Energy & Infrastructure M&A 2024 Comparisons

The Energy & Infrastructure M&A market in Denmark has experienced notable changes over the past 12 months.

Market Comparison

The Danish market has remained robust, driven by the country’s strong commitment to renewable energy and infrastructure projects. Denmark continues to be a leader in decarbonisation, with significant investments in offshore wind, biomethane, and carbon capture and storage (CCS) projects. This has kept the M&A activity relatively stable, although there has been a slight slowdown in deal volume due to broader economic uncertainties.

Offshore wind

There has been rising interest in offshore wind projects, and despite higher interest rates and more expensive financing, the sector remains attractive due to Denmark’s strong renewable energy policies.

Biogas

Interest in biogas remains high, but the level of activity has decreased. The sector’s recent consolidation may have reached its saturation point, and the big players in the sector are now moving their focus onto green field development projects as well as add-on projects for their current operations – eg, CCS development projects. Additionally, the declining gas and origin certificates prices have made it challenging for buyers and sellers to align their expectations. The same trend may, however, also force less professional owners and/or smaller operators and management teams to lower their price ambitions, which could lead to buyers and sellers finding common ground and be a further driver of the consolidation trend.

Solar

There has been a general decline in the number of solar project deals but an increase in investments in developers, particularly through capital-raising processes. Regulatory measures and restrictions on grid access have made projects more complex and costly, and the abundance of green electricity in Denmark has also led to lower prices, making new projects less economically viable.

Onshore wind

The overall volume of onshore wind projects in development and construction in Denmark is relatively insignificant, resulting in low M&A activity. However, there is interest in M&A where synergies can be achieved by merging projects, and in small development projects that are now more difficult to finance.

Power-to-X (PtX)

PtX projects have faced challenges, with a few being closed down or dropped. Despite this, there is an expectation of a slight increase in activity levels as the technology matures and becomes more economically viable. The Danish government’s supportive policies and incentives for green energy projects are likely to play a crucial role in driving future M&A activity in this sector.

CCS

CCS projects are not yet mature enough to see a strong M&A market. However, consortia and joint ventures are being established, and efforts are underway to secure access to storage capacity.

Impact of Inflationary Trends

Inflationary pressures have affected the financing landscape, leading to higher costs of capital. This has made some investors more cautious, particularly in large-scale infrastructure projects. However, the Danish government’s supportive policies and incentives for green energy projects have helped mitigate some of these effects.

Changes in the Financing Market

The financing market has seen increased interest rates, which have impacted the cost of borrowing. Despite this, Denmark’s strong financial institutions and the availability of green bonds have provided alternative financing options, ensuring continued investment in the sector.

Geopolitical Factors

The ongoing conflicts in Ukraine and Gaza have had a mixed impact. The war in Ukraine initially led to higher energy prices and increased deal activity, but as prices normalised, the focus shifted to energy security. Geopolitical instability has introduced some hesitancy among international investors, affecting the pace of cross-border M&A activities. The trend of foreign direct investment (FDI) and focus on key players continues.

Global Versus Local Activity

Globally, the energy and infrastructure M&A market has been dynamic, with significant activity driven by the energy transition and sustainability goals. In Denmark, the pace of M&A activity has been somewhat aligned with global trends, though with slightly more caution due to local economic factors and geopolitical uncertainties. Overall, the Danish market has shown resilience, maintaining a steady flow of deals albeit at a slightly more moderate pace compared to the global surge.

In Denmark, new start-up companies are typically incorporated within the jurisdiction.

The incorporation process is such that start-up companies are registered through the Danish Business Authority’s IT system. The process is efficient and can usually be completed the same day.

The initial capital requirement depends on the type of company being incorporated. For a private limited company (anpartsselskab (ApS)), the minimum share capital is DKK40,000; however, a legislative proposal to lower this to DKK20,000 is currently being processed. For a public limited company (aktieselskaber (A/S)), the minimum share capital is DKK400,000. There is no minimum capital requirement for partnerships.

In Denmark, entrepreneurs are typically advised to choose a private limited company (ApS), since these provide limited liability, have a lower capital requirement and generally have less requirements than public limited companies (A/S). The public limited company is typically chosen for larger businesses, or those planning to raise capital through public offerings, as it has more stringent requirements and provides access to capital markets.

The general partnership (interesselskab (I/S)) is suitable for businesses with two or more partners who wish to share management responsibilities and profits; all partners have unlimited liability, whereas limited partnerships (kommanditselskab (K/S)) and (partnerselskaber (P/S)), which have a structure similar to a general partnership, include both general partners (with unlimited liability) and limited partners (with limited liability). The K/S is often used for private equity (PE) funds.

In Denmark, early-stage financing (seed investment) for start-ups comes from a variety of sources (see 2.4 Venture Capital), including:

• local investors such as business angels, local venture capital firms, networks like Danish Business Angels (DanBAN) and funds such as PreSeed Ventures;
• family offices;
• government-sponsored funds such as Innovation Fund Denmark and The Export & Investment Fund of Denmark (EIFO);
• foreign investors; and
• crowdfunding platforms like Flex Funding and Kickstarter – currently, private limited companies (ApS) do not have access to this funding source, but a new legislative proposal currently being processed will allow for this type of funding for private limited companies under certain limitations.

Documentation

The documentation of seed investments typically comprises several key agreements and legal documents, including:

• a term sheet (outlining basic terms and conditions);
• a shareholders’ agreement (detailing the rights and obligations of the shareholders); and
• an investment agreement (formalising the term sheet and detailing the terms of the investment).

In Denmark, venture capital is available from a variety of sources, both domestic and international.

Typical Sources of Venture Capital

Domestic venture capital firms

Denmark has a robust ecosystem of venture capital firms that actively invest in start-ups. Notable firms include SEED Capital, EIFO and Novo Holdings. These firms provide funding across various stages, from seed to growth.

Government-sponsored funds

The Danish government supports start-ups through several initiatives. EIFO is a prominent government-backed fund that provides venture capital to innovative companies. Additionally, Innovation Fund Denmark offers grants and investments to support research and development projects.

Business angels and incubators

Business angel networks, such as DanBAN, and incubators like Accelerace, play a significant role in the early-stage funding landscape.

Foreign venture capital firms

Denmark attracts significant interest from foreign venture capital firms. International investors are actively engaged in the Danish start-up scene, often participating in funding rounds alongside local investors.

Availability of Venture Capital

Home country venture capital

Venture capital is relatively accessible to start-ups in Denmark, thanks to a well-developed financial ecosystem and supportive government policies.

Foreign venture capital

Foreign venture capital firms are also actively providing financing in Denmark. The country’s reputation for innovation and its strategic location within Europe make it an attractive destination for international investors.

Overall, Denmark offers a favourable environment for start-ups seeking venture capital, with a mix of domestic and international funding sources being readily available.

Denmark has well-developed standards for venture capital documentation.

These standards ensure clarity, consistency and protection for all parties involved in venture capital transactions. These documents are typically prepared by legal professionals with expertise in venture capital transactions to ensure compliance with Danish law and best practices.

In Denmark, start-ups often start out as private limited companies (ApS). However, if they wish to be publicly listed, they have to be converted into a public limited company (A/S). Further, public limited companies have more regulatory oversight and may therefore be more suitable as the company grows and the need for outside investments increases.

Some start-ups may consider re-domiciling to jurisdictions with more favourable tax regimes or regulatory environments. This is particularly relevant for companies with significant international operations or those planning to list on foreign stock exchanges.

In Denmark, investors in start-ups are more likely to run a sale process rather than pursue an IPO. The IPO market has been relatively inactive, with few new listings in recent years. Typically, only well-established and larger firms go public.

Current Trends

A sale process is more common due to the limited IPO market and preference for quicker exits. The dual-track process is less common but used occasionally to maximise valuation. The Danish IPO market currently has limited activity, mainly involving large, stable companies. Overall, there is a very clear trend towards sales for liquidity events in start-ups.

Home Country Exchange

Usually, Danish companies opt to list their shares on Nasdaq Copenhagen, which is part of the Nasdaq Nordic Exchanges. This choice is often driven by familiarity with local regulations, the existing investor base and key stakeholders, the ability to leverage relationships with existing and new local investors and the well-established reputation of the exchange within the Nordic region. Depending on the specific business operations, Danish companies are typically better known in their home markets, which can lead to stronger investor interest and support and makes it easier for companies to raise capital in the future.

Finally, listing locally often incurs lower costs related to regulatory compliance, legal fees and administrative expenses compared to listing on a foreign exchange.

Foreign Exchange

Although most Danish companies still prefer to list in their home market, listing on a foreign exchange can provide access to a larger and more diverse pool of capital. This is particularly attractive for companies seeking significant growth capital or aiming to increase their international visibility. Depending on the specific equity story and business case, certain foreign exchanges may offer better sector-specific analyst coverage and investor interest, which can be beneficial for companies in specialised industries.

Dual Listings

It is not common for Danish companies to pursue a dual-listing process in the first place, as such process would be more relevant for companies with significant operations and customer bases in multiple countries.

Listing on a foreign exchange can affect the feasibility of a future sale, particularly in relation to minority squeeze-out rules and other regulatory considerations such as removal from trading.

Minority Squeeze-Out Rules and Removal from Trading (Nasdaq Copenhagen)

In Denmark, if an offeror in a tender offer obtains an ownership of at least 90% of the shares and voting rights in a Danish listed company, the offeror will have the possibility, in accordance with the Danish companies act, to complete a squeeze out of minority shareholders and request Nasdaq Copenhagen remove the company’s shares from trading and listing on the stock exchange, if certain conditions are met.

Minority Squeeze-Out Rules and Removal from Trading (Foreign Exchanges)

If a Danish company is listed on a foreign exchange, the squeeze-out rules and rules on removal from trading are subject to the foreign stock exchange, potentially setting different requirements and thresholds to complete the squeeze out.

In the current Danish market, the sale of a company as a liquidity event is more typically run as an auction.

This trend is driven by the competitive environment, which helps maximise the sale price through multiple bidders. However, bilateral negotiations are also common, especially for strategic acquisitions where confidentiality and speed are critical. There is a growing trend of buyers demanding exclusivity in negotiations to secure deals more efficiently.

In Denmark, the typical transaction structure for the sale of a privately held energy and infrastructure company with multiple venture capital investors can vary depending on the strategic goals, but there are some prevailing trends.

Share Deal Versus Asset Deal

Most transactions are structured as share deals. This approach is generally more tax-efficient and straightforward compared to asset deals, which are less common but used particularly for smaller transactions or carve-outs.

Full Sale Versus Controlling Interest

The current trend leans towards full sales rather than just a controlling interest. Venture capital investors typically prefer a full sale to maximise liquidity and simplify the exit process. However, in cases where the company has strong growth prospects, some investors may opt to retain a stake, especially if the new shareholder brings strategic value.

In Denmark, most transactions for the sale of privately held energy and infrastructure companies are conducted as cash deals, but the choice of structure depends on the strategic goals and specific circumstances of each deal.

Current Trends

Cash transactions are predominantly favoured due to economic uncertainties and the desire for quick, definitive exits and simple transaction structures.

Stock-for-stock transactions are less common but are used in strategic acquisitions where long-term synergies are identified.

A combination of cash and share-for-share transactions is occasionally used to balance immediate liquidity with continued investment in the acquiring company.

Founders and venture capital investors in Denmark are often expected to stand behind representations and warranties and certain liabilities after closing, typically through indemnification mechanisms.

Escrow/Holdback

An escrow or holdback to ensure funds are available to cover any breaches of representations and warranties is customary.

Representations and Warranties Insurance (RWI)

RWI has become increasingly common in Denmark, particularly in private equity transactions and among larger strategic acquirers, partially driven by the professionalisation, consolidation in the market and relatively low cost of RWI policies.

Overall, the strong preference in Denmark is towards using indemnification, escrow/holdback mechanisms and RWI.

Spin-offs are relatively common in the energy and infrastructure sectors in Denmark. The key drivers for considering a spin-off in these industries are as follows:

• companies may spin off non-core assets or divisions to concentrate on their primary business operations and improve overall efficiency;
• spin-offs can help companies comply with regulatory requirements;
• by creating a separate entity, companies can unlock value for shareholders, as the new entity may be better positioned to attract investment and grow independently;
• spin-offs can facilitate strategic partnerships or joint ventures; and
• smaller, more focused entities can be more agile and innovative, which is crucial in the rapidly evolving energy sector.

These drivers are particularly relevant in the context of renewable energy, where regulatory changes and the need for a specialised focus are prominent.

Spin-offs in Denmark can be structured as tax-free transactions at both the corporate and shareholder levels. The Danish tax rules on spin-offs are largely based on the EU Tax Merger Directive. However, there are specific requirements that must be met to achieve the tax-free status of a spin-off, which also depends on whether the spin-off is executed with or without permission from the Danish tax authorities.

Regarding requirements with permission (non-exhausting):

• the spin-off must have a valid commercial purpose and cannot be made solely due to tax considerations;
• the shareholders must receive shares in the spun-off company in a ratio corresponding to their ownership in the company before the spin-off; and
• if the spin-off does not result in the dissolution of the contributing company, then the spun-off entity must be able to function as a standalone entity with an active trade or business – in this regard, the holding of shares is not considered an active trade or business.

Further, it is often the case that permission from the Danish tax authorities comes with an obligation to report any sell-offs or restructurings done within the subsequent three-year period.

The requirements for doing a spin-off with permission also apply to spin-offs without permission. The following requirements also apply (non-exhausting):

• if the shareholder is a company that owns at least 10% of the share capital in the companies taking part in the spin-off, these shares cannot be sold during a three-year holding period – if the requirements are not observed, the spin-off will become taxable with retroactive effect; and
• the spun-off company must have the same proportion of assets and liabilities as the original company.

In Denmark, a spin-off immediately followed by a business combination is possible and indeed used. The combination process may be included within the spin-off process.

Creating a spin-off immediately followed by a business combination would require the spin-off and business combination to be adopted by the involved companies at a general meeting. Depending on the companies involved, they must first adopt the plan; then, the decision must be finalised at a second general meeting of the involved companies.

A tax-exempt spin-off in Denmark can be executed with or without permission from the Danish tax authorities (see 5.2 Tax Consequences).

If the spin-off is done with permission, an application must be submitted to the Danish tax authorities. It is the authors’ experience that an application is handled within three to four months.

If the spin-off is done without permission, the receiving company must report the tax-exempt merger to the Danish tax authorities, together with the company’s tax return for the income year in which the spin-off took place.

It is possible to apply for a permission retroactively.

In Denmark, it is not uncommon for a buyer to acquire a stake in a public company prior to making a formal tender offer.

Reporting Thresholds and Timing

Shareholders must notify the company and the Danish Financial Supervisory Authority (FSA) when their ownerships or voting rights reach, exceed or fall below certain percentages. Notice should be given immediately and must be provided no later than four days after the shareholder subject to the notification obligation becomes – or should have become – aware that the transaction has been completed.

Stating the Purpose and Plans

Pursuant to the Danish rules on major shareholders, a buyer is only obliged to notify regarding the size of the stake acquired. For strategic reasons, buyers may – in some situations – choose to disclose the purpose of acquisition of a significant stake and the plans or intentions with respect to the company.

However, if a mandatory tender offer is triggered, as set out in 6.2 Mandatory Offer, the disclosure requirements in connection with tender offers must be followed.

“Put Up or Shut Up” Requirement

Denmark does not have a formal put up or shut up rule. However, the Danish FSA can require a potential acquirer to clarify their intentions if there is significant market speculation. Moreover, if an acquirer has decided to make a voluntary tender offer, or if the obligation to make a mandatory tender offer has been triggered, the acquirer must publish an announcement regarding such transaction, including its intention to make such tender offer.

In Denmark, a mandatory tender offer is triggered if the buyer, directly or indirectly – or by acting in concert with any persons – obtains control over the target company, meaning an acquisition of shares resulting in:

• at least one-third of the voting rights, unless it can be clearly demonstrated that such ownership does not constitute control; or
• a situation where such buyer is in control of at least one-third of the voting rights by virtue of an agreement, or has the authority to appoint or dismiss the majority of the members of the company’s central management body.

Public Tender Offer

The most common way to acquire a public company is to make a voluntary tender offer to all shareholders, often at a premium with respect to the market price. The offeror will typically approach the board of directors of the target company, and in certain cases its major shareholders, prior to making any announcements of a tender offer to secure a certain level of deal certainty. The objective of the offeror is often to reach a defined acceptance level to gain control over the target company – eg, 90%, with the purpose of squeezing out minority shareholders and potentially removing the company’s shares from trading after completion of the tender offer. As such, a transaction agreement with the company and irrevocable undertakings with major shareholders may be agreed upon prior to making the tender offer.

Merger

It is possible to acquire a public company through a merger, but such transactions are less common compared to public tender offers. Mergers often require more complex negotiations and approvals, including regulatory approvals and shareholder approvals. Moreover, while a tender offer can be used as a strategic move to gain control without immediate full integration, a merger will often lead to full integration.

In Denmark, public company acquisitions in the technology industry can be structured as either cash or share transactions. Both structures are used, but cash transactions are sometimes preferred due to their simplicity and the immediate liquidity they provide to shareholders.

Use of Cash in Merger Transactions

Cash is permissible and commonly used in merger transactions, not just in takeover offers or tender offers. In Denmark, consideration in a merger can be offered in cash, shares or a combination of both. This flexibility allows parties to structure the deal in a way that best suits their financial strategies and shareholder preferences.

Minimum Price Requirement

For mandatory tender offers, a minimum price requirement applies whereby the offer price must be at least equal to the highest price paid by the offeror for any shares within the six months preceding the offer. In a voluntary tender offer, there is no minimum price requirement. However, the offeror must comply with the rules on equitable treatment of all shareholders.

In terms of a merger, no specific minimum price requirements apply but the valuation of shares must be fair and reasonable.

Bridging Value Gaps With Contingent Value Rights

Bridging value gaps with contingent value rights are not common in transactions involving the acquisition of a Danish listed company.

In Denmark, a voluntary tender offer can include conditions provided that the fulfilment thereof is not within the control of the offeror.

The Danish FSA often approves the following (non-exhaustive) common conditions:

• minimum acceptance level – this is often set at 90%, ensuring that the offeror gains sufficient control over the target company to enable a squeeze-out of the minority shareholders and potential removal from trading post-completion of the tender offer;
• regulatory approvals – necessary clearances from competition authorities and other relevant regulatory bodies; and
• no material adverse change – ensuring that there are no significant negative changes in the target company’s business or financial condition until completion of the tender offer.

A mandatory tender offer must not contain any conditions.

It is customary in Denmark to enter into a transaction agreement in connection with a takeover offer or business combination. This agreement, often referred to as a business combination agreement (BCA), outlines the terms and conditions of the offer and the obligations of both parties.

Obligations of the Target Company

Beyond the board’s agreement to recommend the offer, the target company can undertake certain other obligations, including:

• agreeing not to solicit or engage in discussions with other potential buyers (no-shop clause);
• providing the acquirer with access to necessary information for a certain level of due diligence; and
• assisting in obtaining the necessary regulatory approvals for the transaction.

Representations and Warranties

As takeovers are often completed as “friendly takeovers” in Denmark, it is not unusual for a public company to provide certain representations and warranties, for example in relation to the company’s authority to enter into the transaction agreement and the accuracy of financial statements in connection with the transaction.

In Denmark, the minimum acceptance condition for tender offers is typically set at 90% of the voting rights.

This threshold is significant for the following reasons:

• achieving 90% allows the offeror to initiate a squeeze-out procedure, compelling the remaining minority shareholders to sell their shares whereby the offeror will gain full control of the company; and
• achieving 90% allows the offeror to request the removal of the public company from trading on Nasdaq Copenhagen.

In other cases, the minimum acceptance condition is set at ⅔%, which gives the offeror a certain level of control. Please refer to 6.11 Additional Governance Rights.

The squeeze-out mechanism allows a majority shareholder to compel minority shareholders to sell their shares following a successful tender offer, provided that the offeror, after completion of the offer, holds at least 90% of the shares and voting rights in the target company.

Procedure

The offeror must notify the remaining minority shareholders of its intention to exercise the squeeze-out right.

The redemption price offered to the minority shareholders must be fair and typically matches the price offered in the initial tender offer. If the minority shareholders disagree on the offered price, they can ask an independent expert to determine the price under certain conditions. However, if the redemption follows a voluntary offer, the price is considered fair in all circumstances if the offeror, upon acceptance of the offer, has acquired at least 90% of the share capital. If the redemption follows a mandatory offer, the consideration in the offer is considered fair in all circumstances.

Minority shareholders must determine, within a four-week acceptance period, whether they accept compulsory redemption, including the redemption price. If they do not respond within this period, their shares will be noted in the shareholding of the offeror in the company’s shareholder register.

The consideration for the redemption may be in the same form as specified in the offeror’s tender offer, or paid in cash. Minority shareholders can always demand cash payment.

In Denmark, the offeror must ensure that it can fully meet any requirement regarding the consideration offered to the shareholders in the form of cash, and that any other form of consideration can be provided. Usually, the offeror enters into a conditional financing agreement prior to the offer. The Danish FSA accepts that the offeror’s financing agreements may contain standard conditions.

Financing Banks or Buyer Making the Offer

Usually, the buyer itself makes the offer, and it is common for the buyer to secure a certain level of financing commitment from banks, or to secure financing in another way, before making the offer to ensure that the necessary funds are available.

Conditional Offers

A takeover offer or business combination in Denmark cannot be conditional on the bidder obtaining financing. This ensures that the offer is credible, and that the bidder has the financial capability to complete the transaction.

The most typical deal protection measure relates to the board of directors publicly recommending the offer to its shareholders.

In the Danish Recommendations on Corporate Governance, it is recommended that the board of directors abstains from countering any takeover bids by taking actions that seek to prevent the shareholders from deciding on the takeover bid, without the approval of the general meeting. The target must adhere to these recommendations on a comply-or-explain basis.

Moreover, private transaction documentation, typically in the form of a transaction agreement between the offeror and the target company and irrevocable undertakings between the offeror and major shareholder(s), increases deal success. Non-solicitation provisions, matching rights and exclusivity clauses in transaction agreements are not uncommon, whereas force-the-vote provisions and break-up fees are less common.

If an offeror cannot obtain 100% ownership of a target company in Denmark, it can still obtain significant governance rights, depending on the level of ownership achieved in connection with offer.

The key governance rights based on ownership levels include the following.

• Simple majority (at least 50%): The ability to pass ordinary resolutions at general meetings, including – among other things – appointing board members.
• Qualified majority (⅔%): The ability to pass special resolutions required for significant corporate actions, such as amending the articles of association and approving mergers, capital increases and capital decreases. This level of control allows the bidder to make more substantial changes to the company’s operations and strategy.
• Supermajority (90%): If an offeror reaches 90% ownership, it can initiate a squeeze-out process to acquire the remaining shares from minority shareholders. Moreover, such ownership level allows for the adoption of any resolutions reducing existing shareholders’ right to receive dividends in favour of other shareholders, restricting the marketability of shares and the ability to make use of votes attached to shares.

Domination and Profit-Sharing Agreements

While Denmark does not have specific provisions for domination and profit-sharing agreements, the offeror can still achieve significant control through the ownership levels mentioned in the foregoing. Additionally, the offeror can enter into shareholder agreements with other shareholders to agree on certain governance arrangements.

It is common in Denmark to obtain irrevocable commitments from principal shareholders of the target company to tender or support the transaction. These commitments help provide certainty to the bidder that a significant portion of the shares will be tendered, increasing the likelihood of the offer’s success. Such commitments are legally binding and are typically in the form of either a hard commitment or a soft commitment allowing shareholders to withdraw their commitment if a superior offer is made.

In Denmark, a takeover offer document must be approved by the Danish FSA before it is published. The Danish FSA oversees the compliance of the offer document with the Danish Capital Markets Act and the Takeover Order. Since the offer document must be published four weeks after the publication of the decision to make an offer, only four weeks are available for the approval process with the Danish FSA.

The Danish FSA does not explicitly approve the offer price but ensures that the offer complies with regulatory requirements. The offer price must be at least equal to the highest price paid by the offeror for any shares within the six months preceding the offer. The timeline for approval of the offer document must be approved by the Danish FSA. The Danish FSA also ensures that the timeline, as disclosed in the takeover offer document, is in compliance with regulatory requirements.

The offer period must be at least four weeks, and no more than ten weeks, from the date of publication of the offer document. The offer period may be extended on one or more occasions subject to:

• the extension being at least two weeks long;
• the extension being made through an explanatory addendum to the offer document, which must be approved by the Danish FSA and published; and

• the extension not extending the offer period beyond a total of ten weeks.

If a competing offer is submitted during the offer period, the offer period of the original takeover offer will be extended until the end of the offer period of the competing offer to allow shareholders to consider the competing offer.

In Denmark, the initial offer period must be at least four weeks and no more than ten weeks. If regulatory or antitrust approvals have not been obtained before the expiry of the offer period, the offer period may be extended up to a maximum of nine months from the time the offer document was published. This option is only available for voluntary tender offers as mandatory offers must be unconditional.

It is typical for parties to seek necessary regulatory approvals after announcing a voluntary tender offer before launching it. This approach helps ensure that the offer complies with all necessary regulations and reduces the risk of delays once the offer is launched.

Setting up a company in the energy and infrastructure sector is no different from setting up any other company in Denmark (see 2.1 Establishing a New Company). However, operating an energy facility requires specific approvals and is subject to special legislation, depending on the type of energy project that is being developed and operated.

The Danish Energy Agency (DEA) is the main regulatory body involved in energy projects. The DEA oversees regulation related to energy production, distribution and consumption. The DEA is also the agency responsible for tenders and is in charge of the different subsidy schemes in the energy market.

The Danish Environmental Protection Agency (DEPA) is responsible for the environmental regulations. However, some of DEPA’s responsibilities are in practice handled by the relevant municipality.

The Danish Utility Regulator regulates and oversees the electricity, gas, and district heating sectors, ensuring fair competition and consumer protection.

The time required to obtain the necessary permits and approvals can vary depending on the complexity of the project and the specific sector. Generally, the process involves:

• submitting detailed project plans and environmental impact assessments to the relevant authorities;
• a review period, in which the authorities review the application – this can take several months and may extend to a year or more; and
• a public consultation phase for some projects, where stakeholders can provide input and raise concerns.

Once all reviews and consultations are complete, the final permits and approvals are issued.

The primary securities market regulator for M&A transactions in Denmark is the Danish FSA. The Danish FSA oversees compliance with the Danish Capital Markets Act and the Takeover Order, ensuring that all public takeover bids and related activities adhere to regulatory standards.

In Denmark, there are restrictions on foreign investments in certain sectors. The Danish Investment Screening Act (DISA) requires foreign investors to obtain prior authorisation for investments in certain sensitive sectors.

Mandatory Filing

FDI filings are mandatory for investments in sectors deemed critical to national security or public order. This includes sectors such as energy and critical infrastructure. The threshold for mandatory filing is acquiring at least 10% of the shareholdings or voting rights, or equivalent control by other means, in a Danish company.

The Suspensory Nature of FDI Filing

The filing is suspensory, meaning that the investment cannot be completed until the necessary approvals are obtained from the Danish Business Authority (DBA). The DBA has a two-phase review process:

• Phase I: Initial review, which must be completed within 45 calendar days; and
• Phase II: In-depth review, which if required must be completed within 125 calendar days.

Denmark has a comprehensive national security review process for acquisitions, particularly those involving FDI (see 7.3 Restrictions on Foreign Investments).

Specific Restrictions/Considerations for Investors

The obligation to obtain prior authorisation from the DBA applies to all foreign investors. However, there are specific considerations for investors based on their country of origin. This means that investments from certain countries may be scrutinised more closely, especially if they are from regions with geopolitical tensions or where there are concerns about state influence. The DISA allows the DBA to assess whether a foreign investment potentially constitutes a threat to national security or public order.

Export Control Regulations

Denmark has export control regulations for dual-use goods and technology, which can be used for both civilian and military purposes, and for arms and military technology. The DBA administers controls of dual-use goods, ensuring compliance with international agreements and EU regulations as well as a national regime.

In Denmark, antitrust filing requirements for takeover offers and business combinations are governed by the Danish Competition Act and related executive orders.

Notification Thresholds

A concentration must be notified to the Danish Competition and Consumer Authority (DCCA) if, in the latest audited financial year:

• the combined aggregate turnover in Denmark of all the undertakings concerned is at least DKK900 million, and at least two of the undertakings each have an aggregate turnover in Denmark of at least DKK100 million; or
• the combined aggregate turnover in Denmark of at least one of the undertakings concerned is at least DKK3.8 billion, and the combined aggregate worldwide turnover of at least one of the other undertakings concerned is at least DKK3.8 billion.

Furthermore, even if the aforementioned thresholds are not met, the DCCA may request the filing of a merger notification (call-in) if it suspects there is a risk that the merger will significantly impede effective competition – eg, by creating a dominant position, and the combined aggregate turnover in Denmark of the undertakings concerned exceeds DKK50 million.

Filing Process

If the aforementioned thresholds are met, a formal notification about the transaction must be submitted to the DCCA. Prior to submitting the notification, the parties are encouraged to engage in pre-notification discussions with the DCCA to clarify any issues and streamline the review process.

Following receipt of a complete merger notification, the DCCA has 25–35 working days in the Phase I review period (see 7.3 Restrictions on Foreign Investments) to conduct an initial review and decide whether to approve the transaction or proceed to a more in-depth investigation. If further investigation is needed, the DCCA has an additional 90–130 working days in Phase II to complete the review.

Following the DCCA’s review, the merger may be approved, approved with conditions/commitments or prohibited.

Gun-Jumping

Where a merger filing is required, the prohibition on pre-implementation (“gun-jumping”) must be observed. This means that the parties must not implement the transaction, in whole or in part, before receiving merger approval.

When acquiring a company in Denmark, there are several key labour law regulations to be aware of:

• the Danish Transfer of Undertakings Act, which provides rights to employees in case of a merger, de-merger or other type of transfer of a business or part thereof (asset transfer);
• the Danish Salaried Employees Act, which provides minimum rights for salaried employees, including notice periods, termination pay, and compensation for unfair dismissal;
• collective agreements, which cover a significant portion of the Danish workforce – these regulate the terms of employment, pay, working hours and notice periods;
• the Danish Holiday Act, which governs employees’ entitlement to paid holidays;
• the Danish Anti-Discrimination Act, which prohibits discrimination based on gender, race and other protected characteristics; and
• the Danish Act on Equal Treatment of Men and Women, which ensures equal treatment and opportunities in the workplace.

Works Council and Labour Consultation

In Denmark, companies with more than 35 employees are required to establish an employee forum, often referred to as a works council. The works council must be consulted on matters of significant importance to employees, such as major business decisions, restructuring, and redundancies.

The opinions and advice of the works council are not legally binding on the management of the company, but the management is required to consider these opinions and engage in meaningful consultation with the works council.

Denmark does not have specific currency control regulations or require central bank approval for M&A transactions.

One of the most significant legal developments in Denmark related to energy and infrastructure M&A in the past three years is the implementation of the Danish Climate Act in 2020.

The Act sets legally binding targets for reducing greenhouse gas emissions by 70% by 2030, compared to 1990 levels for Denmark, and mandates that the Danish government publish an annual report on the status and outlook of climate efforts, ensuring transparency and accountability.

The Act includes specific measures for various sectors, including energy and infrastructure, to ensure they contribute to the overall climate goals.

Impact on M&A

M&A transactions in the energy and infrastructure sectors have not been directly impacted by the Danish Climate Act, but targets set in the Act and incentives created to facilitate the meeting of the targets are affecting the interests and possibilities of investors. Resulting from the Act is, among other things, an increased focus on and activity in CCS, which is partially driven by multiple new CCS tenders and the availability of state aid.

In Denmark, the listed target company is not obliged to give the offeror access to due diligence. However, as most takeover offer processes in Denmark are completed as friendly takeovers, the target company usually allows the offeror to execute a (limited) due.

The target company can provide a range of due diligence information to offerors, including financial statements, business plans, legal documents and operational data. The board of directors must balance the need to provide sufficient information for offerors to make informed offers with the need to protect sensitive company information.

Public companies are not legally required to provide the same information to all offerors. However, to ensure fairness and avoid potential legal challenges, it is common practice to offer similar levels of information to all serious offerors.

If the offeror gains access to inside information, such inside information must be disclosed to the public prior to the publication of the offer document.

Denmark is subject to the General Data Protection Regulation (GDPR), which is the primary regulation governing data privacy across the EU. The GDPR is supplemented by the Danish Data Protection Act (DDPA).

Due diligence must comply with GDPR requirements when handling personal data. This includes ensuring that any personal data processed is necessary for the due diligence process (need-to-know basis), that only the minimum amount of personal data necessary for the due diligence is processed and that all parties involved in the due diligence must adhere to strict confidentiality obligations.

In addition, sensitive or confidential personal data may, as a starting point, not be processed as part of the due diligence process, and personal data should to the extent possible be anonymised or pseudonymised before being shared as part of the due diligence process.

In Denmark, a decision to make a public tender offer must be made public immediately to ensure transparency and market integrity. In case of mandatory offers, the obligation to make a public offer must be announced once the obligation arises.

In addition, the actual takeover offer document must be made public within four weeks from publication of the decision.

Publication must take place by means of an announcement that reaches the public via electronic media in the countries where the target company’s shares are admitted to trading on a regulated market.

The offeror or the target company must send the notification to the Danish FSA, and to the regulated market where the shares are admitted to trading, at the latest at the same time as the publication. The Danish FSA will then post the notice on its website.

Prospectus Requirements

Depending on the size of the offer, a prospectus is generally required for the issuance of shares in a stock-for-stock takeover offer or business combination. The prospectus must comply with the EU Prospectus Regulation, which mandates detailed disclosures and must be approved by the Danish FSA before the shares can be issued.

A prospectus is required where the offer of new shares does not fall within the exemptions related to the obligation to publish a prospectus, as set out in the EU Prospectus Regulation.

Such exemptions cover, amongst others, offers under a certain monetary value, to a smaller number of persons or to qualified investors.

Listing Requirements for Buyer’s Shares

The offeror’s shares do not necessarily need to be listed on a specified exchange in the home market, or on other identified markets, for the transaction to proceed. However, if the shares are to be offered to the public or admitted to trading on a regulated market, they must comply with the listing requirements of the relevant stock exchange.

Prospectus

If an offeror is required to publish a prospectus in connection with a stock-for-stock transaction, the EU Prospectus Regulation stipulates that, in the case the transaction constitutes a significant gross change, the prospectus must include a description of how the transaction might have affected the assets, liabilities and earnings of the offeror had the transaction been undertaken at the commencement of the period being reported on, or on the date reported.

This requirement will normally be satisfied by the inclusion of pro forma financial information, accompanied by a report prepared by independent accountants or auditors.

Moreover, the pro forma financial information shall consist of:

• an introduction setting out, among other things, the details of the transaction;
• a profit and loss account, a balance sheet or both;
• accompanying notes; and
• where applicable, the financial information and interim financial information of the acquired (or to-be-acquired) businesses or entities used in the preparation of the pro forma financial information.

Accounting Policies

The pro forma financial information must be prepared in a manner consistent with the accounting policies adopted by the offeror in its last or next financial statements.

Tender Offers (Offer Document)

There are no formal requirements to produce financial statements (pro forma or otherwise) in an offer document related to a tender offer.

Mergers (Merger Plan)

There are no formal requirements to produce financial statements (pro forma or otherwise) in connection with a merger.

Depending on the transaction structure, certain transaction documents must be filed with the relevant authorities.

Key Filing Requirements (Takeovers)

The offer document must be filed with and approved by the Danish FSA. There is no requirement to file any transaction agreement between the target company and the offeror. Furthermore, there is no requirement to file copies of irrevocable undertakings entered into with major shareholders of the target company. If a prospectus is prepared in connection with a stock-for-stock takeover offer, such prospectus must be filed with and approved by the Danish FSA.

Key Filing Requirements (Mergers)

For M&A involving Danish companies, transaction documents such as the merger plan, the merger statement and the decision/shareholder approval must be filed with the Danish Business Authority. There is no requirement to file a BCA between the merging companies.

Moreover, if a transaction meets certain thresholds, it may need to be notified to the DCCA for approval.

No specific or additional duties arise for the board of directors in connection with a business combination.

Under Danish law, the members of the board of directors have a general duty to look after the interests of the company. This is identical to the interests of the company’s shareholders up until the time when it becomes clear that the company is at the risk of going bankrupt. From this time onwards, the interest of the company becomes identical with the interest of the company’s creditors.

It is possible for boards of directors to establish special or ad hoc committees – eg, to handle specific aspects of a business combination or to avoid conflicts of interest.

In large business combinations, it is common for the board of directors to make use of committees, while they are uncommon in smaller business combinations.

In Denmark, it is common for the board of directors to be included in the whole transaction process, including negotiations, setting up a virtual data room and providing other necessary assistance. Most transactions are completed with the assistance of the board of directors.

It is seldom the case that the board of directors’ decision to recommend a transaction is challenged by the shareholders.

In Denmark, most transactions are concluded with outside advice from lawyers and other advisors (if relevant) – eg, for assistance with a fairness opinion, which is customarily completed by a financial advisor.