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

4.1 Means of obtaining control

The main means of obtaining control of a public company in Colombia are:

1. by acquiring existing shares from current shareholders pursuant to a public tender offer;
2. subscribing newly issued shares of the public company; or
3. by upstream mergers – this is less common.

Contests to obtain board control are uncommon, probably because, despite being listed, public companies in Colombia usually have a defined controlling shareholder and therefore that controlling shareholder has appointed the majority of the board and the management.

4.2 Mandatory offer threshold

Public tender offers are mandatory when:

1. Any person (or group of persons sharing the same beneficial owner) intends to acquire shares representing 25% or more of the voting shares of a public company in Colombia;
2. Any person (or group of persons sharing the same beneficial owner) who already owns 25% or more of the voting shares of the relevant company intends to increase its voting shares by more than 5%;
3. Any person (or group of persons sharing the same beneficial owners) acquires voting shares representing 25% or more of the public company as a result of a merger, in Colombia or abroad (in which an "ex- post" public tender offer must be launched within three months of the transaction, unless the purchaser divests the relevant shares within three months of the merger);
4. Any person (or group of persons sharing the same beneficial owner) holds more than 90% of the shares of the public company, if:
   1. this threshold was reached by other means than a public tender offer for all the shares in the company; and
   2. the minority shareholders owning at least 1% of the voting shares of the target company request the launch of a public tender offer (in which case the public tender offer must be launched within three months of the date on which the 90% threshold was exceeded); and
5. The shareholders of the public company decide to delist the company by a majority shareholder vote (as opposed to a unanimous shareholder vote).

4.3 Requirements

Any public tender offer must comply with a number of requirements. The bidder must file a formal request before the SFC and a notice before the BVC, providing both entities with a draft of the offering memorandum and the notice of its intention to make the public tender offer, which must include:

1. the name and principal place of business of the target company;
2. the name, identification, principal place of business, main corporate activity and corporate structure of the bidder (by providing a list of individuals or companies that are subordinated to the bidder or are part of the same business group);
3. the minimum and maximum number of shares that the bidder will accept (with at least a 20% margin between the two figures);
4. information on shares that the bidder already has in the target company and any prearranged transactions or other agreements between the bidder and the management of the target company or other shareholders;
5. the offer price for the shares;
6. the date by which the offer must be accepted;
7. settlement terms, form of payment and guarantees;
8. the name of the exchange broker to be used in the operation;
9. a brief description of the tax, foreign exchange and foreign investment regimes applicable to the securities offered as payment (if applicable);
10. information on the methodology used to value the securities offered as payment (if any);
11. certificates by the bidder and its investment bank on the accuracy of the offering memorandum and information on the authorizations obtained to issue the offer; and
12. any other information requested by the SFC.

As soon as the above information is filed before the SFC, the BVC will suspend trading of the shares until the day after the publication of the public tender offer notice. The SFC has five business days to provide comments to the documentation.

4.4 Pricing rules

No minimum price rules would apply in a tender offer unless the bidder has purchased shares within three months prior to submitting the request for authorization to the SFC (in which case, the offer cannot be less than the highest price paid during those three months) or if there is an agreement to carry out prearranged transactions (in which case, the price cannot be less than the price set forth in such agreement). Applicable regulations provide that the tender offer notice must clearly indicate either (a) the price at which the shares offered in payment shall be delivered as well as the applicable exchange ratio, i.e., the number of shares delivered in payment for each share to be acquired, or (b) the manner in which the price and the exchange ratio are to be calculated.

If the relevant shares are acquired by way of a merger (or otherwise indirectly, if applicable), the minimum price of the OPA must be determined by an independent valuation performed by a professional firm, engaged by the bidder and approved by the SFC. The price offered for the shares cannot be less than the value assigned for the shares in the merger and may only be paid in cash.

The fact that the price at which the mandatory ex-post tender offer is established by a third party has, in the past, led purchasers to carry out a voluntary ex-post tender offer before the mandatory ex-post tender offer, at the same price per share paid in the direct acquisition, as a way of sweeping up as many shares as possible before the OPA has to be launched.

If the obligation to carry out an OPA is triggered by the decision to delist the shares, the minimum price of the OPA would have to be established by an independent valuation performed by a professional firm, hired and paid for by the public company and approved by the SFC.

If the obligation to carry out an OPA is triggered by the request of minority shareholders (as described in Section 4.2(d) above), the minimum price of the OPA must be determined by an independent valuation performed by a professional firm, engaged by the public company and approved by the SFC.

4.5 Committed funding

Committed funding is required before announcing an offer. The bidder must launch the public tender offer through a brokerage firm and establish a performance guarantee, covering a certain percentage of the value of the transaction. The guarantee can be in the form of a stand-by letter of credit or a bank guarantee, among other options.

4.6 Announcing and making the offer

The public tender offer notice must be posted three times in the finance section of a national newspaper, the first within the five days following the expiration of the SFC's term to make comments to the draft of the public tender offer notice and offering memorandum; the other postings cannot be spaced more than five calendar days apart. The public tender offer notice must also be posted in the official information bulletins issued by the BVC, on each day from the date the public tender offer notice is first published until the day set for acceptances.

Acceptances of the public tender offer must be made on the date set-out in the public tender offer notice, at a special two-and-one half hour round, under an open outcry system. If the number of acceptances meets the minimum number of shares indicated by the bidder, then all acceptances are deemed to be final. If not, the bidder is not required to purchase the shares (but may freely elect to do so).

If more acceptances are received than the maximum offer was made for, then the right to sell shares is allocated proportionally among those who accepted.

Agreements in which one party (the bidder) agrees to launch a public tender offer and another party (the shareholder) commits to accept the public tender offer must be disclosed to the SFC, the BVC and the market in general at least one month before the date on which they are to be perfected. This must include an indication of the main terms and conditions of the exchange or trading system of the transaction as well as the proposed date and time of the transaction.

4.7 Offer conditions

Once a public tender offer is launched, it is irrevocable and cannot be made subject to pre-conditions. However, it is common for the bidder's obligation to launch the tender offer to be subject to the satisfaction of pre- conditions, such as securing antitrust clearance.

In practice, once the offer is launched, the only condition to which the bidder's obligation to purchase the shares can be subject is that the acceptances received shall be at least equal to the minimum number of shares set out in the notice.