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

6.1 Stakebuilding

One of the most important aspects of a successful offer is securing its outcome. Therefore, in the preparation of a public offer, stakebuilding is key to strengthening the position of the offeror and, to the extent possible, securing a fruitful outcome.

When an offeror considers stakebuilding, the following should be taken into account:

• The Market Abuse Rules – The offeror may not acquire securities in the target company if it is in the possession of Inside Information. Knowledge about its own intention to make an offer is not considered to be Inside Information. However, if the offeror engages in negotiations with the target company with respect to a contemplated public offer, and this information is not available in the public domain, the offeror is considered to be in possession of Inside Information. This prevents the offeror from acquiring securities in the target company. While carrying out due diligence, stakebuilding is considered to be a complex matter, even though it is not prohibited as such. This is due to the fact that, if due diligence results in the offeror having access to Inside Information on the target company, the offeror would be prohibited from acquiring such shares. Therefore, stakebuilding commences the day that the initial joint announcement about the offer has been made.
• Transparency and disclosure rules – If the offeror acquires a substantial holding in the target company, it is required to forthwith notify the AFM of such substantial holding. A substantial holding is defined as the holding of at least 3% of the shares or the ability to vote on at least 3% of the total voting rights in relation to such shares. Any person who directly or indirectly acquires or disposes of an interest in the share capital or voting rights of the target company must give notice to the AFM without delay if, as a result of such acquisition or disposal, the percentage of capital interest or voting rights held by such person reaches, exceeds or falls below the following thresholds: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%. The AFM maintains a public register in which all shareholders with a substantial holding are registered.

When the offeror acts in concert with a third party by means of an agreement, the interests of the parties acting in concert must be aggregated for the purpose of determining whether a disclosure obligation exists.

Furthermore, any shares of the target company which are purchased in the period between the initial announcement of the offer and the launch of the offer through the publication of the offer document must be included in the offer document. In addition, during the period of the offer, i.e., from the launch of the offer until it has been declared unconditional, the offeror must notify the AFM of the shares it acquired in the target company, this can be announced on a daily basis. The AFM makes such information public.

Additionally, the Netherlands has implemented a FDI screening process for national security purposes, see 2.7. This screening applies to acquisitions or stakebuilding that exceed specific thresholds in Dutch targets by any buyer.

6.2 Put-up or shut-up rule

A target company wishing to obtain clarity on the intentions of a potential offeror can request the AFM to order that party to make a clear public statement as to whether it intends to launch an offer or not. This request can be made if the potential offeror has given the impression that it is preparing a public offer by certain of its actions or disclosures, but has not clarified its intentions. These actions or disclosures should be more substantive than rumors, but do not need to consist of detailed information indicating a public offer. The AFM will make a put-up or shut-up request if the potential target company is negatively affected by any uncertainty surrounding the potential offer.

If the potential target company's request for an order is granted, the party that gave the impression of preparing an offer must clarify its position within six weeks of receiving such order from the AFM. If the potential offeror announces its intention to make a public offer on the target company, the Public Offer Rules will apply. If the potential offeror withdraws, the shut-up rule applies. This results in the potential offeror being prohibited from making a public offer for six months following such withdrawal. This period is nine months if the potential bidder fails to comply with the 'put up or shut up' rule imposed by the AFM. Additionally, during this period, the bidder must not place themselves in a position to gain significant control over the target company.

6.3 Irrevocable undertakings by major shareholders

Another effective means to secure a successful offer is to obtain an undertaking from major shareholders of the target company to tender their shares in the target company to the offeror ("Irrevocable Undertakings"). Usually, major shareholders are approached before any intention to make an offer has been publicly disclosed. This means that Inside Information is shared with a third party. However, the MAR permits Irrevocable Undertakings to be obtained from major shareholders, provided that the willingness of such shareholders to tender their shares is reasonably required for the decision to make the offer. Approaching major shareholders in this way is known as taking market soundings. Furthermore, as these shareholders will gain access to Inside Information, non-disclosure and standstill agreements are usually entered into with such shareholder before it is approached to enter into an Irrevocable Undertaking.

6.4 Protective measures

Under Dutch law, it is possible for companies to protect themselves against hostile takeovers. The most common protective measure is the issuance of protective preference shares to an independent special purpose foundation. Although this mechanism cannot be used to block a possible hostile public offer altogether, the foundation will hold such a significant shareholding that it will impede the offeror in acquiring, to a great extent, full control over the company. The independent foundation may only hold more than 30% in the listed company for a maximum period of 2 years from when the hostile public offer is first announced. Following this period, the independent foundation must make a public offer.

Another protective measure is the issue, by a Dutch listed company, of all its shares to a foundation, which in turn issues DRs to the shareholders. The holders of DRs do not have the right to vote on the underlying shares, as the foundation holds the voting rights on these shares. In a period when there is no hostile situation, the foundation is required to issue proxies for a shareholders' meeting to those holders of DRs that have so requested.

Furthermore, priority shares are occasionally issued to one or more shareholders. The priority shares could, for example, be issued to the controlling shareholder of the company pre-IPO or to a "friendly" foundation, i.e., a foundation whose board of directors are the same as that of the listed company. Priority shares are a separate class of shares to which certain special controlling rights are attributed.

6.5 Break fees (protecting the deal)

It is common practice for parties to agree on a break fee in the merger protocol. A break fee is a penalty to be paid by the target company or the offeror (reverse break fee) if, under certain specific circumstances, the offer is unsuccessful, e.g., the target company accepts a competing offer or the offeror fails to obtain regulatory approval for the offer. Dutch law does not provide for rules on the requirements for a break fee. Nevertheless, the rule of thumb is that a break fee of approximately 1% of the deal value is considered reasonable.