Energy & Infrastructure M&A 2025 Comparisons

Over the past 12 months, Luxembourg’s energy and infrastructure M&A market has remained resilient, albeit shaped more by global fundraising and structuring trends than by domestic asset-level transactions. As a leading fund domicile, Luxembourg continues to play a pivotal role in the global infrastructure investment ecosystem, serving as the jurisdiction of choice for the establishment and financing of infrastructure funds.

While inflationary pressures, rising interest rates, and geopolitical tensions – including the Russia–Ukraine war and the war in Gaza – have contributed to a more cautious global investment climate, Luxembourg has maintained its attractiveness due to its adaptable legal and tax framework. The jurisdiction’s robust security interest regime and creditor-friendly collateral laws – particularly in relation to share pledges over Luxembourg entities – have supported continued activity in fund structuring and leveraged finance transactions.

Compared to the global pace of energy and infrastructure M&A, Luxembourg’s activity has been more stable but less directly exposed to asset-level volatility. The jurisdiction has seen sustained interest in energy transition, digital infrastructure, and sustainable investment strategies, reflecting broader global trends. However, this activity is primarily reflected in fund formation and acquisition vehicle structuring rather than in direct domestic deal volume.

Over the past 12 months, Luxembourg has experienced a notable shift in the strategic orientation of energy and infrastructure investment activity, driven by heightened ESG awareness, evolving EU regulatory frameworks, and broader sustainability commitments. While Luxembourg is not a direct asset jurisdiction for energy and infrastructure projects, its role as a leading fund domicile and structuring hub means that global and European trends – particularly those related to ESG and climate policy – are strongly reflected in its market dynamics.

A key trend has been the deepening integration of ESG criteria into infrastructure fund strategies. Luxembourg-based managers have responded proactively to regulatory developments such as the Sustainable Finance Disclosure Regulation (SFDR), the EU Taxonomy, fund names guidelines and the newly introduced EU Green Bond Standard. These frameworks have led to more rigorous ESG disclosures, enhanced due diligence processes, and a reorientation of capital toward the energy transition, digital infrastructure, and sustainable transport assets.

Luxembourg’s regulatory and legal environment continues to facilitate the structuring of ESG-compliant funds, with particular emphasis on transparency, investor protection, and long-term sustainability.

In terms of business approach, there has been a clear pivot toward financing the energy transition, with increased interest in renewable energy, hydrogen infrastructure, and digital connectivity. Luxembourg’s flexible but predictable legal, regulatory and tax frameworks, combined with its robust collateral regime, collectively remains a key enabler for sponsors seeking to structure complex, multi-jurisdictional transactions.

In Luxembourg, investors typically access the energy and infrastructure M&A market through fund-based and acquisition structuring platforms, rather than through direct investment in domestic assets. The jurisdiction’s appeal lies in its sophisticated legal, tax, and regulatory framework, which supports the formation and financing of infrastructure funds targeting global opportunities.

Investor profiles are diverse, including institutional investors such as pension funds, insurance companies, and sovereign wealth funds, as well as private equity sponsors and specialist infrastructure managers. These investors are drawn to Luxembourg for its flexible fund vehicles – such as RAIFs (semi-regulated investment funds), and the unregulated SCSp (Special Limited Partnership) – which allow for tailored investment strategies and efficient cross-border deployment of capital.

Investor profiles might also comprise investors from the retail sphere, from high-net-worth individuals to full retail investors, wanting to invest in the infrastructure asset class. Such investors would then typically invest in funds structured as Luxembourg Part II funds or ELTIFs (European Long-Term Investment Funds). A growing number of investors are pursuing ESG-aligned infrastructure strategies, reflecting broader market trends and regulatory developments. Luxembourg’s alignment with EU sustainability regulations, including SFDR and the EU Taxonomy, has made it a preferred jurisdiction for structuring funds focused on renewable energy, digital infrastructure, and sustainable transport.

In addition, Luxembourg’s robust collateral and security interest regime makes it an attractive jurisdiction for leveraged finance transactions, enabling investors to structure acquisition vehicles with enhanced creditor protection and financing flexibility.

In summary, investors engage with Luxembourg’s energy and infrastructure M&A market primarily through fund structuring and financing mechanisms, leveraging the jurisdiction’s legal certainty, regulatory sophistication, and international reach to access global infrastructure opportunities.

While Luxembourg does not host major physical infrastructure projects, it remains a strategic jurisdiction for financing and structuring energy transition and infrastructure investments at scale. As a holding and fund domicile jurisdiction, Luxembourg is not the site of large-scale domestic energy or infrastructure projects. Instead, it hosts the investment and acquisition structures that support major projects across Europe and globally.

The current pipeline of activity is heavily weighted toward renewable energy and sustainable infrastructure, reflecting broader investor demand and EU climate objectives. Luxembourg-domiciled funds are increasingly backing projects in energy transition and (digital) infrastructure, often through cross-border platforms.

Luxembourg is not typically a jurisdiction where operational early-stage energy or infrastructure companies are founded. However, it plays a key role in structuring and financing such ventures, particularly those targeting international markets.

Early-stage companies in this sector often use Luxembourg to establish holding or financing vehicles, benefiting from the jurisdiction’s flexible legal structures (such as the société à responsabilité limitée (SARL)), predictable tax environment, and investor-friendly regulatory framework. These structures are commonly used by venture capital and infrastructure funds to support start-ups focused on renewable energy, climate tech, and digital infrastructure.

Typical liquidity events for ventures such as energy and infrastructure companies include sales to private equity, investors or other financial sponsors. Founders often achieve an exit by selling their shares, but, increasingly, it is common for founders and key management to partially reinvest or “roll over” their equity into the acquiring company. This creates an incentive for them to continue driving the company’s performance post-transaction.

Important managers often remain involved through equity participation, bonuses, or partial management buy-ins, ensuring continuity and aligning interests. This is especially common in private equity deals, where managers are frequently made co-owners to boost motivation and investment alignment.

Spin-offs are not customary in Luxembourg’s energy and infrastructure sector in the traditional operational sense, given the jurisdiction’s limited domestic energy production and infrastructure footprint. However, Luxembourg plays an important role in hosting and financing spin-off structures, including those emerging from public research institutions with interest in a flexible holding jurisdiction.

A spin-off is generally a taxable event but can be structured as a tax neutral transaction in Luxembourg, at both the corporate (ie, split company) and shareholders’ level.

At the corporate level, depending on the assets of the split company, the tax neutrality can be achieved in two ways. If the split company is a holding company, the spin-off should be tax neutral in Luxembourg provided the requirements for the participation exemption to apply are met with respect to the participations held by the split company. Alternatively, the split company can achieve a tax neutral spin-off, provided the following requirements are met.

• The spin-off must involve Luxembourg resident companies or companies resident in an EU member state or companies resident in an EEA country (other than EU) that are fully taxable at a rate equivalent to the Luxembourg corporate income tax.
• The assets transferred must constitute a business or an autonomous part of a business. The same requirement applies to the assets retained in the split company.
• The transferred assets must be taken over by the beneficiary company at the tax acquisition value they had in the split company (ie, no step-up in value of the transferred assets).
• The spin-off takes the form of a share-for-share exchange.

At shareholders’ level, the spin-off can be tax neutral in Luxembourg provided the following requirements are met.

• The shareholder must receive (at least two) shares from the beneficiary company in exchange for shares from the split company.
• A cash payment to a shareholder (instead of shares in the beneficiary company), if any, should not exceed 10% of the nominal value (or par value) of the shares in the beneficiary company received.

Luxembourg law permits spin-offs to be followed by a business combination, including mergers or acquisitions, provided that the relevant corporate and procedural requirements are met. These transactions are governed by the Luxembourg law of 10 August 1915 on commercial companies, as amended (“Company Law”) and, where applicable, the EU Mobility Directive (Directive (EU) 2019/2121), which has streamlined cross-border corporate reorganisations.

While spin-offs are not common in the energy and infrastructure sector in Luxembourg (given the jurisdiction’s role as a fund and holding platform rather than an operational hub) the legal framework allows for such structuring. This is particularly relevant in the context of platform reorganisations, fund structuring, or cross-border investment strategies.

From a corporate law perspective, key requirements for a business combination involving a demerger or a merger include the following.

• Preparation and, following a one-month waiting period, approval of a demerger or merger plan by the shareholders of the involved entities.
• Compliance with creditor and, if applicable, minority shareholder protections, including potential exit rights.
• Notarial certification for certain transactions, especially those with cross-border elements.

The timing of a spin-off in Luxembourg depends on the complexity of the transaction and whether it involves domestic or cross-border elements. For a straightforward domestic spin-off, the process typically takes one to three months (including preparation of documents, required publications and a one-month waiting period between publication and final spin-off approval).

There is no requirement of a tax ruling from the Luxembourg tax authorities for a spin-off, and no ruling is filed in the vast majority of cases. An advance ruling request can, however, be handy depending on the factual situation at hand, notably with a view to obtain legal certainty from a Luxembourg tax perspective or in case of unusual and complex situations. Such advance ruling request must be introduced before implementing the spin-off. Subject to the complexity of the case, one should expect the advance tax ruling process to take approximately 4–6 months. The advance ruling request is subject to an administrative fee set by the tax authorities and varying between EUR3,000 and EUR10,000 depending on the complexity and the amount of work involved.

In Luxembourg, it is common for a potential bidder to acquire a stake in a listed company prior to launching a public takeover bid, provided that such acquisitions comply with market abuse regulations and disclosure obligations. There is no prohibition on stakebuilding before an offer is announced.

Under the Luxembourg transparency law of 11 January 2008 (“Transparency Law”) applicable to companies whose shares are listed on a regulated market (within the meaning of MiFID II) in the EEA, shareholders must notify both the issuer and the Commission de Surveillance du Secteur Financier (CSSF) when their holding reaches, exceeds, or falls below any of the following thresholds: 5%, 10%, 15%, 20%, 25%, 33⅓%, 50% or 66⅔% of voting rights. Notifications must be made within four trading days of the transaction.

Additionally, any person who, alone or in concert, acquires more than 33⅓% of the voting rights in a company whose shares are listed on a regulated market in the EEA, is required to launch a mandatory takeover bid for all remaining shares under the Luxembourg takeover law of 19 May 2006 (“Takeover Law”).

The offer document must be approved by the competent authority of the jurisdiction where the shares are listed and admitted to trading on the regulated market. Since Luxembourg companies hardly ever have their shares listed and admitted to trading in Luxembourg, the offer document prepared in relation to Luxembourg companies is typically approved outside of Luxembourg.

If, however, an offer document were to be submitted to the CSSF and hence is subject to the Takeover Law, it would have to include the purpose of the bid, the bidder’s strategic intentions regarding the target (including its business, employees and locations), and details of the financing arrangements for the offer.

Luxembourg does not impose a formal “put up or shut up” rule. However, the Takeover Law requires that an offeror does not unduly hinder the target’s operations, and the maximum period from the announcement of the bid to completion is six months.

Any person who, alone or in concert, acquires at least 33⅓% of the voting rights is required to launch a mandatory takeover bid for all remaining shares in accordance with the provisions of the Takeover Law.

Public company acquisitions in Luxembourg are usually structured as voluntary takeover bids under the Takeover Law. These can be cash, share-for-share, or mixed offers.

Statutory mergers (including cross-border mergers) are legally available under the Company Law but are rarely used for listed companies due to procedural complexity and timing constraints.

Other complex or hybrid structures, such as multi-step transactions combining stakebuilding, a public offer, and post-offer reorganisations, may be used depending on the target’s profile and the bidder’s objectives.

Public company acquisitions in Luxembourg are typically structured as cash deals or share-for-share transactions (the latter being more common in strategic or cross-border combinations). Cash consideration is permissible in both mergers and tender offers, though it is more common in the latter and cannot represent the entire consideration in a merger.

Unlike mandatory tender offers, no specific requirements apply to price and relevant payment mechanisms for voluntary tender offers. The bidder is free to offer any type of consideration (as long as the general principles of the Takeover Law are observed). It is up to the shareholders to decide on the merits of the offer. If shares are acquired at a higher price during the offer period, the offer price must be adjusted.

In deals with valuation uncertainty, parties may use contingent value rights (CVRs) or earn-outs to bridge value gaps and align interests. CVRs are more common in distressed/restructuring scenarios rather than going concern acquisitions.

Both mandatory and voluntary bids are subject to the same rules governing, among other things:

• the information to be provided;
• the disclosures to be made;
• timing; and
• regulatory approvals.

A major difference is that the consideration to be offered as part of the mandatory tender offer must be fair. The CSSF, as part of its supervisory powers, is entrusted with assessing the fairness of the price. The Takeover Law sets forth a series of criteria and rules applicable to such assessment. Another difference is that voluntary offers can be subject to conditions. These must be clearly defined and approved by the CSSF, and typically include:

• minimum acceptance thresholds;
• regulatory clearances; and
• material adverse changes clauses.

However, a takeover offer may not be conditional upon the bidder obtaining financing; a buyer therefore needs to ensure that financing is in place.

In Luxembourg public M&A, it is standard practice to enter into a transaction agreement in friendly deals. Beyond the board’s recommendation, targets may agree to exclusivity, non-solicitation, and break fees, subject to fiduciary duties.

Public companies typically provide limited representations, mainly around authority and compliance. Broader warranties are rare and more common in private transactions.

Typical thresholds include:

• 50% + 1 – grants simple majority control at shareholder meetings;
• 66⅔% – grants control over special resolutions at shareholder meetings (eg, mergers, or changes to articles); and
• 95% – allows for a squeeze-out of minority shareholders.

Article 16 of the Takeover Law provides for a squeeze-out right.

In the event a shareholder or a number of shareholders acting in concert cumulatively hold(s) or acquire(s) 95% of the voting rights in an in-scope Luxembourg company, such shareholder(s) may force the minority shareholder(s) holding the remainder of the shares to sell them to the majority shareholder(s) (the Squeeze-Out Right). The Squeeze-Out Right foreseen under the Takeover Law can only be exercised following a takeover offer under the Takeover Law and only within a maximum of three months following the end of the acceptance period of that takeover offer.

The competent authority to supervise the squeeze-out procedure is the CSSF.

Luxembourg requires bidders to have committed financing (“certain funds”) in place before launching a public offer. The bidder (and not the financing bank) must demonstrate the ability to fully fund the offer, and this is verified by the CSSF as part of the offer documentation.

Offers cannot be conditional on securing financing. The bidder must be able to honour the offer in full at the time of announcement, ensuring deal certainty and protecting shareholder interests.

The Takeover Law includes, among others, a Board Neutrality Rule and a Breakthrough Rule (each term is defined below). As a general rule when adopting any measures, the board of directors must always act in the corporate interest of the Luxembourg target company.

Board Neutrality Rule

The Takeover Law allows Luxembourg companies to choose whether they wish to subject their board to neutrality in the context of a takeover bid. In this respect, the general meeting of shareholders of the Luxembourg company may resolve in accordance with the conditions applicable to amendments of the articles of association – even before a takeover – to prevent the board from adopting defensive measures against a takeover bid (the Board Neutrality Rule).

In application of the Board Neutrality Rule, the general meeting of the shareholders may decide to require the board to submit for their prior approval during a takeover offer, the adoption of any defensive action which may result in the frustration of the takeover bid. The opt-in to the Board Neutrality Rule is reversible. The decision to opt-in to the Board Neutrality Rule must be notified to the CSSF, as well as to all supervisory authorities of the member states on whose regulated markets the Luxembourg target company’s shares are admitted to trading or to which such a request has been made.

Absent such decision by the general meeting to adopt the Board Neutrality Rule, the default position is that the board may adopt such defensive measures as permitted by the Luxembourg law of 10 August 1915 on commercial companies, as amended, and as it may deem appropriate.

If the general meeting of shareholders has opted-in to the Board Neutrality Rule, the board must obtain the prior approval of the general meeting of the shareholders for any defensive measures which it wishes to implement, except for actions aimed at triggering a competing bid.

Breakthrough Rule

The Takeover Law provides for an optional rule according to which any restrictions on the transfer of securities or restrictions on voting rights provided for in the articles of association or in contractual agreements relating to the Luxembourg target company shall not apply during the time allowed for acceptance of the bid (the Breakthrough Rule). Luxembourg companies are allowed to decide whether to voluntarily opt-in to this rule.

The decision to opt-in to the Breakthrough Rule must be taken by the general meeting of the shareholders in accordance with the conditions applicable to amendments of the articles of association. The opt-in to the Breakthrough Rule is reversible. The decision to opt-in to the Breakthrough Rule must be notified to the CSSF, as well as to all supervisory authorities of the member states on whose regulated markets the Luxembourg target company’s shares are admitted to trading or to which such a request has been made.

The timeframe for which the Breakthrough Rule is effective corresponds to that for acceptance of the bid. However, this period may be reduced or increased by the CSSF through a specifically reasoned decision.

In addition to the aforementioned measures set out in the Takeover Law, pre- and post-bid defensive measures can be undertaken, provided that, where such measures are implemented by the board, they are in the corporate interest of the company. Companies may consider implementing the following legal and strategic mechanisms to deter or neutralise hostile acquisition attempts.

• Use the authorised share capital to issue new shares or convertible instruments to a white knight/one or more shareholders.
• Introduce enhanced quorum and majority requirements for key control decisions, making it more difficult for a hostile party to influence strategic outcomes.
• Grant specific board nomination rights to certain shareholders and ensure that the composition of the board remains aligned with the interests of the majority or founding shareholders.
• Employ debt financing to recapitalise the company, potentially making the balance sheet less attractive to a hostile bidder due to increased liabilities.
• Repurchase existing shares to consolidate control and reinforce the position of the majority shareholder.
• Sell key assets to friendly third parties or execute spin-offs to reduce the attractiveness of the target to a hostile acquirer.
• Acquire new assets to increase the valuation of the company, thereby raising the financial threshold for a hostile takeover.
• Embed change-of-control provisions in critical contracts to trigger adverse consequences – such as termination rights or accelerated payments – in the event of an unsolicited acquisition.

Luxembourg law does not provide for formal domination or profit-sharing agreements like those seen in jurisdictions such as Germany. Instead, governance influence is typically achieved through a shareholding stake (at least 10%) which can grant meaningful minority protections or enhanced rights to the bidder, such as the right to convene a general meeting of shareholders and add items on the agenda of the meeting, the right to ask questions on the management of the company, and the right to request the adjournment of a general meeting of shareholders.

If the bidder reaches 95% ownership, they may initiate a squeeze-out procedure, compelling minority shareholders to sell at a price determined in accordance with applicable legal provisions.

In friendly public takeovers, it is common practice to secure irrevocable commitments from principal shareholders. These agreements are typically negotiated during the pre-offer phase of a voluntary bid and serve to reinforce deal certainty. While a breach of such commitments may give rise to liability, remedies are generally limited to damages rather than specific performance.

Additionally, under the Takeover Law, the announcement of a competing bid automatically releases shareholders who have already accepted the initial offer from their prior acceptance. However, this statutory release does not affect any contractual arrangements that may have been entered into separately.

Upon deciding to launch an offer, the bidder must notify the CSSF and immediately disclose the bid to the public. Within ten business days the bidder must file an offer document with the CSSF. Upon receipt of a complete offer document, the CSSF has 30 business days to approve and publish the offer document. Once the offer document has been approved, the bidder may officially launch its tender offer.

In case of a mandatory bid, the consideration offered must be a fair price. The CSSF, as part of its supervisory powers, is entrusted with assessing the fairness of the price. The Takeover Law sets forth a series of criteria and rules applicable to such assessment.

The CSSF does not set the timeline of the offer; the timetable is determined exclusively by the provisions of the Luxembourg Law.

According to the Takeover Law (Article 13 (c)), where a competing bid is made, the timeframe for acceptance of the initial bid is automatically extended and ends simultaneously with the competing bid upon occurrence of the later date of acceptance of the competing offers.

The offer document may include conditions precedent, such as the requirement to obtain regulatory or antitrust approvals by a specified deadline. If these approvals are not granted within the prescribed timeframe, the offer acceptance period may be extended, in accordance with the Takeover Law. In such a case, the initial ten-week acceptance period may be extended, provided that the offeror gives at least two weeks’ prior notice of its intention to close the offer.

It is common for the parties to obtain regulatory approvals after the announcement but before the launch of the offer, as the CSSF may approve the offer within 30 days following its notification and subsequent disclosure to the public.

In Luxembourg, privately held companies are most commonly acquired through a share purchase, where the buyer acquires all shares in the target company, thereby taking on its assets, liabilities and operational risks. An alternative is an asset deal, in which only specific assets and selected liabilities are transferred, which allows the buyer to “cherry pick” individual assets and liabilities of the target company.

For share deals, due diligence is important, covering legal, tax, environmental (including permits and zoning) and commercial aspects. Key considerations include tax exposures, ongoing litigation, customer and supplier contracts, insurance coverage, and compliance with technical and regulatory standards.

A widely used tool in Luxembourg M&A transactions is warranty and indemnity (W&I) insurance. This insurance coverage provides protection from loss due to breaches of warranties and the tax indemnity as included in the acquisition agreement. Buyers have additional comfort, while sellers can limit their post-closing liability and release proceeds earlier.

Setting up a Luxembourg holding company (société de participations financières – SOPARFI) is generally straightforward and not subject to sector-specific rules if it only holds foreign participations.

If the holding company intends to operate in Luxembourg in regulated sectors (energy, utilities or infrastructure), additional licences are required, eg, from the Ministry of the Economy, and possibly environmental or construction permits.

The CSSF is the primary regulator for public M&A transactions in Luxembourg. The CSSF oversees compliance with the Takeover Law. Its responsibilities include reviewing and approving the offer document, monitoring disclosure obligations, and supervising the conduct of takeover bids for companies whose shares are admitted to trading on a regulated market in Luxembourg.

Since September 2023, a mandatory foreign direct investment (FDI) filing is required for non-EU/EEA investors acquiring control (≥25%) in entities active in critical sectors (eg, energy, transport, water, health or finance).

The filing is suspensory – the transaction cannot close until cleared by the Ministry of the Economy, with an initial review period of up to two months.

Portfolio investments (ie, passive holdings without control) are excluded from the screening regime.

The FDI screening is the main review process. There are no blanket restrictions based on the investor’s country of origin. However, investments from non-EU/EEA jurisdictions may face heightened scrutiny, particularly if the transaction could affect security or public order, or due to the application of AML/KYC regulations.

Luxembourg enforces EU-aligned export control regulations, particularly for:

• dual-use goods (civilian items with potential military applications);
• defence-related products; and
• goods linked to torture or capital punishment.

These controls are overseen by the Ministry of the Economy. Exporting such items typically requires prior authorisation, and companies must ensure compliance with both EU regulations and international embargoes or sanctions.

Luxembourg currently has no national merger control regime, so there is no mandatory antitrust filing for takeover offers or business combinations. However, transactions meeting the thresholds of the EU Merger Regulation must be notified to the European Commission. The Luxembourg Competition Authority may review deals ex post under general competition rules.

As of late 2024, a draft bill introducing ex ante merger control (Bill No 8296) was still under proposal, and it has not yet entered into force.

In Luxembourg, acquirers should be aware of the staff delegation (similar to a works council), which is mandatory for companies with 15 or more employees.

The delegation must be informed and consulted on various matters, notably significant changes affecting the employees, including mergers.

In companies with 150 or more employees, there are co-decision rights of the staff delegation for specified matters only, eg, selection criteria for collective dismissals

While consultation on an envisaged merger is required, the delegation’s opinion is not binding on the board. The board may proceed with the transaction even if the delegation disagrees. However, failure to consult properly can lead to legal or reputational risks.

Disclosure is in principle internal. In some cases – such as collective redundancies – the Labour Inspectorate must also be notified.

Luxembourg has no currency controls and no central bank approval requirement for M&A transactions. Payments and fund repatriation are unrestricted. Approvals may apply only for acquisitions of regulated entities (eg, banks or insurers), subject to sector-specific laws.

The most significant recent development is Luxembourg’s implementation of the EU Mobility Directive through amendments to the Company Law, effective from April 2025. This reform modernises the framework for cross-border mergers, divisions, and conversions, streamlining corporate reorganisations and facilitating strategic M&A in regulated sectors such as energy and infrastructure.

There have been no landmark court decisions specifically on energy and infrastructure M&A, but this legislative change is expected to have the greatest practical impact on deal structuring.

Luxembourg continues to demonstrate strong political and regulatory commitment to renewable energy and emissions reduction. In July 2024, the government adopted the updated Plan national intégré en matière d’énergie et de climat (PNEC), which sets out the country’s climate and energy objectives for 2030, along with the policies and measures required to achieve them.

The PNEC targets six key sectors:

• residential and tertiary buildings;
• transport;
• energy and manufacturing industries, including construction;
• agriculture and forestry;
• waste and wastewater treatment; and
• land use, land-use change, and forestry.

By 2030, Luxembourg aims to:

• reduce greenhouse gas emissions by 55% compared to 2005 levels;
• achieve a 37% share of renewable energy in final energy consumption;
• improve energy efficiency by 42%; and
• strengthen sector-specific targets for renewables and efficiency.

Complementing these goals, Luxembourg introduced a CO₂ tax in 2021 on fossil fuels used for road transport and heating. Initially set at EUR20/t CO₂, the tax has increased by EUR5 annually, reaching EUR45/t CO₂ in 2026. This aligns with the price level anticipated under the upcoming EU Emissions Trading Scheme for buildings, transport, and certain industrial sectors, scheduled for 2027.

The PNEC also outlines a phase-out strategy for fossil-based heating systems in buildings and includes a roadmap for decarbonising the national vehicle fleet.

Under the Takeover Law, a listed company must make certain information publicly available (eg, share capital structure, major shareholdings, restrictions on voting rights, and material agreements triggered by a change of control). Additional information can be shared with bidders during due diligence, provided this complies with market abuse rules and confidentiality obligations.

Luxembourg imposes no general legal or regulatory restrictions on conducting due diligence on energy and infrastructure companies, including those structured as holding companies (SOPARFIs). Access to information is typically governed by contractual arrangements and shareholder/board co-operation.

In Luxembourg, a public takeover bid must be disclosed immediately after the decision has been taken by the offeror, provided that the offeror shall notify the CSSF of its intention before it is made public. The offer document is then subject to CSSF approval (if CSSF is the competent authority) and published once cleared. Disclosure must be prompt and include key terms of the bid, ensuring transparency and equal treatment of shareholders.

In a share-for-share takeover or business combination, a prospectus is required if the buyer’s shares are offered to the public or admitted to trading on an EU regulated market. The prospectus must be approved by the CSSF (if the CSSF is the competent authority) under the EU Prospectus Regulation.

There is no requirement for the buyer’s shares to be listed on a specific exchange in Luxembourg, but listing on a regulated EU market is generally expected to ensure liquidity and investor protection.

The Takeover Law does not require bidders to produce financial statements.

In Luxembourg public M&A, parties are not required to file full transaction documents. However, the offer document must be submitted to the CSSF for approval under the Takeover Law. Other filings (eg, a prospectus, and merger documentation) may apply depending on the deal structure.

In Luxembourg, directors involved in a business combination – such as a merger, acquisition or takeover – are bound by duties owed to the company itself. These include the duty of care, the duty of loyalty, and the obligation to act in the corporate interest of the company.

These duties are primarily owed to the company itself.

While Luxembourg law does not formally extend board duties to all stakeholders, directors are expected to act responsibly and prudently, in the interest of the company (which may require balancing commercial objectives with legal and reputational risks).

In Luxembourg, it is relatively rare for boards of directors to establish special or ad hoc committees in the context of business combinations. That said, when conflicts of interest arise, the conflicted director must abstain from deliberations and decisions. In some cases, especially in larger or listed companies, boards may choose to delegate certain tasks to a smaller group of independent directors, but this remains the exception rather than the rule.

In private M&A, the board is typically expected to be actively involved in negotiations. It may engage directly with the buyer or seller, structure the transaction, and take defensive or strategic actions to protect the company’s interests. The board’s role is hands-on and often central to shaping the deal.

In contrast, in public M&A, particularly in regulated markets, the board’s role is generally more limited. It is expected to assess the offer and issue a recommendation to shareholders for or against the proposed transaction.

Minority shareholders holding at least 10% of voting rights may initiate legal action against directors for breaches of duty under Article 444-2 of the Company Law. Such actions are rare but possible, especially if shareholders believe the board failed to act diligently or transparently.

In Luxembourg, it is common for boards of directors to engage independent external advisers when considering takeovers or business combinations. These advisers typically include legal counsel, financial advisers and sector-specific consultants, especially in regulated industries like energy and infrastructure. Their role is to help the board fulfil its fiduciary duties by providing expert analysis and support throughout the transaction process.

It is customary (albeit not mandatorily required by law) for financial advisers to provide a fairness opinion as part of their service, especially in public M&A. A fairness opinion is an independent evaluation that assesses whether the price and terms of a proposed transaction are fair from a financial perspective. This opinion assists directors and supervisory boards in making informed decisions and properly discharging their duties.