efmc2002 becht takeovers

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The Future of Corporate Takeovers in Europe: 

The Future of Corporate Takeovers in Europe ECGI Session at the Federation of European Securities Exchanges' 6th European Financial Markets Convention Brussels, 31 May 2002

Corporate Takeover Defences in Europe: 

Corporate Takeover Defences in Europe Marco Becht Université Libre de Bruxelles & ECGI

The U.K. Takeover Panel says : “Though Shalt not have Post-Bid Defenses”: 

The U.K. Takeover Panel says : “Though Shalt not have Post-Bid Defenses”

No “Level Playing Field” with the US: 

No “Level Playing Field” with the US

Slide5: 

Texaco Inc. (Global FT500 #162) Texaco Inc. Source : Proxy Statement for meeting April 26, 2000; IRRC 2000 no 5%+ block holder blank check preferred stock poison pill shareholder rights plan pill approved by shareholders vote (1998) : 65.1% for, 34.1% against 1/3 staggered board with 3 year terms 11/12 directors independent

How typical is Texaco?: 

How typical is Texaco? Poison Pill is always available Staggered Boards 58% in IRRC sample (S&P 1500 + 1000) 70% of IPO firms in 2001 Only 92 hostile bids 1996-2000 32 failed (34.8%) 23 acquired by bidder (25%)

No “Level Playing Field” within Europe: 

No “Level Playing Field” within Europe

Main Pre-Bid Defences in Europe: 

Main Pre-Bid Defences in Europe Majority voting blocks with proportional amounts of capital with disproportional amounts of capital (shares with no vote, multiple votes, pyramids) Voting right ceilings Shares with special rights

How will the “breakthrough rule” affect these pre-bid defenses?: 

How will the “breakthrough rule” affect these pre-bid defenses?

Blocks: 

Blocks

Percentage of listed companies under majority control: 

Percentage of listed companies under majority control Source : country chapters in “The Control of Corporate Europe”

Percentage of listed companies with a blocking minority of at least 25%: 

Percentage of listed companies with a blocking minority of at least 25% Source : country chapters in Barca and Becht (2001)

Companies not affected by the “Breakthrough Rule”: 

Companies not affected by the “Breakthrough Rule”

Slide14: 

KBC Bank and Insurance Holding Co (Euronext 100 company) Source : www.kbc.com (consulted 24 May 2002) KBC Bank and Insurance Holding Co

Slide15: 

Porsche AG Voting Stock Porsche AG Porsche AG Non-Voting Porsche/Piech Family Voting Pool 100% 10%* Source : Hoppenstedt Guide 1999; * estimate 50:50 capital

Allianz AG and Munich Re AG: 

Munich Re Allianz AG and Munich Re AG Allianz Share transfer restrictions locked in by cross-holding 20% 24.9% Bay. Hypo-Vereinsbank AG 13.7% (V 14.04) 6.8% 5.05% (V 5.18) 6.8%

Companies under blockholder control potentially affected by the “Breakthrough Rule”: 

Companies under blockholder control potentially affected by the “Breakthrough Rule”

Slide18: 

Investor AB Class A 1 vote 40.6% capital 87.2% votes Investor AB Investor AB Class B 1/10 vote 59.4% capital 12.7% votes Wallenberg Foundations Source : www.investorab.com (situation as of 12/31 2000) 21% capital 44% votes

Volkswagen AG: 

Volkswagen AG VW AG Voting Stock VW AG Non-Voting Land Niedersachsen votes 18.8% 75:25 capital Volkswagen Beteiligungs- Gesellschaft mbH 13.05% 100% 14% of total capital Source : Volkswagen Law, Company Statutes, BaWe, Hoppenstedt 2002 Voting right ceiling of 20% No “blank” proxy voting Major decisions require 80% supermajority

Slide20: 

ING Groep N.V. ING Source : Form 20-F, Handboek Nederlandse Beursfonden 2000

Companies under Minority Control potentially affected by the “Breakthrough Rule”: 

Companies under Minority Control potentially affected by the “Breakthrough Rule”

Slide22: 

BBVA S.A. 10% voting right ceiling 2 year waiting period 3 year waiting period Banco Santander Central Hispano S.A. Source : Company Statutes 70% supermajority to : change 10% voting limit change supermajority amendment

Slide23: 

The “Shell” Transport and Trading Company p.l.c. Royal Dutch/Shell (Global 500 #10) Source : Form 20-F 2000

Radical Italians : 

Radical Italians Voting right restrictions are null and void in a full bid for a privatised company

Slide25: 

Source : Consob filings not listed listed

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