Contributed By CHSH Cerha Hempel Spiegelfeld Hlawati
The shareholder structure of Austrian listed companies is typically composed of one or a few core shareholders holding large share packages, whereas the percentage of free float shares is sometimes rather limited. Therefore, it is not uncommon to approach a core shareholder first – if it makes sense strategically – and to privately negotiate and seek an irrevocable commitment by the shareholder to sell these shares before launching a public offer. There are good arguments supporting the validity of such commitments even with a view of a public tender process and it might also be argued (although some grey area exists) that such irrevocable commitment, if already made prior to the launch of a public tender offer, should also remain binding in the case of a competing offer.
Contractual provisions providing a way out for the principal shareholder before a tender process is rather unusual, although such a clause would appear to be legally permissible. Within a tender process, the Takeover Act gives shareholders who have already accepted a public tender offer the mandatory right to withdraw their acceptance in the event that a competing tender offer is launched (but a contractual right of exit will make sense for those commitments which, as outlined above, would otherwise arguably remain binding in a subsequent tender process).