Contributed By Ferrere Abogados
In Uruguay, the typical process for acquiring/selling a business through a purchase and sale of shares or other participations is as follows:
Although this can vary widely in each case, this process can typically take from four months to one year.
In Uruguay, acquirers are mandatorily required to make a tender offer to all the shareholders of a publicly listed company in the following cases:
Cash is most commonly used as consideration in Uruguay. Consideration in shares is occasionally used in multinational deals that have portions in Uruguay.
Conditions are only allowed in voluntary takeover offers; mandatory tender offers cannot be subject to conditions. In voluntary takeover offers, the conditions allowed by the regulations are:
Tender offers are not common in Uruguay, so there are no minimum acceptance conditions that can be considered usual.
It is possible for the parties in a business combination to condition it on the bidder obtaining financing. However, a mandatory tender offer cannot be subject to the condition of the offeror obtaining financing.
The most common deal security measures used in M&A transactions in Uruguay (transactions in privately held companies) are break-up fees and non-solicitation or exclusivity provisions. It is usual to include in the preliminary agreements of the transaction that, for a certain period, neither the target company nor its shareholders will enter into any negotiations with any other party to sell, transfer or exchange any of the interests, stock or any material assets in the target. If the shareholders of the target company breach this provision and end up transferring the shares of the target to a third party, then they will have to pay the break-up fee.
A shareholder who does not own 100% of a company can generally seek representation in the Board of Directors with a certain number of directors, and veto rights over certain decisions.
In Uruguay, it is possible for shareholders to vote by granting a simple proxy to a third person. No specific formalities, such as the notarisation of signatures, are required when the proxy is granted for a specific meeting. Proxies cannot be granted in favour of administrators, directors, comptrollers and other employees of the company.
There are very few publicly traded companies in Uruguay with trading activity, and tender offers are not common in the Uruguayan market. Therefore, statistics are not available on the mechanisms employed to buy shareholders that have not tendered following a successful tender offer.
There are very few publicly traded companies in Uruguay and tender offers are not common in the Uruguayan market.