Technology M&A 2024 Comparisons

Austria has been affected by geopolitical tensions and the resulting market volatility. This is accompanied by high interest rates, inflation and high energy prices. While the Austrian M&A market remained stable in 2022, the market challenges appear to be having an impact on deal activity in Austria in 2023.

In line with the EMEA M&A market as a whole, the number of M&A transactions with Austrian participation declined compared to the previous year. The number of acquisitions with Austrian participation fell by 14 transactions in the first half of the year, from 146 to 132, according to the EY M&A Index. A similar picture emerges from the Merger Market Database. According to this database, the number of transactions fell by 34. The higher number in the Merger Market Database has to be reduced somewhat due to the time-lag in incorporating data into its database.

The technology, media and telecommunications (TMT) and industrials and chemicals (I&C) sectors were the busiest for deal making in Austria in the first half of 2023, continuing the trend of recent years and confirming the importance of both industries to the regional economy. According to Merger Market Database and the EY M&A Index, both sectors together account for approximately half of the transactions in the first half of 2023.

The largest technology deal was Intel Corporation agreeing to sell an approximately 20% stake in IMS Nanofabrication GmbH to Bain Capital in a transaction that values IMS at approximately USD4,3 billion. Based in Austria, IMS is a high-tech company specialising in innovations in electron beam lithography. However, there are good reasons to believe that the worst is behind us. Recent inflation data has been better than expected and most people believe that the current interest rate cycle is coming to an end. As a result, there are good reasons that M&A activity in Austria will soon pick up again.

In addition to the development of transaction volume in Austria, a trend towards increasing internationalisation of the domestic economy can be observed. This is reflected in the fact that the number of inbound transactions (ie, transactions in which an Austrian acquirer acquires a foreign target) and the number of outbound transactions (ie, transactions in which a foreign acquirer acquires an Austrian target) are each higher than the number of domestic transactions involving an Austrian acquirer and an Austrian target.

So far this year foreign investors have acquired more Austrian companies than Austrian investors have acquired foreign targets. As in previous years, most foreign investors came from Germany.

The majority of Austrian deals are strategic transactions. This may be one reason the unfavourable macroeconomic factors are only now having an impact on the M&A market, as strategic investors stick to their strategies and acquisition targets longer than private equity investors might. Private venture capital still plays a minor role in Austria compared to the global M&A market. However, we see clear signs that this will change in the future.

Foreign investors have recently become increasingly active in Austria. They are particularly active in the IT sector. This trend continued to be seen in the first half of 2023. It should not go unmentioned, however, that more and more Austrian companies are also going on a “shopping tour” abroad. Outbound transactions, therefore, also play an important role. This reflects the approach of many Austrian companies to expand their portfolio and grow. However, outbound transactions declined in H1 2023.

Moreover, the COVID-19 pandemic has weighed heavily on many companies in recent years. In addition, many governmental funding measures have expired. This could still be reflected in distressed M&A movements.

Furthermore, the Austrian M&A market has become more buyer-friendly. This is also due to the COVID-19 pandemic, as many companies are still feeling the economic consequences badly. Consequently, these companies are looking for new investors or buyers.

Increasingly, price negotiations are getting tougher. At the moment, the parties’ ideas are drifting very strongly apart. While sellers enter negotiations with high price expectations (they are not (yet) willing to deviate from the previous peak prices), buyers are often already pricing in current economic problems, supply chain problems and higher financing costs. As a result, the parties are increasingly unable to agree on the purchase price. This has caused quite a few transactions to fail.

Lastly, ESG already plays an important role in target selection, deal preparation, due diligence, contract drafting, and will become even more of an important deal driver.

In order to avoid adverse tax and legal implications, it is recommended that Austrian entrepreneurs establish their company in Austria. This is typically the case in common practice.

The standard company form is the limited liability company (Gesellschaft mit beschränkter Haftung), which can be established within around two weeks. According to the Austrian law, the registration in the commercial register should be effected within five working days after filing.

A draft law is currently on the table according to which a new legal form with the flexible corporation (Flexible Kapitalgesellschaft) or flexible company would be introduced. This flexible company is aimed specifically at start-ups and its legal framework allows more flexibility compared to the traditional limited liability company.

The minimum share capital of the limited liability company is EUR35,000, with EUR17,500 being paid in cash. In this context, a draft law has been published, according to which the share capital is to be reduced to EUR10,000 and the paid-in capital to EUR5,000.

For legal and tax reasons, entrepreneurs are typically advised to establish their company as a limited liability company.

Typically, three groups provide seed investments: (i) friends and family; (ii) government grants and government-sponsored funds; and (iii) angel investors and domestic seed-investment-focused venture capital funds.

Typical sources of venture capital can be categorised into (corporate) venture capital funds and government-sponsored funds. In addition, Austria has a considerable number of active investors that provide venture capital financing. Further investment rounds (ie, after Series A) are often conducted together with international investors.

There are no well-developed standards for venture capital documentation comparable to, for example, the British Private Equity & Venture Capital Association (BVCA) standard or the SECA’s VC model documentation in Switzerland. Typically, venture capital transactions are documented in an investment agreement, shareholders’ agreement and articles of association as main transaction documents.

Start-up development is always very case-specific and there is no typical scenario. When companies plan an IPO or focus more on management in their corporate governance, they then change their corporate form to a joint-stock company. In some cases, a holding structure with foreign subsidiaries is established.

In a few cases, a dual-track process is approached; however, this is not standard and is very rare in Austria (and therefore is not a trend). Most dual-track processes have led to private M&A sales/trade sales in the past. IPOs involving Austrian companies are extremely rare. Private sales are primarily chosen for transactions involving companies from the industrial or services sector. On the other hand, an IPO may be an attractive option for mature technology and growth companies. Especially for growth companies, being public may offer several benefits. Growth companies tend to access public capital markets not only once during an IPO but also in subsequent secondary offerings as a publicly listed company (eg, by means of rights issues).

The Vienna Stock Exchange, operated by Wiener Börse AG, is the main market for Austrian issuers and a few other issuers from abroad. As a home market, it is the primary listing venue for Austrian companies. In a global context and with a few exceptions, Austrian issuers listed in Vienna are, according to market capitalisation, small to mid-size issuers. Main listings take place on the Official Market (Amtlicher Handel) of the Vienna Stock Exchange and in the prime market segment. The prime market segment is the segment with the highest level of transparency and is considered the premium segment of the regulated market in Vienna.

In the past, there was a trend for primary and secondary listing. For example, Austrian issuers tend to choose the Frankfurt Stock Exchange as the second listing venue for their shares to enhance the liquidity of the stock. Another example is the trend among biotech/life science companies to conduct listings in the USA or in Amsterdam in the course of implementing a new holding company.

Irrespective of any listing either in Austria or abroad, the Austrian squeeze-out regime applies to all Austrian joint stock corporations and limited liability companies.

Divergences between the country of domicile and the country of listing may arise in a partial application of the takeover law regime. Whereas any takeover-related market rules - such as minimum price rules and offer proceedings - follow the rules of the country of listing, takeover-related corporate rules (eg, whether a mandatory offer is triggered) follow the rules of the country of domicile.

If the sale of the company is chosen as a liquidity event, sales processes are typically run as an auction.

In most of the cases, all shareholders except active founders exit a company following its sale, with active founders typically being required to stay on board for at least a transition period (from 12 to 36 months). In some cases an earn-out is agreed, ie, a combination with a performance-related portion of the purchase price.

Cash is the most common form of consideration in Austria. In the case of some large transactions, a combination of stock and cash is implemented.

This area is very case-specific and heavily negotiated. If financial investors successfully do not provide business representations and warranties, the purchaser typically insists on the liability of the founders or other shareholders. An escrow is not very common, but in some cases a bank guarantee is provided. Representation and warranties insurance is usually only common in high transaction volumes, although the trend is towards medium transaction volumes.

Spin-offs are not that common in Austria. Nevertheless, there is a private initiative (https://www.spin-off-austria.at), which set its goal to “raise the awareness that entrepreneurship must be a third mission of Austrian universities, universities of applied sciences and research institutions next to research and teaching”.

Spin-offs can be structured as tax neutral at both the corporate level and the shareholders level. To achieve this, the spin-off in particular must qualify as operative businesses (including operative partnerships and partial businesses thereof) or qualified shareholdings.

It is possible to combine several different reorganisation steps within one transaction. In practice, this is specified in more detail in a reorganisation plan.

Including the necessary preparation, a typical spin-off requires four to six months. A tax ruling prior to completing a spin-off is not mandatory; however, in complex spin-offs it is often practiced.

To exert influence on the target and depending on the envisaged offer structure (partial, voluntary or mandatory offer), the bidder can acquire an initial stake in the target prior to announcing a public offer. If a buyer acquires or sells, directly or indirectly, target shares and thereby reaches, exceeds or falls below 4%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 75% or 90% of the voting rights in the target, the shareholding must be notified to the Austrian Financial Market Supervisory Authority (Finanzmarktaufsicht), the Vienna Stock Exchange and the target. In addition, a triggering disclosure at 3% can be set forth in the target’s articles of association. This reporting obligation must be made within two trading days and the buyer is not required to disclose the purpose of the transaction(s).

If a bidder submits a public offer, it may acquire further target shares but not on better terms than in the offer unless the bidder improves the offer terms.

A bidder or a group of concerted parties acting together that obtains voting rights exceeding 30% (controlling interest) triggers the obligation to launch a mandatory offer. Any shareholding below 30% of the voting rights does not trigger a mandatory offer (safe harbour). However, voting rights between 26% and 30% are suspended from voting and must be notified to the Austrian Takeover Commission (Übernahmekommission).

Furthermore, the Austrian Takeover Act (Übernahmegesetz) provides for various exemptions from the mandatory offer obligation, inter alia, when a controlling interest is acquired in the course of an insolvency or another shareholder or group of concerted parties holds the same number of shares.

The Austrian Takeover Act provides for three different offer types:

Mandatory Offers

If a controlling shareholding (voting rights exceeding 30%) is acquired, a mandatory offer is triggered. Except for legal conditions such as regulatory approvals, a mandatory offer must not be made conditional.

Voluntary Offers

A voluntary offer is triggered if a non-controlling shareholder (ie, one with a shareholding of less than 30%) makes an offer aimed at control. Voluntary offers are subject to a mandatory, statutory 50% minimum acceptance threshold whereby the launching pad (ie, shares already held by the bidder and concerted party prior to the announcement of the offer) is not to be included.

Both mandatory and voluntary offers aimed at control are subject to minimum pricing rules and require a cash offer, but can have an offer to exchange for other securities (shares) as alternative in addition.

Voluntary Partial Offers

A voluntary partial offer does not result in a controlling shareholding. Such offers have no minimum price rules, the consideration may be in cash or securities, and the offer may be conditional.

The acquisition of public listed companies by way of mergers has been the exception rather than the rule. The implementation of the EU cross-border mergers directive also allows (reverse) takeovers through cross-border mergers.

Both mandatory and voluntary offers aimed at control are subject to statutory minimum price rules; ie, the higher of the six-month value-weighted average price (VWAP) prior to the announcement of the offer and the 12-month reference price (ie, the highest price paid by the bidder or a concerted party for a single share during the 12 months prior to submitting the offer memorandum to the Austrian Takeover Commission). Furthermore, mandatory offers and voluntary offers aimed at control require a cash offer, but shares can be offered in addition.

In case of a merger transaction, the bidder must offer an adequate exchange ratio for its offered shares and is ultimately limited in offering cash as an alternative. Minority shareholders may initiate a subsequent review procedure of the adequacy of the exchange ratio.

Mandatory offers must not be made conditional. This does not apply to legal conditions (eg, regulatory approvals). Voluntary offers aimed at control are subject to a statutory minimum acceptance threshold of 50%.

Besides legal conditions (regulatory approvals), voluntary offers aimed at control and partial offers often include:

• customary compliance conditions (eg, target management is not convicted or indicated for a criminal act);
• conduct of business conditions (eg, no transaction outside the ordinary course of business);
• no leakage conditions and dilution protection (eg, no dividend payments, no issuance of new shares); and
• material adverse change (MAC) conditions relating to both the target itself (eg, no insolvency of the target) and the market (eg, the MAC clause that a relevant index must not fall below a pre-defined threshold).

In case of submitting a takeover offer, no transaction agreement is concluded next to it.

Business combination agreements have become popular in public M&A transactions that do not involve a selling core shareholder. Under such agreements, the target usually agrees to support and recommend the offer but also to help the bidder post-closing with the integration of the target. A no-shop confirmation, conduct of business, waiver of management’s change of control (CoC) rights and the resignation of supervisory board members is usually accepted, whereas a no-talk agreement would violate the board neutrality rule. Further representations and warranties as well as access to non-disclosed information prior to closing is usually not accepted.

A voluntary offer aimed at control is successful only if the bidder receives acceptance declaration for more than 50% of the voting rights that are subject to the offer (statutory minimum acceptance threshold). In this threshold, shares that are acquired alongside the offer, ie, off-market (but on the same terms), are also included. However, a launching pad, ie, shares already held by the bidder and concerted party prior to the announcement of the offer, is not included. Furthermore, it is also possible that the bidder introduces a higher minimum acceptance threshold as a condition precedent (eg, 75% as the delisting threshold to pass material decisions for the target’s business and implement corporate restructurings or 90% as the squeeze-out threshold) but in practice the threshold is usually set at the statutory acceptance threshold (50%). Partial offers may have maximum or minimum acceptance conditions.

Under the Austrian Squeeze-Out Act (Gesellschafter-Ausschlussgesetz) a majority shareholder that holds at least 90% of the outstanding share capital of the target may resolve on the squeeze-out of the remaining minorities. This law applies for both listed and unlisted companies. The minority shareholders cannot prevent or block the squeeze-out, but can request a review of the adequacy of the offered cash compensation.

If the squeeze-out follows a public offer no later than three months after the end of the acceptance period and 90% of the offer addressees accepted that offer, there is a rebuttable presumption that the offer price qualifies as adequate compensation for the squeeze-out.

A bidder may only announce a public offer if financing will be available at settlement date. There is a mandatory obligation to appoint an independent expert, who must confirm to the Austrian Takeover Commission that the bidder has the financial means to fully fund the offer.

In practice, the expert’s requirements as to bank documentation will depend on the size and structure of the offer and the bidder’s financial strength. In case of a financially strong bidder, the balance sheet and the bidder’s statement can be sufficient to allow the expert to issue a confirmation. Otherwise, legally binding bank funding commitment letters are required.

The settlement of a public offer (ie, availability of the cash consideration) may not take place later than ten trading days after unconditional effectiveness of the offer.

In general, break-up fees are not forbidden, but rather uncommon in public M&A transaction as they could hinder competing offers and would need to be disclosed in the offer memorandum. Another deal protection measure would be a no-shop agreement between the target and a bidder. In this case, the target’s management would be prevented from actively looking for an alternative bidder. However, if the target is approached, it must nevertheless evaluate the competing offer, which weakens the no-shop agreement.

A core shareholder holding of at least 75% could enter into a profit and loss transfer agreement or delist the shares from the stock market and subsequently transform a joint stock corporation into a limited liability company. However, a domination arrangement under which instructions to the management board are given is not permitted under Austrian law (in contrast to German law).

In the Austrian market, irrevocable tender commitments from existing core shareholders are quite common. These undertakings only oblige the seller to tender its shares into the offer and not, as often desired by the bidder, to sell and transfer its shares directly to the bidder. In order to mitigate this, bidders often prefer to enter into direct share purchase agreements (SPA) with the core shareholders prior to the announcement of an offer. These share purchase agreements have economic terms similar to the offer and its closing is parallel to the settlement of the offer. In contrast to a tender commitment, the SPA provides for a direct claim against the core shareholder to sell its shares directly to the bidder. In this context, a top-up agreement protects the seller from any price increase granted during the offer to the other shareholders.

It is mandatory to prepare and file an offer memorandum that contains detailed information for the target’s shareholders with the Austrian Takeover Commission within at most 40 trading days after the announcement of an offer (20 trading days in a mandatory takeover offer). This offer memorandum must contain, inter alia:

• a brief expert statement on the completeness of the offer;
• the compliance of the offer with the Austrian Takeover Act;
• the bidder’s ability to finance the offer;
• the terms and conditions of the offer;
• background information regarding the bidder and its future plans;
• the offered consideration; and
• the valuation method applied.

Then the Austrian Takeover Commission has a two-week review period and may prohibit the publication of the offer memorandum. If the Austrian Takeover Commission does not prohibit the publication, the bidder must publish the offer memorandum between the 12th and 15th trading day after filing with a minimum of four weeks and a maximum of ten for acceptance.

For a public offer the acceptance period is a minimum of four weeks and a maximum of ten. After the initial acceptance period, a subsequent three-month sell-out period applies in mandatory offers as well as in voluntary offers aimed at acquiring control, which successfully fulfil the statutory 50% minimum acceptance. Typically, the offer conditions have to be fulfilled within the initial acceptance period. However, for regulatory approvals, the Austrian Takeover Commission accepts a longer timeline of up to 90 trading days starting with the launch of the offer.

In general, tech companies have to comply with public laws and orders, especially GDPR and data protection obligations. Depending on the intended business activity, the establishment of a new tech company in regulated sectors may require certain licences (eg, a fintech payment solution provider would require a banking licence). Furthermore, there are some regulatory control provisions, which may affect the acquisition of a tech company. Examples would be the utilities, gambling and telecommunications industries, where changes in the target ownership will in many cases require advance notification to the relevant government agencies when certain thresholds of stake ownership are reached or exceeded. It is not possible to say as a general rule how long it will take to obtain a permit or an approval as this is always a case-by-case decision and the Austrian law provides for different time limits depending on the subject matter.

The Austrian Takeover Commission is the primary market regulator for public M&A transaction.

In July 2020 Austria brought the Austrian Investment Control Act (Investititionskontrollgesetz, ICA) into force. According to this law, foreign direct investments by a non-EU, non-EEA and non-Swiss person or legal entity are subject to a screening. A foreign direct investment is the direct/indirect acquisition of (i) an Austrian undertaking; (ii) voting interests in such an undertaking (10%, 25% and 50% of the voting rights); (iii) a controlling influence over such an undertaking; and (iv) the acquisition of the essential assets of such an undertaking. The Austrian undertaking must be active in a sector listed in the Annex to the ICA that covers a wide range of industries and sectors including critical digital infrastructure, critical technologies and dual-use items as defined in Regulation (EG) No 428/2009, artificial intelligence, robotics, cybersecurity, quantum and nuclear technology, nano and biotechnology and media.

A mandatory filing to the Federal Ministry of Labour and Economy is triggered if a foreign investor (ie, a non-EU, non-EEA, non-Swiss individual/entity) intends to carry out an investment in a target that operated in a relevant sector.

Except for the requirements for ICA approval and save for limited restrictions in the defence equipment/defence technology sector, there are no direct Austrian inward investment restrictions in the tech sector.

Antitrust filing requirements generally depend on the turnover of the undertaking involved. The Austrian Cartel Act generally provides for the following turnover thresholds:

• combined turnover of more than EUR300 million worldwide;
• combined turnover of more than EUR30 million in Austria, with at least two undertakings having a domestic turnover of more than EUR1 million; and
• at least two undertakings having each a turnover of more than EUR5 million worldwide.

Exemptions and special rules for smaller targets and media companies apply.

In addition to this turnover test, an alternative jurisdictional test based on the size of a transaction has been introduced. The test aims to cover cases with respect to the acquisition of start-ups in the digital economy, where the target has little to no current turnover and is bought primarily because of its potential growth. Three cumulative conditions must be fulfilled:

• the combined turnover of the undertaking must be at least EUR300 million worldwide and EUR15 million domestically;
• the value of consideration for the transaction must be above EUR200 million; and
• the target must be active in Austria to a significant degree.

There are no particular concerns from an Austrian labour law perspective. In general, investors should note that Austrian labour law provides for a rather employee-friendly environment. Supporting examples are: minimum wages, working hours restrictions, and restrictions on termination of certain employees or groups of employees.

It may be required in the context of an M&A transaction to notify or consult with the works council. However, the works council’s opinion/advice is not binding on the board and does not need to be disclosed.

Inbound M&A transactions are neither subject to central bank approval nor limited by a currency control regime. Notwithstanding the foregoing, for statistical purposes, cross-border investments of at least EUR500,000 must be notified by the Austrian target company to the central bank.

In general, Austria has a stable legal and regulatory environment for technology M&A transactions, but significant changes can be observed because of legislation relating to FDI and ESG.

The new rules under the Austrian Investment Control Act have led to a massive increase in FDI procedures, according to the First Activity Report of the Austrian Investment Control Authority for the period 25 July 2020 to 24 July 2021 published in 2022. Since the entry into force until 24 July 2021, a total of 50 applications for approval and applications for the issuance of clearance certificates had been processed, another 20 procedures were pending. During this period, the data processing and IT sector accounted for the second highest number of FDI procedures. From 25 July 2020 to 24 July 2022, a total of 150 cases are said to have been handled or pending, according to unofficial statistics. For comparison: under the old law regulating foreign direct investments, only 25 procedures have been carried out in the past eight years. Pursuant to the First Activity Report of the Austrian Investment Control Authority, none of the approval procedures have been rejected so far.

In addition, ESG is playing an increasingly important role in M&A transactions due to existing, and in preparation for upcoming, EU legislation. For some time now, parties have been paying more and more attention to this area in their due diligence. In addition, more and more transactions where ESG is one of the reasons for selling or buying a business are seen, as this is also a way to achieve ESG goals. On the one hand, those who are not yet well positioned in terms of ESG can buy targets with better sustainability standards and thus enhance their image and economic success. On the other hand, companies are selling lines of business that do not conform to ESG.

Moreover, the legal form requirements for SPAs regarding Austrian limited liability companies were recently improved. As private M&A dominates the Austrian M&A market and the vast majority of Austrian targets are limited liability companies whose shares can only be transferred by entering into a notarial deed, the introduction of electronic notarisation is a major step forward to simplify M&A transactions in Austria. Now the parties can conclude a notarial deed in a virtual meeting without the physical presence of a notary being required.

In a public M&A-context, since mid-2012 there have been new rules concerning creeping in. Based on such rules, a mandatory offer also needs to be made if within a calendar year a shareholder already holding a controlling stake in a listed company acquires shares accounting for at least 3% of the voting rights. Sales and purchases of shares within a calendar year may be set off against each other.

A distinction must be made between public M&A and private M&A transactions. It is typically for public M&A transactions that the bidder regularly conducts a due diligence based on publicly available data. The reason behind this is that the management needs to balance the bidder’s need for disclosure against its fiduciary duties towards other shareholders as well as regulatory and contractual secrecy obligations.

Furthermore, the target’s management is bound by law to neutrality and objectivity in relation to all bidders in case of a competing bid situation. Thus, the target company is ultimately required to provide all bidders with the same level of information.

In contrast, due diligence in private M&A transactions can be and in practice is more extensive, including non-public information - with staggered access to sensitive information depending on the transaction progress. Typical areas of review are: intellectual property rights (registered and non-registered), protection of trade secrets and know-how, review of licensing agreements, use of free and open source software, GDPR compliance, review of material agreements, review of employment agreements and employment relationships, legal disputes, as well as classic corporate, commercial and finance matters.

There are no particular restrictions in excess of general data privacy restrictions under the GDPR, which restricts the ability of a target company to share certain personal data.

It is legally permitted to prepare an offer in secret and to build a stake in advance provided that there is no reporting threshold triggered. A public offer must be announced in three cases, if:

• the bidder has decided to launch an offer;
• market rumours occur due to the preparation of an offer (“put up or shut up”); or
• the bidder obtained a controlling interest (ie, more than 30% of the voting rights in the target).

Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered (Prospectus Regulation) also applies in Austria. In its Article 3 the Prospectus Regulation provides for a need to publish a prospectus in several instances of share offerings (including stock-for-stock offerings) unless an exemption applies. Exemptions are listed in Article 1 paragraph 4 of the Prospectus Regulation. An example for an exemption is a security offering in connection with a takeover by means of an exchange offer, provided that a document is made available to the public in accordance with the arrangements set out in Article 21 paragraph 2 of the Prospectus Regulation, containing information describing the transaction and its impact on the issuer. From a prospectus law point of view, no listed buyer’s shares are required as a consideration. Also, non-listed shares might be offered as a consideration.

In case of cash-only offers, there is no mandatory requirement to provide the bidder’s financial information in the offer memorandum.

In case of a stock-for-stock offer, in which a document is made available to the public in accordance with the arrangements set out in Article 21 paragraph 2 of the Prospectus Regulation, containing information describing the transaction and its impact on the issuer, and is published in order to avoid a fully fledged prospectus document, such a document will also need to provide the historical financial information of the bidder/issuer of the share contribution.

The offer memorandum for a public takeover must be filed with the Austrian Takeover Commission and is published on the websites of the bidder, the target company and the Austrian Takeover Commission. In case of a merger transaction, the merger agreement together with ancillary documents is published by that target in advance of the shareholders’ meeting that resolved on the merger transaction.

As a general rule, all management decisions must be made in compliance with the business judgement rule; ie, the management resolves without any conflict of interest, based on adequate information and to the benefit of the company and its stakeholders.

In public M&A transactions, the target’s management also needs to comply with the mandatory board neutrality rule. This means that after the target becomes aware of a bidder’s intention to launch an offer, any measure that could prevent the target shareholders from making a free and informed decision or any action that could likely frustrate the offer requires prior approval by the target shareholders (eg, sale of core assets, issuance of new shares).

In a public listed company it is possible to form ad hoc committees in the supervisory board in order to react quickly in case of unexpected events (eg, unsolicited announcement of an offer). The supervisory board may delegate issues to special committees for further evaluation and decision. In case of a conflict of interest of one or more supervisory board members, the governance usually provides that the respective members need to disclose such circumstances to the board and to refrain from voting. In sensitive cases, such members should also not participate in the preceding discussions.

The board neutrality rule provides for the target management board and supervisory board to stay objective towards the potential offer and may not prevent the offer. The search for a white knight is explicitly permitted.

After the publication of the offer memorandum, the management has to prepare and publish a reasoned statement that includes an assessment to the offer, inter alia regarding the offered consideration and the impact on the target and its workforce.

Another option for the management would be to involve financial advisers, which usually prepare a fairness opinion that serves as a bias for the management’s decision to either support or reject the offer. If the management issues a neutral statement, the pro and cons for accepting the offer shall be included.

The Austrian Takeover Act obliges bidders and targets to nominate an expert (usually a certified public accountant) who confirms the compliance of (i) the offer memorandum, and (ii) the target management’s statement to the offer with applicable Takeover Law rules.

It always depends on the individual case, but in practice bidders and target companies often involve financial, tax and legal advisers in connection with a takeover. In recent years, public relations agencies and proxy advisers were also engaged in contested, hostile and unsolicited situations.