Last Updated June 10, 2019

Law and Practice

Authors



CHSH Cerha Hempel Spiegelfeld Hlawati has 25 partners and 76 senior attorneys and associates in Austria; the firm also has offices in Belarus, Bulgaria, the Czech Republic, Hungary, Romania, and the Slovak Republic. The Corporate team is active for clients in the private M&A markets of Austria and CEE, representing strategic and private equity investors as well as their targets and/or management. It also advises on national and international cross-border mergers and reorganisations, specialising in developing and providing practical solutions to what can be extremely complex issues that often involve cross-border components. Due to the diversity of its clients, the team is particularly experienced in advising on public M&A, including takeover law and related disclosure requirements under stock exchange law.

The principle of freedom of contract granted by Austrian law enables transaction parties to seek any type of deal security measure as long as they do not violate moral principles (Sittenwidrigkeit). Needless to say, the question whether any (and what kind of) deal security may be part of a transaction, depends also on the bargaining positions of the parties involved. However, in situations where the Takeover Act) applies, further limitations need to be observed, eg:

  • exclusivity agreements appear quite commonly sought after by a bidder from a core shareholder and should be legally feasible, particularly in a phase preceding a public tender, but arguably also during a tender process. Exclusivity arrangements with the target, on the other hand, appear more problematic, in particular if they are aimed to restrict the free business judgement of management acting in the best interest of all shareholders. Therefore, no-talk arrangements (lock-ups) typically risk being too restrictive and thus void, while there are good arguments that no shop provisions and market test provisions (if they just limit management to actively look for other bidders) are more likely to be upheld;
  • break-up fees (sometimes also called inducement fees, termination fees or drop-dead fees) will conflict with the Takeover Act if the amounts involved are substantial so that they de facto exclude or materially impede competing offers (in particular, if they are not limited to just compensating the bidder for his or her out-of-pocket costs but also have some penalty element);
  • standstill obligations are essentially already foreseen by the Takeover Act, containing statutory rules prohibiting the launch of a new or modified offer once the tender offer is published (with only very few exceptions) as well as a statutory waiting period in case the offer turns out unsuccessful; and
  • as regards irrevocable tender commitments, see 6.11 Irrevocable Commitments, below.
CHSH Cerha Hempel Spiegelfeld Hlawati

Cerha Hempel Spiegelfeld Hlawati
Rechtsanwälte GmbH
Parkring 2
A-1010 Vienna

+43 1 514 35 0

+43 1 514 35 35

office@chsh.com www.chsh.com
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Authors



CHSH Cerha Hempel Spiegelfeld Hlawati has 25 partners and 76 senior attorneys and associates in Austria; the firm also has offices in Belarus, Bulgaria, the Czech Republic, Hungary, Romania, and the Slovak Republic. The Corporate team is active for clients in the private M&A markets of Austria and CEE, representing strategic and private equity investors as well as their targets and/or management. It also advises on national and international cross-border mergers and reorganisations, specialising in developing and providing practical solutions to what can be extremely complex issues that often involve cross-border components. Due to the diversity of its clients, the team is particularly experienced in advising on public M&A, including takeover law and related disclosure requirements under stock exchange law.

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