New EU rules 'could affect compulsory takeovers'

New EU takeover rules could have a significant impact on the operation of compulsory takeovers in the Irish market, according to solicitors McCann FitzGerald.

David Byers from McCann FitzGerald said the European Takeovers Directive introduced in May has resulted in some major changes to the Irish takeover regime, particularly in relation to the operation of the "squeeze-out" compulsory acquisition procedure and the involvement of employees in takeover bids.

He was speaking today at the launch of McCann FitzGerald’s report Takeovers in Ireland – the Irish Regulatory Framework.

According to Byers, under the new rules, the level of acceptances necessary to enable a bidder for an Irish-listed company to compulsorily acquire the shares of non-accepting shareholders (the "squeeze out") has been increased from 80% to 90%, which brings Ireland into line with the European standard.

"This will constitute a significant change in Irish takeover practice. The availability of the 'squeeze-out' right is critical to takeover activity," he said.

"On a leveraged bid, the bidder needs to be confident of its ability to exercise the 'squeeze-out' right, as it only when the bidder has acquired 100 per cent of the target's shares that it can take the steps necessary to secure its borrowings on the target’s assets."