The Mergers & Acquisitions

Review

Law Business Research

Tenth Edition

Editor

Mark Zerdin

The Mergers & Acquisitions

Review

Tenth Edition

EditorMark Zerdin

Law Business Research Ltd

PUBLISHER Gideon Roberton

SENIOR BUSINESS DEVELOPMENT MANAGER Nick Barette

BUSINESS DEVELOPMENT MANAGER Thomas Lee

SENIOR ACCOUNT MANAGERS Felicity Bown, Joel Woods

ACCOUNT MANAGERS Jessica Parsons, Adam Bara-Laskowski, Jesse Rae Farragher

MARKETING COORDINATOR Rebecca Mogridge

EDITORIAL ASSISTANT Sophie Arkell

HEAD OF PRODUCTION Adam Myers

PRODUCTION EDITOR Anne Borthwick

SUBEDITORS Tessa Brummitt, Caroline Herbert

CHIEF EXECUTIVE OFFICER Paul Howarth

Published in the United Kingdom by Law Business Research Ltd, London

87 Lancaster Road, London, W11 1QQ, UK© 2016 Law Business Research Ltd

www.TheLawReviews.co.uk No photocopying: copyright licences do not apply.

The information provided in this publication is general and may not apply in a specific situation, nor does it necessarily represent the views of authors’ firms or their clients. Legal

advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or omissions contained

herein. Although the information provided is accurate as of August 2016, be advised that this is a developing area.

Enquiries concerning reproduction should be sent to Law Business Research, at the address above. Enquiries concerning editorial content should be directed

to the Publisher – gideon.roberton@lbresearch.com

ISBN 978-1-910813-21-8

Printed in Great Britain by Encompass Print Solutions, Derbyshire

Tel: 0844 2480 112

THE MERGERS AND ACQUISITIONS REVIEW

THE RESTRUCTURING REVIEW

THE PRIVATE COMPETITION ENFORCEMENT REVIEW

THE DISPUTE RESOLUTION REVIEW

THE EMPLOYMENT LAW REVIEW

THE PUBLIC COMPETITION ENFORCEMENT REVIEW

THE BANKING REGULATION REVIEW

THE INTERNATIONAL ARBITRATION REVIEW

THE MERGER CONTROL REVIEW

THE TECHNOLOGY, MEDIA AND TELECOMMUNICATIONS REVIEW

THE INWARD INVESTMENT AND INTERNATIONAL TAXATION REVIEW

THE CORPORATE GOVERNANCE REVIEW

THE CORPORATE IMMIGRATION REVIEW

THE INTERNATIONAL INVESTIGATIONS REVIEW

THE PROJECTS AND CONSTRUCTION REVIEW

THE INTERNATIONAL CAPITAL MARKETS REVIEW

THE REAL ESTATE LAW REVIEW

THE PRIVATE EQUITY REVIEW

THE ENERGY REGULATION AND MARKETS REVIEW

THE INTELLECTUAL PROPERTY REVIEW

THE ASSET MANAGEMENT REVIEW

THE PRIVATE WEALTH AND PRIVATE CLIENT REVIEW

THE MINING LAW REVIEW

THE EXECUTIVE REMUNERATION REVIEW

THE LAW REVIEWS

www.TheLawReviews.co.uk

THE ANTI-BRIBERY AND ANTI-CORRUPTION REVIEW

THE CARTELS AND LENIENCY REVIEW

THE TAX DISPUTES AND LITIGATION REVIEW

THE LIFE SCIENCES LAW REVIEW

THE INSURANCE AND REINSURANCE LAW REVIEW

THE GOVERNMENT PROCUREMENT REVIEW

THE DOMINANCE AND MONOPOLIES REVIEW

THE AVIATION LAW REVIEW

THE FOREIGN INVESTMENT REGULATION REVIEW

THE ASSET TRACING AND RECOVERY REVIEW

THE INSOLVENCY REVIEW

THE OIL AND GAS LAW REVIEW

THE FRANCHISE LAW REVIEW

THE PRODUCT REGULATION AND LIABILITY REVIEW

THE SHIPPING LAW REVIEW

THE ACQUISITION AND LEVERAGED FINANCE REVIEW

THE PRIVACY, DATA PROTECTION AND CYBERSECURITY LAW REVIEW

THE PUBLIC-PRIVATE PARTNERSHIP LAW REVIEW

THE TRANSPORT FINANCE LAW REVIEW

THE SECURITIES LITIGATION REVIEW

THE LENDING AND SECURED FINANCE REVIEW

THE INTERNATIONAL TRADE LAW REVIEW

THE SPORTS LAW REVIEW

THE INVESTMENT TREATY ARBITRATION REVIEW

THE GAMBLING LAW REVIEW

i

The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:

AABØ-EVENSEN & CO ADVOKATFIRMA

Æ LEX

AGUILAR CASTILLO LOVE

AKD NV

ALLEN & GLEDHILL LLP

ANDERSON MŌRI & TOMOTSUNE

ARIAS, FÁBREGA & FÁBREGA

ASHURST LLP

AVENT ADVOKAT

AZMI & ASSOCIATES

BHARUCHA & PARTNERS

BREDIN PRAT

BRIGARD & URRUTIA

CLEARY GOTTLIEB STEEN & HAMILTON

CORONEL & PÉREZ

CORRS CHAMBERS WESTGARTH

CRAVATH, SWAINE & MOORE LLP

DITTMAR & INDRENIUS

DRYLLERAKIS & ASSOCIATES

ACKNOWLEDGEMENTS

Acknowledgements

ii

DUANE MORRIS & SELVAM LLP

FANGDA PARTNERS

HENGELER MUELLER

HEUKING KÜHN LÜER WOJTEK

KBH KAANUUN

LEGAL ATTORNEYS & COUNSELORS

LETT LAW FIRM P/S

MAKES & PARTNERS LAW FIRM

MAPLES AND CALDER

MATTOS FILHO, VEIGA FILHO, MARREY JR E QUIROGA ADVOGADOS

MNKS

MORAVČEVIĆ VOJNOVIĆ I PARTNERI IN COOPERATION WITH SCHÖNHERR

MOTIEKA & AUDZEVIČIUS

NISHIMURA & ASAHI

OSLER, HOSKIN & HARCOURT LLP

PEREZ ALATI, GRONDONA, BENITES, ARNTSEN & MARTINEZ DE HOZ (H)

POPOVICI NIȚU STOICA & ASOCIAȚII

ROJS, PELJHAN, PRELESNIK & PARTNERS

RUBIO LEGUÍA NORMAND

RUSSIN, VECCHI & HEREDIA BONETTI

S HOROWITZ & CO

SCHELLENBERG WITTMER LTD

SCHINDLER RECHTSANWÄLTE GMBH

SLAUGHTER AND MAY

STRELIA

STUDIO LEGALE DELFINO E ASSOCIATI WILLKIE FARR & GALLAGHER LLP

SYCIP SALAZAR HERNANDEZ & GATMAITAN

TORRES, PLAZ & ARAUJO

URÍA MENÉNDEZ

UTEEM CHAMBERS

VON WOBESER Y SIERRA, SC

WALKERS

WEERAWONG, CHINNAVAT & PEANGPANOR LTD

WH PARTNERS

WHITE & CASE LLP

iii

Acknowledgements

CONTENTS

Editor’s Preface ...................................................................................................xi Mark Zerdin

Chapter 1 EU OVERVIEW ......................................................................... 1Mark Zerdin

Chapter 2 EUROPEAN PRIVATE EQUITY ................................................ 9Benedikt von Schorlemer and Holger H Ebersberger

Chapter 3 M&A LITIGATION ................................................................. 19Mitchell A Lowenthal and Roger A Cooper

Chapter 4 PRIVATE EQUITY: AN OFFSHORE PERSPECTIVE............. 26Rolf Lindsay

Chapter 5 ARGENTINA ........................................................................... 30Santiago Daireaux and Fernando S Zoppi

Chapter 6 AUSTRALIA ............................................................................. 38Braddon Jolley, Sandy Mak and Jaclyn Riley-Smith

Chapter 7 AUSTRIA.................................................................................. 49Clemens Philipp Schindler

Chapter 8 BAHRAIN ................................................................................ 60Haifa Khunji and Natalia Kumar

Chapter 9 BELGIUM ................................................................................ 70Olivier Clevenbergh, Gisèle Rosselle, and Filip Jorens

Chapter 10 BRAZIL .................................................................................... 81Moacir Zilbovicius and Rodrigo Ferreira Figueiredo

iv

Contents

v

Chapter 11 BRITISH VIRGIN ISLANDS .................................................... 90Richard May and Richard Spooner

Chapter 12 CANADA ................................................................................. 99Robert Yalden, Emmanuel Pressman and Jeremy Fraiberg

Chapter 13 CAYMAN ISLANDS .............................................................. 113Suzanne Correy and Daniel Lee

Chapter 14 CHINA ................................................................................... 121Norman Zhong and Helen Fan

Chapter 15 COLOMBIA ........................................................................... 136Sergio Michelsen Jaramillo

Chapter 16 COSTA RICA ......................................................................... 151John Aguilar Jr and Marco Solano

Chapter 17 DENMARK ............................................................................ 158Sebastian Ingversen and Nicholas Lerche-Gredal

Chapter 18 DOMINICAN REPUBLIC ..................................................... 168María Esther Fernández A de Pou, Mónica Villafaña Aquino and Laura Fernández-Peix Perez

Chapter 19 ECUADOR ............................................................................ 178Daniel Pino Arroba and Fernanda Guzmán Amador

Chapter 20 FINLAND .............................................................................. 182Jan Ollila, Wilhelm Eklund and Jasper Kuhlefelt

Chapter 21 FRANCE ................................................................................ 194Didier Martin

Chapter 22 GERMANY ............................................................................. 210Heinrich Knepper

Chapter 23 GREECE................................................................................. 226Cleomenis G Yannikas, Sophia K Grigoriadou,Vassilis S Constantinidis and John M Papadakis

Chapter 24 HONG KONG ....................................................................... 236Jason Webber

Chapter 25 ICELAND .............................................................................. 245Hans Henning Hoff

Chapter 26 INDIA .................................................................................... 252Justin Bharucha

Chapter 27 INDONESIA .......................................................................... 268Yozua Makes

Chapter 28 ISRAEL ................................................................................... 280Clifford Davis and Keith Shaw

Chapter 29 ITALY ..................................................................................... 289Maurizio Delfino

Chapter 30 JAPAN .................................................................................... 301Hiroki Kodate and Yuri Totsuka

Chapter 31 LITHUANIA .......................................................................... 309Giedrius Kolesnikovas and Michail Parchimovič

Chapter 32 LUXEMBOURG ..................................................................... 314Marie-Béatrice Noble, Raquel Guevara and Stéphanie Antoine

Chapter 33 MALAYSIA ............................................................................. 327Rosinah Mohd Salleh and Norhisham Abd Bahrin

Chapter 34 MALTA ................................................................................... 343James Scicluna, Ramona Azzopardi and Rachel Vella Baldacchino

Contents

vi

Chapter 35 MAURITIUS .......................................................................... 355Muhammad Reza Cassam Uteem and Basheema Farreedun

Chapter 36 MEXICO ................................................................................ 365Luis Burgueño and Andrés Nieto

Chapter 37 MONTENEGRO.................................................................... 376Slaven Moravčević and Dijana Grujić

Chapter 38 MYANMAR ........................................................................... 386Krishna Ramachandra and Rory Lang

Chapter 39 NETHERLANDS ................................................................... 402Carlos Pita Cao and François Koppenol

Chapter 40 NIGERIA ................................................................................ 415Lawrence Fubara Anga

Chapter 41 NORWAY ............................................................................... 419Ole K Aabø-Evensen

Chapter 42 PANAMA ................................................................................ 454Andrés N Rubinoff

Chapter 43 PERU ...................................................................................... 463Carlos Arata

Chapter 44 PHILIPPINES ......................................................................... 472Philbert E Varona, Maria Jennifer Z Barreto, Hiyasmin H Lapitan, Patricia A Madarang and Javierose M Ramirez

Chapter 45 PORTUGAL ........................................................................... 481Francisco Brito e Abreu and Joana Torres Ereio

Chapter 46 QATAR ................................................................................... 494Michiel Visser, Charbel Abou Charaf and Eugenia Greco

Contents

vii

Chapter 47 ROMANIA ............................................................................. 506Andreea Hulub, Alexandra Niculae and Vlad Ambrozie

Chapter 48 RUSSIA ................................................................................... 518Scott Senecal, Yulia Solomakhina and Ekaterina Abrossimova

Chapter 49 SERBIA ................................................................................... 539Matija Vojnović and Luka Lopičić

Chapter 50 SINGAPORE .......................................................................... 548Lim Mei and Lee Kee Yeng

Chapter 51 SLOVENIA ............................................................................. 556David Premelč, Bojan Šporar and Jakob Ivančič

Chapter 52 SPAIN ..................................................................................... 566Christian Hoedl and Javier Ruiz-Cámara

Chapter 53 SWITZERLAND .................................................................... 580Lorenzo Olgiati, Martin Weber, Jean Jacques Ah Choon, Harun Can and David Mamane

Chapter 54 THAILAND ........................................................................... 591Pakdee Paknara and Pattraporn Poovasathien

Chapter 55 TURKEY ................................................................................ 600Emre Akın Sait

Chapter 56 UNITED ARAB EMIRATES ................................................... 609DK Singh and Stincy Mary Joseph

Chapter 57 UNITED KINGDOM ............................................................ 621Mark Zerdin

Chapter 58 UNITED STATES................................................................... 639Richard Hall and Mark Greene

Contents

viii

Chapter 59 UZBEKISTAN ........................................................................ 679Shuhrat Yunusov, Ulugbek Abdullaev, Khilola Sattarova and Diyora Abdurakhmanova

Chapter 60 VENEZUELA ......................................................................... 686Guillermo de la Rosa, Juan D Alfonzo, Nelson Borjas E and Domingo Piscitelli N

Chapter 61 VIETNAM .............................................................................. 698Hikaru Oguchi, Taro Hirosawa and Ha Hoang Loc

Appendix 1 ABOUT THE AUTHORS ...................................................... 709

Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS ....... 749

ix

Contents

xi

EDITOR’S PREFACE

The past year has seen a boom in dealmaking, with many markets reaching post-crisis peaks and some recording all-time highs. Mega-deals have been at the heart of the expanding market, with companies tapping into cash piles and cheap debt to fund transformational deals. Looking behind the headline figures, however, a number of factors suggest dealmaking may not continue to grow as rapidly as it has done recently.

In Europe, the European Central Bank was forced to start a programme of quantitative easing in the wake of consistently low growth, a full seven years after the Bank of England and the Federal Reserve undertook their programmes. US interest rates have also tightened for the first time since the financial crisis, contributing, according to some commentators, to the wobbly US markets that marked the start of 2016. Yet this uncertainty has now seemingly passed, and the Federal Reserve is contemplating raising rates further. Meanwhile, eurozone and UK interest rates look likely to remain low for some time to come due to continued slow growth and low inflation in the region. How the markets react to this bifurcation of monetary policy across the Atlantic will shape dealmaking in the year to come.

Elsewhere, there have been some concerns that falling commodities prices (particularly that of oil) have been driven by a fall in market confidence. However, it seems that this view is somewhat simplistic. It is more likely that prices have fallen due to excess capacity that built up to service Chinese industrialisation and somewhat weak growth figures. The recent uptick in prices should be seen as an indicator that perhaps the market overreacted and fundamentals remain strong.

Perhaps one of the biggest factors that poses a threat to dealmaking in 2016 is the political uncertainty affecting much of the world. In the UK, the first half of the year was clouded by the referendum on the UK’s continued membership of the EU, and in the US, the presidential election result is likely to have a considerable impact on markets. It is hoped that the resolution of this uncertainty in the second half of the year will foster an environment in which markets can thrive.

Editor's Preface

xii

I would like to thank the contributors for their support in producing the 10th edition of The Mergers & Acquisitions Review. I hope that the commentary in the following chapters will provide a richer understanding of the shape of the global markets, together with the challenges and opportunities facing market participants.

Mark ZerdinSlaughter and MayLondonAugust 2016

70

Chapter 9

BELGIUM

Olivier Clevenbergh, Gisèle Rosselle and Filip Jorens1

I OVERVIEW OF M&A ACTIVITY

From an international perspective, 2015 was a record-breaking year with a total transaction value of around US$5 trillion. Following this global M&A revival, the Belgian M&A market was dominated by a few exceptional landmark transactions in 2015, so last year largely beats 2014 in terms of transaction value (2014 was an unremarkable year for M&A with a disclosed total transaction value of approximately €26 billion).

Belgium’s strategic location in the heart of Western Europe and its open economy characterised by a large number of small and medium-sized companies (including a large amount of family-owned businesses) make it an attractive market for foreign M&A players. Moreover, the government’s recent tax initiatives are meant to increase the country’s attractiveness to foreign investment.

Following a trend that was already initiated in 2014, the divestments by Belgian financial institutions as a result of the financial turmoil have disappeared from the transaction statistics, leaving room again for industrial and strategic acquisitions by industrial players, as well as private equity players with a particular focus on certain niche markets.

By far the largest transaction was the public takeover of SABMiller, an English beer brewing company listed on the London Stock Exchange and the Johannesburg Stock Exchange, by the Belgian beer giant AB InBev for €92 billion. Other notable transactions include the merger between major retail players Delhaize Group and Royal Ahold with a deal value of approximately €25 billion, and the acquisition of Cytec Industries by Solvay for US$5.5 billion.

The Belgian capital markets continued to progress on the void of initial public offerings (IPOs) up to 2013, with eight IPOs in 2015, compared with four in 2014. Even

1 Olivier Clevenbergh and Gisèle Rosselle are partners and Filip Jorens is an associate at Strelia. The authors would like to thank Jean-Philippe Cordier, Brecht Cops, Benoît Malvaux and Eric-Gérald Lang for their contributions to this chapter.

Belgium

71

though Belgian entrepreneurs do not consider the Brussels stock exchange as their preferred way to finance their growth, one must say that the BEL 20, the leading stock index reference for the Brussels stock exchange, delivered an average return of more than 12.6 per cent over 2015, therefore being the third best-performing share index in the world. Only the Irish Iseq share index (up 30 per cent) and the Italian MIB share index 30 (up 12.66 per cent) performed better. The strong performance of the BEL 20 has come about thanks to very strong showings by several companies including Delhaize, Ageas, Ackermans & van Haaren and AB InBev.

Among the companies that went (partly) public on Euronext Brussels in 2015, we noticed several biotech companies, such as Bone Therapeutics, Mithra Pharmaceuticals and Biocartis Group. This biotech trend continued at the beginning of 2016, with ASIT Biotech going public. Other newly noted companies on the Brussels stock exchange include TINC (investment services), KKO International (food products) and Xior Student Housing (Real Estate Holding & Development).

The total amount raised by Belgian companies through the issuance of bonds ended up significantly higher than in 2014, with a total amount of €12.8 billion, compared with €10.5 billion in 2014. The highest bond issuance in 2015 (€4.7 billion) was made by Solvay; the amount raised was used to finance its acquisition of the American company Cytec Industries. This was followed closely by AB InBev, with an issuance of €3.5 billion to (partly) finance its takeover of SABMiller.

II GENERAL INTRODUCTION TO THE LEGAL FRAMEWORK FOR M&A

In Belgium, the negotiated sale and purchase of corporate entities’ shares or assets (or both) are governed by the Civil Code, partly by the Commercial Code, and by practice. The practice developed in common law jurisdictions has had and still has an important influence on the Belgian M&A practice. Through these practice developments, and following the common law influence in the Benelux in the past two decades, the use of more or less standardised share or asset purchase agreements has been established. Although the standard clauses contained in these types of agreements have gained influence, especially with regard to the representations and warranties used in M&A transactions, even the most standard provisions in these agreements are now sometimes debated during negotiations. A concern expressed by all parties involved, even more than before and most certainly since the financial turmoil of 2008, is the wish to be protected against the possible insolvency of their counterparty.

Mergers, including cross-border mergers, demergers, (partial) splits and spin-offs, as well as contributions to part or all of the assets and liabilities or branches of activity, are governed in detail by the Belgian Companies Code. When any one of these kinds of transactions or restructuring processes is envisaged, one must take into account that the provisions of the Companies Code impose certain filing and publication obligations as well as waiting periods after the filing of the proposal.

If the target company’s shares are either traded on a regulated market or widely spread among investors residing in Belgium so that the bid is public in nature, the Law of 1 April 2007 on takeover bids (Takeover Bid Law) and its implementing Royal Decree of 27 April 2007 apply. The Takeover Bid Law makes a distinction between a voluntary bid and a mandatory bid. A voluntary bid is a bid in which a bidder seeks to acquire control over a listed company, while a mandatory bid is one in which a bidder or shareholder has increased

Belgium

72

its participation over the threshold of 30 per cent of the shares of the company in question. That bidder or shareholder must then extend its bid to all the other shareholders under the same terms and conditions. The Belgian takeover bid legislation is characterised in great detail, particularly in the area of acting in concert for the purposes of fulfilling the mandatory bid obligation.

Finally, public offerings and admissions to trading of investment securities on the Belgian territory, whether harmonised (i.e., those that are within the scope of application of the Prospectus Directive) or not (i.e., those public offerings that are solely governed by Belgian law), are governed by the Prospectus Law of 16 June 2006, and the Financial Services and Markets Authority is the supervisory and regulatory authority that is competent to oversee these operations. This piece of legislation is also characterised in great detail. Since the financial turmoil, it has been used for several IPOs in Belgium, starting from 2013 with the successful IPO of the Belgian postal services. Throughout 2015, eight IPOs revived the Belgian stock market, but the first half of 2016 has only shown one IPO. Indeed, after the successful IPOs of biotech companies Bone Therapeutics, Biocartis and Mithra Pharmaceuticals in 2015, other biotech companies such as ASIT Biotech followed in these footsteps in May 2016.

III DEVELOPMENTS IN CORPORATE AND TAKEOVER LAW AND THEIR IMPACT

No significant changes in corporate or takeover bid law were noted during 2015 or at the beginning of 2016. The implementation of the Shareholders’ Rights Directive of 2006 went smoothly and did not cause any significant problems in the organisation of shareholders’ meetings of listed companies. Furthermore, some small changes to the Belgian Companies Code were either implemented or more quickly introduced to reinforce the government’s battle against tax fraud or elucidation.

The Law of 14 December 2005 on the abolition of bearer securities provided that issuing companies had to proceed, before 30 November 2015, with the public auction of all remaining securities that were not converted into registered or dematerialised securities. In December 2015, bearer securities that were not sold had to be registered with the Caisse des dépôts et Consignations.

In addition, the Law of 12 July 2015 restricts the ability of funds that are investing in sovereign debts (‘vulture funds’) to enforce their rights on the relevant debtor states or to obtain freezing orders against them.

Finally, an important number of practitioners have begun drafting a proposal to the Belgian Secretary of Justice seeking an overall review of the Belgian Companies Code. This review should not only pursue an increase in the attractiveness of Belgium for both Belgian and foreign investors, but also permit the tidying up of the vast landscape of very different corporate forms that often have overlapping, yet slightly different, rules that apply to each form.

IV FOREIGN INVOLVEMENT IN M&A TRANSACTIONS

Foreign involvement in the Belgian M&A market remains significant. Belgian shareholders often prefer to be a majority shareholder, or at least a ‘reference’ shareholder, to be able to remain in control of their company. When, at a certain point in time, these reference shareholders are no longer able to provide the company with the necessary financial means to

Belgium

73

support the growth of their company, they prefer to sell it rather than see their participation become diluted and be ‘stuck’ with another shareholder that is taking over control of the company.

In general, it is difficult to obtain an overall view on (foreign) private equity involvement apart from the reported deals (some of which are reported below). However, with Belgium being a country with many medium-sized companies with international presence or ambitions, an increasing number of interesting investment opportunities continue to be available for both industrial and financial foreign investors.

Recent reports on M&A activities notice an increased presence of Chinese investors on foreign M&A markets. This presence is also felt on the Belgian market: a recent example is the €1 billion sale of Punch Powertrain, a Limburg-based car transmission producer, to Yinyi group – a Chinese group which was, until now, mainly active in the fields of real estate and resources.

V SIGNIFICANT TRANSACTIONS, KEY TRENDS AND HOT INDUSTRIES

As already mentioned, 2015 was a record-breaking year from an M&A perspective, dominated by a few landmark transactions. Compared to previous years, 2015 had more transactions that were made from a mere strategic point of view by industrial actors in search of synergies or expansion.

Once again, Belgian beer brewer AB InBev recorded the largest ‘Belgian’ M&A deal of 2015 with its takeover of British rival SABMiller, sealing a long-anticipated deal that combines the world’s biggest brewers into a company controlling about half the industry’s profit. The European Union ultimately approved the (approximately) €92 billion takeover on the condition that the brewer shed nearly all of SABMiller’s European assets. With this takeover, AB InBev and its CEO Carlos Brito continue to digest one important acquisition successfully after the other, thereby leading the Belgian brewery to become the number one brewer in the world in terms of turnover, beer brands and brewing capacity.2

The second-largest Belgian M&A deal was the €25 billion merger between major retail players Delhaize Group and its Dutch counterpart Royal Ahold. The merger creates a complementary base of more than 6,500 stores with 375,000 associates, and will be able to serve over 50 million customers per week in the United States and in Europe. The European Union approved the merger on the condition that 13 Delhaize supermarkets in Belgium will have to be sold.

Other notable Belgian M&A transactions in the course of 2015 include: a The US$5.5 billion acquisition by Solvay of its US rival Cytec Industries, through

which Solvay became the second-largest player in aerospace composite metals. Solvay has arranged committed bridge financing for the transaction, which it funded with a €1.5 billion rights issue, €1 billion of additional hybrid instruments and a senior debt issuance.

2 However, this deal is not entirely final yet. Most recently, AB InBev was forced to raise its offer following pressure from SABMiller shareholders, who saw a part of their deal value evaporate as a result of the pound sterling devaluation in the aftermath of the Brexit referendum.

Belgium

74

b The merger between Belgian private banks Bank Degroof and Petercam. With assets under management worth over €50 billion, the new entity called Degroof Petercam became the reference independent financial institution in Belgium with a leading position in its three businesses (private banking, institutional asset management and investment banking) and a leading player in these sectors in Europe. The merged entity issued new shares to the shareholders of Petercam based on a valuation of 70 per cent for Bank Degroof and 30 per cent for Petercam.

c Telenet Group’s €1.33 billion acquisition of Base Company, the third-largest mobile network operator. This acquisition enables Telenet to compete more effectively in the Belgian mobile market. The deal was financed through a combination of €1 billion of new debts and existing liquidities.

d The €1 billion sale of IVC Group, a major vinyl and laminate flooring manufacturer led by Belgian captain of industry Filip Balcaen, to the US company Mohawk Industries. The acquisition expands Mohawk’s position as the world’s largest flooring manufacturer, and increases Mohawk’s presence in the LVT and sheet vinyl categories.

e The merger of Greenyard Foods, UNIVEG and Peatinvest. The three companies combined will have over €3.7 billion in sales, creating one of the world’s largest producers of fresh, frozen and canned food products. Greenyard Foods, the new parent company of the merger, now owns 100 per cent of the shares of UNIVEG and Peatinvest. In return, 25.5 million new shares of Greenyard Foods were issued to the shareholders of UNIVEG and Peatinvest.

f The acquisition of 74.99 per cent of the outstanding shares in Indaver, a leading company in industrial waste services, by Katoen Natie for approximately €416 million.

g The acquisition of Keytrade Bank by the French group Crédit Mutuel Arkéa (Fortuneo) for over €250 million.

From an IPO perspective, Belgium went along with the optimism that started in 2013. Indeed, the Brussels stock exchange could add eight companies to its listings, including Bone Therapeutics, Mithra Pharmaceuticals and Biocartis Group. However, with only one IPO in the first half of 2016 (ASIT Biotech), it seems as if this IPO revival has encountered a (temporary) slowdown.

Almost not visible in the deal statistics, but still an important factor in the market, is the constant stream of smaller real estate acquisitions by real estate investment trusts such as Aedifica, AG Real Estate, Cofinimmo, Montea, Retail Estates and WDP, often through share deals followed by an intragroup merger. In this market, divesting is becoming more and more key to success, leading to divestment of office facilities into (temporary) private housing and elderly housing.

Deme and Jan De Nul, two Belgian and universally known dredgers and construction companies, have been involved in many of the largest dredging projects in the world, including, for instance, the modernisation of the Panama Canal. Furthermore, the renewable energy sector has also gained importance in the Belgian M&A market, with the involvement of Belgian companies such as Deme, which has successfully expanded its business to the construction business of renewable energy parks, as well as TINC, which has recently launched its IPO on the Brussels stock exchange.

Another remarkable trend in the Belgian M&A market is the growing interest in venture capital, especially when it comes to technology-related transactions. Indeed, over the

Belgium

75

course of the past few years, a series of new venture capital funds were created such as Fortino, Smartfin Capital and Volta Ventures, leading to recent investments in start-ups, including Showpad, UnifiedPost, Teamleader and TrendMiner.

An unfortunate consequence of the financial turmoil are the financial difficulties that certain companies were still facing throughout 2015, following which they are forced to refinance their operations or even undergo a judicial reorganisation or, in the worst-case scenario, go bankrupt. This development has entailed a new kind of M&A, a kind in which actors such as receivers of a bankrupt estate take on a major role, and in which certain specific regulations and legislation change the rules of the transaction profoundly. This sometimes leads to competitive bids on the bankrupt estate, a situation in which it is the court that decides who is the acquirer, and this is on the basis of the continuity of the business (and of the employment) rather than on the basis of the usual criteria relating to the price. Basically, no representations and warranties are given in such ‘sales’, and due diligence is often limited to the bare minimum.

In general, it should be noted that the Belgian financial sector is regaining confidence and that acquisitions led by industry-related motives are once again standard practice. Buyers are indeed more often the other industrial players, a trend of 2014 that has been confirmed in 2015. The beginning of 2016 has been fairly calm, however, in terms of M&A transaction, without any specific reason. The most striking Belgium-related acquisition in the first half of 2016 was the above-mentioned billion sale of Punch Powertrain to Yinyi group.

VI FINANCING OF M&A: MAIN SOURCES AND DEVELOPMENTS

Given that the majority of the Belgian M&A transactions are mid-market deals, and considering the low interest rates that were applicable throughout 2015, financing continued to be available on reasonable conditions. Asset-backed lending in different forms is still gaining popularity, while club financing and syndicated loans for small and mid-cap deals also remain popular. In general, funds seem to continue to be available. However, financial institutions remain very careful, and sometimes risk-averse, requesting proper and solid securities for almost all transactions.

Credit documentation is either subject to the London Loan Market Association model – even for pure Belgian deals – or largely inspired by it. The refinancing of deals continues to be important in practice.

More and more industrial players finance deals through their existing credit lines or sometimes even through their own funds. Bonds continue to be placed with institutional investors for less known (or less popular) companies, whereas well-known companies often place their bonds within the private investor market as well, which has the advantage of offering a lower interest rate. However, acquisitions also appeared to be financed more often through general loan deals throughout 2015.

VII EMPLOYMENT LAW

Belgium has implemented the Acquired Rights Directive 2001/23/EC through the conclusion of a collective bargaining agreement, 32-bis (CBA 32-bis) by the National Labour Council, which was then declared generally binding on all employers and employees by a royal decree. CBA 32-bis safeguards employees’ rights in the event of transfers of undertakings, businesses or parts of businesses as a result of a legal transfer or merger if the business retains its identity

Belgium

76

after the transfer. Individual employees’ rights that arise from employment contracts or employment relationships at the time of the transfer are transferred automatically. Hence, all transferred employees will continue to benefit from the same terms and conditions that applied to them prior to the transfer. However, there are specific employment conditions that cannot be transferred on a compulsory basis (e.g., pension plans). If such specific employment conditions are not transferred, the transferee (i.e., the new employer) should nonetheless give similar conditions or compensation to the employees concerned to avoid a constructive dismissal. Furthermore, specific legislation has been implemented to provide similar protection to employment terms and conditions that follow from collective agreements. Even though CBA 32-bis prevents the transferor and the transferee from dismissing employees for reasons related to the transfer, exceptions have been implemented as well. In particular, when changes to the workforce as well as their working conditions can be justified for economic, technical or organisational reasons, dismissals or changes to the working conditions can be envisaged. In any event, the transferor and transferee will remain jointly liable for any obligations towards the workforce that have arisen before the date of the transfer for any transferred employment relationship. Finally, it should be noted that a specific information and consultation procedure towards employee representative bodies or, in the absence thereof, towards the employees themselves, is imposed by both CBA 32-bis and common ordinary law.

The Law on the Continuity of Undertakings of 31 January 2009 has introduced special rules for the transfer of an undertaking (or part of an undertaking) in the framework of the procedure on judicial reorganisation, and it is therefore not submitted to CBA 32-bis. From 1 August 2013, CBA 102 must be taken into account in the event of a transfer of employees that is subject to this procedure. In general, the transferee will only be obliged to take over the employees under the previous terms and conditions if the transferee has been informed about those conditions prior to the transfer. The employee and transferee can agree on individual changes, but they must be justified by economic, technical or organisational reasons. Moreover, changes to collective employment conditions can also be envisaged in the framework of the contemplated transfer. Any such changes are to be negotiated with the employees’ representatives and should be laid down in a collective bargaining agreement.

Specific legislation has also been implemented regarding the transfer of employees within the framework of a transfer of an undertaking that is submitted to insolvency proceedings. Whereas CBA 32-bis prevents the transferee from dismissing certain people (employees) in the framework of the transfer of an undertaking, except for the reasons stated above, the purchaser of an insolvent undertaking is not obliged to take over the entire workforce. The latter can select which employees it will take over within the workforce of the insolvent undertaking. However, it should be noted that in the bidding process on the insolvent undertaking, the receiver of the bankrupt estate is not legally obliged to accept the highest bid. The receiver may indeed accept a lower bid on the insolvent undertaking (or part of it) if that bid offers better guarantees of future employment to the workforce.

The recast Directive 2009/38/EC of the European Parliament and the Council of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees has been implemented in Belgian law by the Collective Bargaining Agreement 101 of 21 December 2010 (CBA 101). CBA 101 has the merit of increasing awareness of the requirement to involve the European Works Council or to apply information and consultation procedures for transnational matters. Matters

Belgium

77

are considered to be transnational when they concern a Community-scale undertaking or Community-scale group of undertakings as a whole, or at least two undertakings or establishments of the undertaking or group situated in two different Member States. Discussions have arisen with regard to the exact interpretation and scope of ‘transnational matters’.

A development that has been pending for a long time was the harmonisation of white-collar and blue-collar employee status. After years of discussion, legislative bills were published by the end of 2013 and new legislation entered into force on 1 January 2014. Blue-collar and white-collar employees now have identical termination rights in relation to years of service accrued after 1 January 2014. Generally speaking, the rights of blue-collar employees in cases of dismissal have improved, whereas certain categories of white-collar employees are treated less favourably compared to the previous system. For years of service accrued prior to 1 January 2014, a different treatment of both categories of employees subsists, but a state-sponsored compensation mechanism should abolish this unequal treatment for all blue-collar workers by 2017. The most important consequence of the new rules is the increased termination cost for employers that have a large number of blue-collar employees. Because of the modified termination rules that went hand in hand with the abolishment of the probation period, employers are more often calling upon temporary agency workers or are hiring workers under fixed-term contracts. Although measures have been taken to mitigate the impact of the increased termination cost for employers when they terminate contracts with blue-collar workers, this new law on the unified status has consequences for M&A in Belgium, in particular when restructuring procedures involving collective dismissals or closings are envisaged following an M&A transaction. Now that consensus has been reached on the harmonisation of blue-collar and white-collar employees’ termination rights, social partners have furthermore agreed to harmonise other outstanding items over time (such as vacation entitlements and social security). In the framework of the unified employment status, employees whose contracts are terminated now have the right to request from their employer an indication of the reasons for the termination. If the employer is unable to provide reasons or if the reasons are ‘manifestly unreasonable’, the employer may owe the employee a specific termination indemnity, ranging from 8 to 10 weeks’ salary based on recent case law. At the collective employment law level, no major changes have occurred, notably due to the social elections that were held in the spring of 2016. Still in the pipeline is the amendment of the ‘Renault Act’, which lays out the procedure for restructuring procedures involving collective dismissals. While the Renault Act was intended to create a greater involvement of employees in a restructuring process, it suffers from its formalistic aspects. Depending on the outcome of the amendments to this Act, there will most probably be consequences for M&A in Belgium, and more in particular for restructurings taking place before or after an M&A transaction.

VIII TAX LAW

In the course of 2015, the government adopted several tax-related measures in the framework of the ‘tax shift’ agreement that aims to lower tax pressure on labour income to strengthen Belgium’s economic attractiveness in comparison to neighbouring countries and to become more supportive to small and medium-sized enterprises (SMEs). To date, the Belgian M&A market may already take over the following changes (see the Act of 26 December 2015):a the employer social security contributions will decrease (gradually) from 33 to 25

per cent;

Belgium

78

b as of 1 January 2016, a speculation tax of 33 per cent is charged on capital gains made by private investors on listed shares within six months after the date of acquisition of these shares; and

c several tax incentives for start-ups have been introduced (including an investment deduction for investments in digital assets and an incentive for crowd-funding).

These new lines of the government have been particularly reflected in the latest withholding tax policies. While the withholding tax rates had already been levelled up to a uniform rate of 25 per cent on most moveable income (including interest, dividend and, as per 1 October 2014, liquidation bonuses) (see the Acts of 27 December 2012 and 28 June 2013), this uniform rate has now been further upgraded to 27 per cent as per 1 January 2016 (see the Act of 26 December 2015), and efforts have continuously been made to create a consistent set of reduced withholding tax regimes dedicated to SMEs (see the Act of 28 June 2013 and the Omnibus Acts of 19 December 2014 and 10 August 2015). More specifically, SMEs are eligible to a reduced withholding tax rate of 20 per cent (second accounting year) or 15 per cent (after the third accounting year) for new cash contributions made after 1 July 2013, subject to certain other restrictive conditions; and to a reduced withholding tax rate of 17 per cent (distribution before the fifth year), 5 per cent (distribution after the fifth year) or zero per cent (distribution upon liquidation) for accounting profit realised as from tax year 2015 that is voluntarily allocated to a ‘liquidation reserve’ against immediate payment of a separate tax of 10 per cent.

Finally, especially relevant for foreign minority interests is the specific new withholding tax rate of 1.6995 per cent that has formally been introduced (see the Act of 18 December 2015), subject to certain conditions, for dividend payments to non-resident companies located within the EEA (or in jurisdictions having a double tax treaty with Belgium) holding a participation with an acquisition value of at least €2.5 million (but that is less than 10 per cent of the share capital). This regime had to be implemented further to the European Court of Justice Tate and Lyle case. A bill of law has recently been tabled to narrow this regime, notably by inserting ‘subject-to-tax’ requirements with both the involved companies (see Draft Bill of 23 June 2016, No. 1920/001).

Next to these changes, the Belgian tax landscape has already experienced significant changes that affected M&A practice over the past few years. A first set of changes have been introduced in the Omnibus Act of 29 March 2012, notably the new general anti-abuse provision, the new thin capitalisation rules and a taxation of capital gains on shares in the Acts of 13 and 27 December 2012, thereby expanding the scope of the new taxation of capital gains on shares and in the Omnibus Act of 30 July 2013, notably the new fairness tax.

Since financial year 2011–2012, Belgian tax law contains a strengthened, new general anti-abuse provision. The new provision moves towards EU case law and international standards by introducing a more economical approach (i.e., the possibility to disregard the legal acts, not rather legal classifications) as well as the concept of ‘tax abuse’ (i.e., reference to the violation of the underlying legislative intent of a tax provision). Following this EU trend, Belgium will normally implement Directive 2015/121/EU of 27 January 2015 (modifying Parent–Subsidiary Directive 2011/96/ EU of 30 November 2011) by introducing a new ‘tax abuse’ rule to prevent the improper use of the dividend exemptions (both the participation exemption and withholding tax exemption). As primarily targeting holding companies, this new rule is anticipated to affect the M&A practice. Under both of these anti-abuse rules,

Belgium

79

the main escape for taxpayers is to demonstrate that the transaction is justified by sound economic motives (other than the avoidance of tax). The actual trend thus creates legal uncertainty and implies careful scrutiny of economic motivations when structuring a deal.

Other major changes for M&A structuring are the extension of the anti-thin capitalisation provision to inter-company loans and the former exemption of capital gains realised on shares, which have been continuously eroded in the past few years. By enacting the anti-thin capitalisation provision, Belgium has aligned itself with the laws of neighbouring jurisdictions. As of 1 July 2012, interest paid on intragroup loans is not deductible any more above a 5:1 debt-to-equity ratio. The concept of ‘group’ refers to all companies that are connected, according to the meaning given by the Belgian Companies Code. A series of exceptions applies, notably on publicly issued bonds, loans from credit institutions and loans from leasing companies. This change affects not only M&A structuring but also existing financing structures and real estate financing. It is still not clear if this regime will be revisited in the framework of EU efforts to combat aggressive tax planning (see Proposal for EU Directive 2016/0011 (CNS) of 28 January 2016). The other change relates to the capital gain on share exemption that has been noticeably revisited with respect to companies. The Omnibus Act of 29 March 2012 had already introduced a taxation of 25.75 per cent on capital gains realised without fulfilment of a one-year holding period. The Act of 27 December 2012 has now added a taxation of 0.412 per cent on capital gains realised after this holding period. This last taxation does not apply to SMEs. Capital gains realised on the shares of a company that is not considered to be subject to normal tax treatment are still not exempt and are subject to the normal corporate tax of 33.99 per cent.

Another major set of changes relates to the notional interest deduction (NID), which has been continuously eroded in recent years, and to the introduction of a new ‘fairness tax’, with a view to increasing the tax benefits of NID and tax losses. As of tax year 2013, it is no longer possible to carry forward excess NID. Furthermore, measures have been taken to reduce the NID rate and calculation base (see the Acts of 17 June 2013 and 28 June 2013) and to remedy former breaches of the establishment freedom affecting companies with foreign permanent establishments (see the Act of 21 December 2013). The NID rate for tax year 2017 is 1.131 per cent (1.631 per cent for SMEs). For its part, the new fairness tax is due as from tax year 2014 by large companies (not by SMEs). The fairness tax is a separate tax of 5.15 per cent on a portion of the company’s dividend distributions. This portion aims at representing the part of the distributed taxable profit that has been offset against NID and has carried forward tax losses. A procedure is still pending before the European Court of Justice to assess whether the fairness tax is compatible with EU law.

Finally, the existing patent income deduction is currently being reviewed for alignment with the OECD/G20 base erosion and profit shifting project (notably, the nexus approach). A bill of law is currently on track to abolish the existing regime as per 1 July 2016, subject to a transitional or grandfathering regime for earlier patent and patent applications (see Draft Bill of 23 June 2016, No. 1920/001). Details of the upcoming IP regime are still being confirmed.

Other important changes have been introduced, notably to the tax regime that applies to regulated investment companies and funds, investment deductions, the definition of permanent establishment and the tax shelter legislation.

The foregoing shows that the M&A practitioner must be careful, and that important opportunities offered by the Belgian tax system are still surviving the crisis.

Belgium

80

IX COMPETITION LAW

Belgian competition laws were integrated in 2013 into Book 4 of the Code of Economic Law. With this introduction, the Belgian competition laws were slightly reformed. This reform entailed, on the one hand, the removal of the government’s power to approve transactions that have been prohibited by the Competition Authority and, on the other, the possibility for the Competition Authority to investigate and approve or prohibit mergers that have been notified to it.

Through this reform, the Belgian Competition Authority has been reshaped in accordance with the ‘independent agency’ model. The Competition Authority now both investigates and approves or prohibits mergers that have been notified to it, while safeguarding the separation between the investigative and decision-making powers. This transformation is primarily inspired by the desire to accelerate investigations, and mostly the decisions regarding suspected violations of competition rules. Moreover, these changes should also contribute to a somewhat shorter clearance process for mergers.

X OUTLOOK

2015 showed that industrial players have again regained confidence and were active on the M&A market. However, this trend was not confirmed in the first semester of 2016.

From a global perspective, the number of large deals (over US$10 billion) has decreased significantly, with several large deals not being granted regulatory approval.

From a Belgian perspective, the M&A market is now on the same level as in 2014 with an aggregate transactional volume of approximately €9.8 billion over the first semester of 2016. This is considerably lower than in 2015, although it should be noted that 2015 was a rather exceptional year.

Moreover, this slowdown is very likely to continue in the following months. Indeed, in the immediate aftermath of the UK’s EU Referendum, whereby a majority of the British citizens voted to leave the European Union (Brexit), global markets dropped significantly. The leave vote marks the start of long period of uncertainty on the global markets, as it has the potential to upend Europe’s established political order. The exact influence of Brexit on the M&A market remains unclear, as the Brexit implementation terms still have to be negotiated, but it seems clear that economically significant areas would be affected by Brexit, most notably cross-border taxation, and also merger clearances, employee protections, etc.

Finally, private equity appears to be again cautiously active on the Belgian M&A market, but it is difficult to predict what the influence of the increasing interest rates will be on its activity. Industry players and strategic buyers will most probably continue to be active in Belgium; however, the ever-increasing number of Belgian family businesses that are struggling with succession and are searching for buyers makes the Belgian M&A market very attractive for potential (foreign) investors.

709

Appendix 1

ABOUT THE AUTHORS

OLIVIER CLEVENBERGHStreliaOlivier Clevenbergh is mainly active in the field of M&A and corporate law. He deals with national and international acquisitions and disposals of shares or assets, private equity and venture capital transactions, mergers and joint ventures. He has considerable experience as regards restructurings and the acquisition of the assets of distressed companies.

He also has specific expertise in the field of retail and distribution law and is an acknowledged specialist in franchising.

Olivier Clevenbergh combines his transactional practice with a contentious practice covering the same areas. He therefore also represents clients in commercial and corporate litigation before the Belgian courts and arbitration tribunals.

Olivier was admitted to the Brussels Bar in 1989 and was admitted as a solicitor of England and Wales in 1995.

Before becoming a partner at Strelia, Olivier Clevenbergh was a partner at Stibbe since 2000, where he headed the corporate finance department in Brussels.

GISÈLE ROSSELLEStreliaGisèle Rosselle concentrates on corporate and corporate finance transactions, with particular experience in cross-border mergers and acquisitions, private equity and capital market transactions involving a wide variety of industries.

Gisèle Rosselle was admitted to the Brussels Bar in 1994 and started her career at Allen & Overy (formerly Loeff Claeys Verbeke) in Brussels and in London. Before joining Strelia, she was a partner at White & Case LLP.

She served as chair of the Corporate and M&A Committee of the International Bar Association from 2009 through 2011, after having chaired the Private Equity Subcommittee of the International Bar Association’s Corporate and M&A Committee.

Gisèle Rosselle obtained an executive master’s degree at the INSEAD Business School in 2014.

About the Authors

710

FILIP JORENSStreliaFilip Jorens concentrates on finance and M&A transactions, private equity, corporate law in general and contentious work in those areas.

Filip Jorens started his career as a lawyer with Strelia in August 2013.Filip obtained a law degree from the Universiteit Antwerpen (UA) in 2012. In

addition, he holds a master’s degree in economic law from the Université libre de Bruxelles (ULB, 2013) and a certificate of advanced studies in banking and finance law from the Université catholique de Louvain (UCL, 2015).

STRELIARoyal Plazarue Royale 145 1000 BrusselsBelgiumTel: +32 2 627 00 90Fax: +32 2 627 01 09olivier.clevenbergh@strelia.com gisele.rosselle@strelia.comfilip.jorens@strelia.com www.strelia.com