provided the stricter rules for delisting bids are followed. This would, for example, not allow any conditions, such as a minimum acceptance threshold, and minimum pricing rules from both sets of rules would apply, i.e. typically would be subject to the higher of two thresholds (3 months and 6 months VWAP).