Public Takeovers in Denmark A legal guide | August 2015

Public Takeovers in Denmark A legal guide | August 2015

Important notice While care has been taken to ensure the accuracy of the information contained herein, this guide does not purport to be all-inclusive or to contain all of the information that you may require. Takeovers should not be undertaken in reliance on this guide without seeking specific legal advice on the relevant circumstances. The information in this guide has been prepared on the basis of relevant Danish law as at August 2015.

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Contents Introduction ............................................................................................ 5 Our M&A and Capital Markets Group ................................................... 6 Danish takeovers in brief........................................................................ 8 1. General introduction to the Danish takeover regime......................... 10 1.1 Main regulation.......................................................................... 11 1.2 Recent amendments to the Danish takeover regime................ 14 2. Offer structure..................................................................................... 16 2.1 Mandatory and voluntary offers................................................ 17 2.2 Controlling influence.................................................................. 18 2.3 Conditional offers ...................................................................... 21 2.4 Consideration ............................................................................ 26 2.5 Publication of the offer and offer period .................................. 29 3. The takeover process........................................................................... 32 4. Preparation.......................................................................................... 34 4.1 Approach to target company...................................................... 35 4.2 Due diligence ............................................................................. 35 4.3 Market purchases ...................................................................... 36 4.4 Disclosure obligations ............................................................... 37 4.5 Other preparatory actions.......................................................... 39 5. Key documents.................................................................................... 40 6. The statement by the board of directors............................................. 46 7. Competing offers.................................................................................. 50 8. Takeover defences............................................................................... 52 9. Shareholders, employees of the target company and other stakeholders............................................................................... 56 9.1 Contact with other shareholders in the target company........... 57 9.2 Role of employees ...................................................................... 57 9.3 Other stakeholders..................................................................... 59 10. Public authorities, etc........................................................................ 60 10.1 The Danish FSA.......................................................................... 61 10.2 Nasdaq Copenhagen................................................................... 61 10.3 Competition authorities............................................................. 61 11. Post completion of takeover............................................................... 62 11.1 Squeeze out/sell out ................................................................... 63 11.2 Delisting .................................................................................... 64 12. How to get in touch............................................................................ 66

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Axel Towers – our new domicile in Copenhagen. Architect: Lene Tranberg. Relocation: Autumn 2016.

Introduction This guide is intended to provide a summary overview of certain aspects of the law and regulation governing public takeovers of listed companies in Denmark. We hope that this guide may serve as a practical tool to assist clients and other interested parties to understand the public takeover process in a Danish context and some of the issues which may arise in connection therewith. The primary focus of this guide is aimed at voluntary takeovers, but the guide also describes certain matters in relation to mandatory takeover offers. Over the past years, Gorrissen Federspiel has been involved in many public takeover transactions in Denmark, and this guide builds on the significant experience obtained by members of our Corporate/M&A and Capital Markets Group acting as adviser to both bidders and target companies. We would welcome any feedback or suggestions for improvements in future updates of this guide. A special thanks to our dedicated team, who has assisted with the preparation of this guide, including attorney Rebecca Kramarz Cohen and assistant attorney Jakob Gregers Andersen. Should your reading of the guide give rise to any practical or legal questions, you are always welcome to contact us.

Yours sincerely, Rikke Schiøtt Petersen Chantal Patel Partner Attorney

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Our M&A and Capital Markets Group For decades, our Corporate/M&A and Capital Markets Group has had a leading position in all aspects of Danish M&A and capital markets work including public takeovers, private M&A processes, structured auction processes, corporate reorganisations, IPOs and other public equity offerings. We have a unique insight in market practices and trends and offer an indepth expertise, know-how and experience in these areas including inter alia public M&A and large, complicated structured auction processes. Gorrissen Federspiel is consistently ranked as a leading law firm in Denmark by international rating agencies and was honoured by Chambers Europe as Danish Law Firm of the Year 2014. Our Corporate/M&A Group is ranked in band 1 by Chambers Global and by Chambers Europe where it is stated that we are known as a “[…] trusted adviser to a significant proportion of Denmark’s leading industrial companies, which regularly takes a leading role on the most prominent M&A transactions in the market, especially those with an international element” and as offering “[…] tremendous strength in private equity transactions”. Legal 500 has also ranked our Capital Markets Group in tier 1 and states that “Gorrissen Federspiel provides ‘excellent service and commercial knowledge’ in respect to equity and debt capital markets work, including IPOs”. Chambers Europe cites the following quotes from clients in regards to our Capital Markets and Corporate / M&A Group: “The team’s main strength is its people - they are the best-educated and smartest lawyers in the industry.” “Extremely high-quality lawyers; very available and both service- and business-minded.” “It’s an excellent team and it’s always there if you need it.” “The firm is top for this area and in a class of its own.” Should you have any questions or comments in relation to public take­ overs in Denmark, you are most welcome to contact the authors of this guide or any of the following from our Corporate/M&A and Capital Markets Group.

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Contact information Rikke Schiøtt Petersen Partner T +45 33 41 42 71 M +45 24 25 28 24 [email protected] Klaus Søgaard Partner T +45 33 41 42 56 M +45 40 42 94 84 [email protected] Tomas Haagen Managing Partner T +45 33 41 41 92 M +45 21 80 18 22 [email protected] Chantal Patel Attorney T +45 33 41 42 30 M +45 27 80 40 11 [email protected]

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Danish takeovers in brief The Danish market for publicly listed companies is characterized by a relatively small number of large companies with high stock liquidity and a large number of small and medium-sized companies with limited or rather low stock liquidity. Moreover, many of the largest Danish listed companies (such as Novo Nordisk, A.P. Møller - Mærsk, Carlsberg and Tryg) have private foundations among their shareholders, which make it difficult for suitors to obtain a controlling influence. Listed companies in Denmark are primarily admitted to trading and official listing on NASDAQ OMX Copenhagen A/S (“Nasdaq Copenhagen”) and to a lesser extent the alternative marketplace First North, which is operated by Nasdaq Copenhagen. In the past decade, the Danish public M&A market has been dominated by a number of larger public-to-private transactions in which companies with high stock liquidity without dominant shareholders have been acquired, such as the private equity acquisitions of Falck A/S (2004), ISS A/S (2005), Københavns Lufthavne A/S (Copenhagen Airports) (2005), TDC A/S (2006), and more recently the acquisitions of Satair A/S by Airbus (2011), Danisco A/S by Dupont (2011) and Thrane & Thrane A/S by Cobham (2012). The Danish takeover market has also witnessed a number of public takeover offers for shares in companies facing financial difficulties, where the takeover offer was e.g. the result of a structured termination of the companies’ activities with a subsequent sale of the listed shell company or acquisitions in the financial sector following the financial crisis. This incited some degree of consolidation, although perhaps less than expected given the large number of financial institutions in Denmark. Featuring on the next page is an overview of larger takeovers in Denmark in the past 12 years. The overview is not exhaustive and primarily focuses on successful takeover offers and does e.g. not include takeover offers, which did not result in an acquisition of a majority of the voting rights in the target company such as the offers made to the shareholders of Brdr. Hartmann A/S in 2011 or Jeudan A/S in late 2012.

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Target company

Bidder

Voluntary/ mandatory

Vejen Trælast A/S

STB Invest II ApS

Voluntary

NEG Micon A/S

Vestas Wind Systems A/S

Voluntary

Radiometer A/S

DH Denmark Holding ApS

Mandatory

Group 4 A/S

Group 4 Securicor plc

Mandatory

Falck A/S

Cidron A/S

Mandatory

BHJ A/S

LGI Denmark ApS

Mandatory

ISS A/S

EQT and Goldman Sachs Capital Partners

Mandatory

Kompan A/S

Cidron II A/S

Mandatory

Københavns Lufthavne A/S

Macquarie Airports Copenhagen ApS

Voluntary

TDC A/S

Nordic Telephone Company ApS

Voluntary

Potagua FLS A/S

FLSmidth & Co. A/S

Voluntary

Color Print A/S

Polaris Private Equity

Voluntary

Dampskibsselskabet Orion A/S

Camillo Eitzen & Co ASA

Mandatory

Spæncom A/S

Consolis Denmark A/S

Voluntary

Hedegaard A/S

Dan Agro Holding A/S

Voluntary

EDB Gruppen A/S

Cidron IT A/S

Mandatory

Forstædernes Bank A/S

Nykredit Realkredit A/S

Voluntary

Lokalbanken i Nordsjælland A/S

Svenska Handelsbanken AB (publ)

Voluntary

Maconomy A/S

Deltek Inc.

Voluntary

Danisco A/S

Dupont Denmark Holding ApS

Voluntary

Satair A/S

Airbus SAS and Airbus Denmark Holding ApS

Voluntary

Thrane & Thrane A/S

Lockman Electronic Holdings Ltd. (Cobham plc)

Voluntary

ORIGIO A/S

The Cooper Companies, Inc.

Voluntary

Össur hf.

William Demant Invest A/S

Voluntary

2013

DiBa Bank A/S

Sydbank A/S

Voluntary

2015

Nørresundby Bank A/S

Nordjyske Bank A/S

Voluntary

2015

Mols-Linien A/S

Polaris Private Equity IV K/S

Voluntary (pending)

Year

2003

2004

2005

2006

2007

2008

2010

2011

2012

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1.

General introduction to the Danish takeover regime

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1.1 Main regulation Both voluntary and mandatory takeover offers for shares in listed companies are subject to the rules and regulation laid down by the Securities Trading Act, Consolidated Act no. 227 of 11 March 2014, (the “Danish Securities Trading Act”) and Executive Order no. 562 of 2 June 2014 (the “Takeover Order”), which implement central parts of the EU Directive 2004/25/EC (the “Takeover Directive”). The Danish Securities Trading Act and the Takeover Order were both amended in 2014. The Takeover Order has been supplemented by a revised set of guidelines by the Danish Financial Supervisory Authority (the “Danish FSA”) (Guidelines no. 9687 of 15 September 2014 (the “Takeover Guidelines”)). The primary purpose of the Danish takeover regime is to safeguard the rights of minority shareholders and secure equal treatment of all shareholders of the same share class, and at the same time minimise disruption of the target company’s financial affairs and operations as well as maintain the interest of the capital markets in general. The figure on the next page outlines the various elements of the Danish takeover regime. The Takeover Directive provides the general legal framework that EU Member States must implement while allowing for significant national freedom in terms of implementation. Certain elements of the Danish takeover regime are not based on the Takeover Directive and are specific to Danish takeovers. Some noteworthy examples of specific Danish regulation are: – Passive increase in ownership stake: Under Danish law, the obligation to issue a takeover offer is not triggered by a shareholder passively obtaining a controlling influence, e.g. as a consequence of a decrease in the share capital, divestment by other major shareholders or cancellation of restrictions on voting rights in the articles of association. – Bonus and benefits to members of the executive management and board of directors of the target company: The target company, the bidder and a person acting in concert with a bidder are prohibited from entering into or amending existing agreements regarding bonuses and similar benefits for the executive management and/or the board of directors in the target company. This restriction applies from the initiation of discussions with the target company until such have ended or a takeover offer has been successfully completed. The purpose of the rule is to avoid conflicts of interest between the executive management and the board of directors of the target company on one hand and the shareholders of the target company on the other.

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– Offer period: Generally, the offer period can at the bidder’s discretion be extended by two weeks at a time up to a maximum of 10 weeks. However, the offer period may be extended up to a maximum of nine months to allow for the necessary approvals from public authorities, typically from the competition authorities. Furthermore, the offer period will automatically be extended beyond the 10-week maximum, if a competing takeover offer is made. The decision to extend the offer period shall be set out in a supplement to the offer document. – Distribution of funds following the takeover: To ensure disclosure of a bidder’s intention to leverage the target company and distribute available funds, the Danish Companies Act and the Takeover Order impose a prohibition on distribution of funds of the target company in a 12-month period following completion of a takeover, except (i) if the offer document contains information on the intended distribution, or (ii) if certain circumstances are present, which improve the financial situation of the target company and the occurrence of these were not foreseeable when submitting the takeover offer. When do the rules and regulation of the Danish takeover regime apply? The Danish takeover regime applies to takeover offers in respect of which the target company has its registered office in Denmark (or in a country outside the EU with which the EU has not entered into an agreement for the financial area), provided that the target company is listed on a Danish regulated market or a Danish alternative market. The Danish takeover regime also applies to takeover offers with regard to a company with a registered office outside Denmark that is listed on a Danish regulated market provided that the listed company is not also listed on a regulated market in another country where the company has its registered office. In the event a company, whether registered in Denmark or outside Denmark, is listed both in Denmark and another EU Member State (or a country with which the EU has entered into an agreement for the financial area), the Danish takeover regime only applies to the extent the company’s shares were first admitted to trading and official listing in Denmark. The rules apply to both direct and indirect transfers of shares in listed companies, regardless of whether the shares are acquired by (i) an individual, (ii) a legal entity, or (iii) individuals and/or legal entities acting in concert.

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EU r

egi

me

The Danish takeover regime

EUDirective

Da ni

sh r

egi

me

Danish Securities Trading Act, Part 8 The Takeover Order (Executive Order no. 562 of 2 June 2014 on Takeover Bids) The Takeover Guidelines (Guidelines no. 9687 of 15 September 2014)

EU Directive

– The Takeover Directive – Minimum guidelines for the conduct of takeover offers involving securities of companies established in EU Member States in which all or some of those securities are admitted to trading on a regulated market

Danish Securities Trading Act, Part 8

– Legally binding, breach may result in a fine – Section 31: Mandatory and voluntary offers – Section 32: Offer document – Section 32a: Supervisory authority and applicable law

The Takeover Order

– Legally binding, breach may result in a fine – General principles on mandatory and voluntary offers – Disclosure requirements incl. form and content – Competing offers

The Takeover Guidelines

– Guidelines on key provisions in the Takeover Order related to e.g.: - Examples of a mandatory offer obligation - Form and content of the offer document - Obligations of the management of target 13

1.2 Amendments to the Danish takeover regime The Takeover Order and the Danish Securities Trading Act were amended with effect from 1 July 2014 and the most significant changes are set out below in the following: a) New threshold for controlling influence: As a general rule, a shareholder will be deemed to have a controlling influence in a company, if it directly or indirectly possesses at least one third (previously more than half) of the listed company’s voting rights, whereby a mandatory takeover offer obligation is triggered.

However, a shareholder acquiring one third of the voting rights in a company will not be required to submit a mandatory takeover offer, if the shareholder can prove that actual controlling influence has not been acquired. This may be the case e.g. if another shareholder has a larger shareholding. Moreover, it is still possible to obtain controlling influence by being able to exercise actual control over a company or by acting in concert with other parties, e.g. agreements with other shareholders.



In February 2014, the Danish FSA announced that it will no longer adhere to the administrative practice regarding the Danish lawbased concept of ”one shareholder”. The concept of and practice regarding “one shareholder” (which was typically applied to larger groups of family-controlled entities) preceded the implementation of the EU directive-based notion of “acting in concert”, but after the implementation of the latter into Danish law in 2005, these two concepts conflicted and therefore the Danish FSA has discontinued the use of and the practice regarding the concept of “one shareholder”.

b) Mandatory offer requirement following a voluntary offer: A bidder will be obliged to launch a mandatory offer upon obtaining a controlling influence through a voluntary takeover offer, if the bidder does not obtain more than half of the voting rights in the target company through the voluntary takeover offer. Any subsequent acquisition would not trigger an obligation to submit a mandatory takeover offer as it would be deemed consolidation of existing control. This amendment may prevent a bidder from acquiring controlling influence at a low offer price and/or by buying a small amount of shares in a voluntary offer and thereby avoid the stricter requirements of a mandatory offer. c) Exceptions to the obligation to submit a mandatory takeover offer: The exception with respect to obtaining a controlling influence in the target company by way of a gift has been removed. In effect, an investor will become obliged to submit a mandatory takeover offer to 14

the other shareholders of the target company, if the investor obtained a controlling influence in the target company by virtue of a gift. However, it is possible to apply for an exemption with the Danish FSA in cases in which the gift transaction is not deemed objectionable. Furthermore, if a creditor obtains a controlling influence in the target company by way of debt collection, the creditor has two months to sell as many shares in the target company as is necessary to relinquish its controlling influence, provided that the creditor abstains from exercising its controlling influence in the target company. Otherwise, the creditor will be obliged to submit a mandatory takeover offer. d) A longer offer period pending approval by public authorities: The offer period may now be extended up to a total of nine months (previously four months), if completion of the takeover requires the approval of public authorities. This amendment is intended to especially accommodate long application periods with respect to approval by relevant competition authorities. e) Target shareholders’ right to withdraw their acceptance of a takeover offer in favour of a competing offer: The shareholders of the target company now have a right to withdraw their initial acceptance of a takeover offer in favour of accepting a competing offer within three working days of the publication of the competing offer. Prior to the amendment, it was not a shareholder right, but rather the choice of the bidder, whether the target shareholders should have such a right of withdrawal. f) Announcement of the preliminary result of a takeover offer: No later than 18 hours after the expiry of the offer period, the bidder is now required to publish an announcement stating, whether the takeover offer will be extended or shall be considered final. The announcement should state the preliminary result of the takeover offer. This deadline should be taken into account when determining the length of the offer period and the date on which the offer period is to expire. We recommend that the 18-hour deadline is set to expire on a weekday which is not a Friday, while still leaving sufficient time for a two-week extension within the maximum 10-week offer period. g) A “cool-down” period: A bidder is now required to compensate the shareholders of the target company that accepted the takeover offer in the offer period, if the bidder acquires additional shares in the target company during a period of six months after completion of the takeover on more favourable terms than those initially offered to the shareholders of the target company in the takeover offer.

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2.

Offer structure

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2.1

Mandatory and voluntary offers

What is the difference between a mandatory and voluntary offer? A takeover offer is a public, open offer or invitation by a bidder to all shareholders of a listed company to acquire shares in the listed target company at a specified price during a specified period of time following the acquisition of control or with the view to obtain a controlling influence in the listed company. A bidder may be required by law to make a takeover offer upon acquisition of a controlling influence in the target company – such a takeover offer is referred to as a mandatory offer. The obligation for the bidder to submit a mandatory offer may apply, regardless of whether the bidder wants to acquire a further stake in the target company or not. However, certain exceptions do apply to the obligation to make such a mandatory offer as described below. A voluntary offer is a takeover offer submitted by a bidder at its own discretion. The voluntary offer is directed at all the shareholders of the target company with the view to acquire all or some of the shares in the target company. Contrary to mandatory offers, the voluntary bidder has the option of designing the offer to some extent so as to suit its specific needs and preferences. Voluntary offers provide the bidder with a more flexible offer structure in terms of timing, amount of outstanding shares comprised by the offer, the type of consideration to be paid and the fact that the offer to some extent can be made conditional. A bidder will not be obliged to launch a mandatory offer when obtaining controlling influence in the target company by way of a successful voluntary offer, provided that i. the voluntary offer is directed at all the shareholders with respect to all outstanding shares; ii. the voluntary offer satisfies the statutory requirements of form and contents for a voluntary offer; and iii. the bidder obtains more than half of the voting rights in the target company as a result of the voluntary offer. The latter of these statutory requirements set out in the Danish Securities Trading Act follows from a legislative amendment, which entered into force on 1 July 2014. In effect, this new threshold was introduced to prevent the bidder from acquiring a controlling influence on the basis of a low, and less attractive, offer price in a voluntary offer and as a consequence hereof avoid the stricter requirements of a mandatory offer. Any subsequent acquisition would not trigger an obligation to submit a mandatory takeover offer as it would be deemed consolidation of existing controlling influence. 17

What triggers a mandatory bid? Section 31 of the Danish Securities Trading Act stipulates that if a shareholding in a company with one or several share classes admitted to trading on a regulated market or an alternative market place, is transferred to a bidder or persons acting in concert with the bidder, the bidder shall enable all the shareholders of the company to dispose of their shares on identical terms, if as a result of such transfer the bidder obtained a controlling influence in the company. The obligation is triggered regardless of whether the shareholding in the listed company is transferred directly or indirectly. 2.2

Controlling influence

When is controlling influence obtained? Controlling influence exists when a bidder directly or indirectly holds at least one third of the voting rights in a company, unless it may be clearly demonstrated in special cases that such ownership does not constitute controlling influence. Moreover, controlling influence exists when a bidder, who does not own at least one third of the voting rights in a company, has – the right to control at least one third of the voting rights by virtue of an agreement with other shareholders; – the right to manage a company’s financial and operating affairs in accordance with its articles of association or an agreement; or – the right to appoint or dismiss the majority of the members of its supreme governing body (normally the board of directors), and such body has control of the company. When assessing whether a bidder has a controlling influence, the existence and effect of potential voting rights, subscription rights and options to purchase shares, which may be exercised or converted at the time must be taken into account, although only at the time when the share option or the attached voting rights may be exercised at the sole discretion of the bidder. Section 31 of the Danish Securities Trading Act covers both direct and indirect transfers of shareholdings. According to the Takeover Guidelines, an indirect acquisition, e.g. a transfer of the controlling shareholding of a company, which holds a controlling shareholding in the listed company, will generally trigger a mandatory offer obligation vis-à-vis the shareholders of the listed company. A shareholder already possessing a controlling influence in a company will not be obliged to submit a mandatory takeover offer when consolidating its position by acquiring further shares in the target company. 18

Controlling influence obtained as a result of an issue of new shares or a merger may result in an obligation to submit a mandatory takeover offer. It is not possible for two separate and independent shareholders to hold a controlling influence in a company at the same time, but they may have a joint controlling influence, if they are deemed to be acting in concert. Natural and legal persons may be considered as acting in concert with a bidder or a target company, when they cooperate according to an agreement, explicit or tacit, oral or in writing, with a view to obtain a controlling influence in the target company or obstruct a takeover offer. Are there any exceptions to submitting a mandatory offer when controlling influence is obtained? A potential bidder is exempt from the obligation to submit a mandatory takeover offer, if it is a securities dealer, a credit institution or an investment firm acquiring shares in a listed company as part of an underwriting agreement in connection with an issue of shares or as part of an agreement with the issuer or one or more shareholders to resell the shares in question. However, this exception to the mandatory offer rules only applies provided that the shares are resold within five working days and provided that the voting rights are not exercised or in any other way used to intervene in the management of the company during the fiveworking day period. Under normal circumstances, controlling influence obtained through non-action, e.g. as a result of the target company’s purchase of own shares, a share buy-back programme or share capital decrease, will not constitute a transfer of shares and therefore not result in an obligation to submit a mandatory takeover offer. The same applies in connection with cancellation of voting right restrictions in the articles of association of a listed company resulting in a shareholder obtaining a controlling influence. The Takeover Order explicitly exempts acquisitions of shares by inheritance or transfer within the same group from the obligation to submit a mandatory takeover offer. Further, a creditor’s acquisition of shares as a result of debt enforcement proceedings is exempt, provided that i) the creditor has resold enough shares in the company to no longer possess a controlling influence within two months after the acquisition, and ii) the creditor abstains from exercising its voting rights or in any other way exercise its controlling influence. Transfer of shares by gift is no longer exempt.

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May a bidder be exempt from the obligation to submit a mandatory offer? In addition to the exceptions set out in the Takeover Order, the Danish FSA has a broad authorisation to grant exemption from the obligation to submit a mandatory takeover offer. In practice, the Danish FSA has granted an exemption in situations in which a company is in distress and under threat of bankruptcy and where it is considered in the interest of the minority shareholders to reorganise the company’s capital structure in order to safeguard their investment. Typically, the Danish FSA has taken the following factors into consideration; i) whether the target company is financially distressed when the potential bidder obtains controlling influence; ii) whether the existence of the target company is directly threatened, because it is not able to procure the necessary funds to continue operating; and iii) whether it will be in the interest of the minority shareholders in the target company to reorganise the corporate structure of the target company in order to ensure the continued operation of the target company as well as the value of the minority shareholders’ investment. Examples of situations in which the Danish FSA has granted such exemption include Tower Group A/S (2010), Guava A/S (2010), Affitech A/S (2010), Nordicom A/S (2010), Sanistål A/S (2011), TORM A/S (2012) and Nordic Shipholding A/S (2013). However, the revised Takeover Guidelines specifically provide that exemption will not be granted if controlling influence is obtained in a “listed shell company” (i.e. with no activity), as this is not considered a distress situation for these purposes. Exemption may also be granted in other situations such as gifts between family members, e.g. in connection with planned family succession. 2.3

Conditional offers

Can the takeover offer be conditional? A mandatory takeover offer cannot be made conditional, unless an exemption is extraordinarily granted by the Danish FSA. In relation to voluntary offers, there are no limitations concerning conditions that an offer may be subject to, provided, however, that such conditions are not within the bidder’s control or depend on the bidder’s own discretion. However, the Danish FSA does not exclude that certain material adverse change-clauses may be included as a condition to a voluntary takeover offer, but such are likely to be subject to discussion with the Danish FSA. Conditions to the offer shall be set out in the offer document and the procedure for cancelling the offer due to conditions not being fulfilled shall be described in the offer document as well.

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Can the conditions be waived or amended by the bidder? Conditions set out in the offer document can be waived, limited or reduced at the discretion of the bidder provided that the right for the bidder to do so is specifically reserved for in the offer document. In addition, the bidder may amend the offer, including any conditions, within the offer period, provided that such amendment constitutes an improvement of the offer for all shareholders. Amending the offer requires that a supplement to the offer document is prepared, and that such supplement to the offer document is approved by the Danish FSA and subsequently made public in the same manner as the offer document. Any amendments made to the takeover offer will result in an automatic 14day extension of the offer period from the publication of the supplement to the offer document. It is the responsibility of the bidder to make improvements to the takeover offer at such a time in the offer period to allow for a 14-day extension to expire within the maximum 10-week offer period. A waiver of a condition will in some cases amount to an improvement of the offer and therefore trigger the 14-day extension. In practice, it is not uncommon for a bidder to waive e.g. a 9/10 shareholder acceptancecondition after having tallied the votes and concluded that the takeover offer was not accepted by a sufficient majority of shareholders. Such a waiver will be deemed an improvement of the takeover offer and may therefore as a main rule only be made before the expiry of the eigth week of the offer period – otherwise, there would not be enough time left of the maximum 10-week offer period to accommodate the 14-day extension. However, depending on the specific circumstances, it is possible for a bidder to obtain an exemption from the Danish FSA to extend the offer period beyond the 10-week maximum.

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What conditions are typically present? Typical conditions in Danish voluntary offers include – a requirement that the bidder owns or has received valid acceptances from more than 9/10 of the share capital and the voting rights in the target company. 9/10 is the relevant threshold under Danish law for a shareholder being entitled to initiate a minority squeeze out-procedure (as specified in detail below); – all necessary approvals and acceptances have been obtained, including approvals from public authorities, typically the compe­ tition authorities; – the offer being recommended by the board of directors of the target company and that such recommendation is not altered or withdrawn; – no material adverse changes (MAC-clause); – completion of the offer is not precluded or obstructed by new legislation, or decisions by courts or public authorities; – no changes are made to the target company’s capital structure, including distribution of dividends, changes to the share capital, disposal of treasury shares or amendments to the articles of association; – resolutions by the general meeting in the target company approving amendments of the articles of association (e.g. to delete defensive measures, voting restrictions etc.)

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Featuring below are examples of conditions in two large Danish takeover offers: Offer for shares in TDC | 2005

Offer for shares in Danisco | 2011

The bidder owns, or has received valid acceptances of the offer in respect of an aggregate of more than 90 %* of the share capital and votes or such lower percentage as will permit to initiate compulsory acquisitions following an EGM.

The bidder owns, or has received valid acceptances of the offer in respect of more than 90 %* of the shares and voting rights before the end of the offer period.

TDC’s board of directors has not withdrawn or adversely modified the Board Recommendation.

Danisco’s board of directors has not withdrawn or adversely modified the Board Recommendation.

No change in or binding undertakings to change the share capital of TDC or its articles of association and no announcement of any proposal initiated by TDC in relation thereto shall have been made.

No change in or binding undertakings to change the share capital of Danisco or its articles of association and no announcement of any proposal initiated by the board of directors in Danisco thereto shall have been made

No sale or any other disposal by TDC of any of its holding of treasury shares, apart from a disposal in connection with a potential redemption or exercise of already issued stock options.

No sale or any other disposal by Danisco of its holding of treasury shares (apart from potential redemption of share options in connection to the exercise of such before the expiry of the offer period).

No issuance by TDC of any convertible debt, warrants or other securities directly or indirectly convertible or exchangeable into TDC shares.

No issuance by Danisco of any convertible debt, warrants or other securities directly or indirectly convertible or exchangeable into, or acting as a surrogate for, Danisco shares.

The bidder has obtained the necessary approvals from the relevant authorities, court instances and supervising authorities.

The bidder has obtained any necessary approvals and clearances from the relevant competition authorities in EU and China.

There shall not be in effect any law or any restraining order or other order of any public, judicial or regulatory authority preventing or making illegal the completion of the takeover offer nor the intended compulsory acquisition.

The completion of the takeover offer is not (significantly) prevented by applicable legislation or any decision by the courts or public authorities.

No Material Adverse Effect shall have occurred.

No Material Adverse Effect shall have occurred.

* The acceptance threshold was decreased to 85 % during the offer period.

* The acceptance threshold was decreased to 80 % during the offer period.

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2.4 Consideration Are there any requirements as to the price offered? A bidder must act in accordance with the general principle of equal shareholder treatment to the effect that the offer must be submitted to all shareholders in all share classes of the listed company and that all shareholders in the same share classes must be treated equally. Mandatory offers The price offered by a bidder pursuant to a mandatory takeover offer must at a minimum correspond to the highest price paid by the bidder, or persons acting in concert with the bidder, for the shares already acquired in the target company during the six months preceding the offer (the “highest price”-rule). The Danish FSA is authorised to adjust the price offered upwards or downwards, provided that – the price of the shares has been manipulated; – the price in general or in the offer has been affected by extra­ ordinary events; – the offer is made with a view to saving a financially distressed company; – the principle of equal treatment was disregarded when the price was fixed; or – the price offered is significantly lower than the market price. When determining the offer price, the Danish FSA may choose to apply the highest price paid by the bidder for the shares already acquired during the 12 months preceding the takeover offer; the average price paid by the bidder during the same period of time; the net asset value of the target company, or other objective criteria. The Danish FSA is usually reluctant to adjust the offer price, unless it is evidently and significantly divergent from the market price. It may be difficult to establish the correct offer price in case of indirect transfers at a holding company level, especially if such holding company has other assets, and therefore it may be necessary to contact the Danish FSA prior to carrying out the transaction in question. Voluntary offers Voluntary offers are not subject to restrictions on the offer price, except for the principle of equal shareholder treatment as described above. In the context of a voluntary offer, the bidder will usually, unless special circumstances apply, offer a premium to encourage the shareholders to tender their shares. As it appears from the chart on the next page, the 26

initial premium offered in the offer document compared to the share price the day before the announcement of the offer have in a number of large Danish takeover cases been in the range of 20-40 %. The bidder may also increase the offer price during the offer period, which will be Initial an premium offered one day offer anno considered improvement of the compared offer and will to therefore havebefore to be announced at least two weeks prior to the expiry of the maximum 10-week offer period. This is rarely seen in practice, but it occurred in the takeover of Danisco A/S by Dupont in 2011, when the offer price was increased from DKK 665 to DKK 700 per share at a late stage in the offer period. Initial premium offered compared to one day before offer announcement (%) 120

110

100 80 60 40 20 0

73

73 43 39 36

31

31 30 27 26 23 7

6

0

0

0

Are there any specific requirements in relation to the type of consideration offered? There are no specific requirements to the type of consideration to be offered in a voluntary offer and, accordingly, consideration in shares or other securities (whether listed or not) may be offered. Most often, the bidder offers cash – however, consideration in shares was offered in the takeover offer for the shares in e.g. NEG Micon A/S by Vestas Wind Systems A/S in 2003, Group 4 A/S by Group 4 Securicor plc. in 2004, Potagua FLS A/S by FLSmidth & Co. A/S in 2006 and Nørresundby Bank A/S by Nordjyske Bank A/S in 2015. In a mandatory offer, the bidder is required to offer cash, voting shares or a combination thereof as consideration. Voting shares offered as consideration in a mandatory offer shall be shares with a certain liquidity, which generally is deemed to be the case if the shares are listed on a stock exchange (not necessarily in Denmark). If the shares are not 27

deemed to have sufficient liquidity, the bidder will be required to offer cash consideration as an alternative. If the bidder in the six months preceding the expiry of the offer period has accumulated more than 5 % of the voting rights in the target company against cash payment, a mandatory offer shall include a cash consideration alternative. The bidder may always offer cash as consideration – also in the event that the bidder has acquired shares in the target company against payment of shares in the six months preceding the expiry of the offer period. It is an indispensable requirement that all shareholders are offered the same type of consideration, regardless of whether the offer is voluntary or mandatory. The type of consideration offered shall be stated explicitly in the offer document. If shares or other securities are offered as consideration, the offer document shall contain such information as required for the shareholders to fully assess the consideration offered. This generally includes information on the activities of the issuer of the consideration shares, key figures from the issuer’s most recent financial statement, and key elements and figures from the issuer’s most recently published expectations for the current financial year. Moreover, to the extent that shares are issued as consideration in connection with the completion of the offer, such issue may be subject to the Danish prospectus requirements meaning that the offer document has to contain information corresponding to that of a prospectus. Does the bidder need to have certain funds prior to launch of the takeover offer? Before a takeover offer is announced, the bidder is required to ensure that it is able to meet all of its obligations to pay the consideration offered. The bidder will typically be considered to have sufficient funding in place on the basis of loan documentation containing customary conditions precedent and covenants. Moreover, the bidder shall have made the necessary arrangements, if the consideration is to be paid in e.g. shares or other securities. An example of such necessary arrangements is for the board of directors in the bidder company to have obtained the necessary approval or authorisation by the general meeting to issue the consideration shares in question. The Danish FSA has taken the view that the financing requirement is not satisfied, if the board of directors, at the time of the announcement of the takeover offer, has merely sent out the notice to convene a general meeting at which the board of directors has asked for the right to issue the consideration shares. In the event that such necessary arrangements have not been made before the takeover offer is announced, it is possible to satisfy this requirement by way of other financing arrangements, e.g. a guarantee commitment. It is a requirement that it is stipulated in the offer document how the offer will be financed. 28

2.5

Publication of the offer and offer period

When shall the offer be submitted? Announcement of a mandatory offer shall be made as soon as possible after having obtained a controlling influence, and the bidder is likewise required to make an announcement of a voluntary offer as soon as possible after the decision to submit the offer. No later than four weeks after the controlling influence has been obtained through a mandatory offer, the bidder is required to make public an offer document and an offer advertisement. With respect to a voluntary offer, the bidder is required to publish an offer document and offer advertisement no later than four weeks after the initial announcement of the decision to submit a takeover offer – even if the takeover offer would not be expected to be completed. Can the bidder decide on the duration of the offer period on a discretionary basis? Pursuant to the Takeover Order, the offer period shall be no less than four weeks and no more than 10 weeks from the date of publication of the offer document. The offer period may be extended by not less than 14 days at a time at the discretion of the bidder, but not beyond a 10-week maximum, except for the following two instances in which a longer offer period is permitted: Firstly, the bidder can extend the offer period beyond the 10-week period to a maximum of nine months from the publication of the offer document in order to obtain the necessary approvals from public authorities, typically the competition authorities. For the bidder to have such a right to extend the offer period, the takeover offer must be conditioned on obtaining the necessary approvals from public authorities. After having obtained the necessary approvals, it is possible for the bidder to improve the takeover offer only once, provided that the subsequent 14-day extension of the offer period may be contained within the 10-week maximum. Secondly, the submission of a competing takeover offer during the offer period will automatically trigger an extension of the existing offer until the expiry of the competing offer. The Danish FSA can in special circumstances decide to grant an exemption and allow the offer period to be extended further than the maximum offer period and in other situations than those described above. The chart on the next page shows the length of the offer period applied in a number of larger Danish takeovers. It is apparent from the chart that the length of the offer period varies depending on the circumstances, but that the initial offer period is usually between four and six weeks.

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Offer period (days) Danisco (2011)

38

32

NEG Micon (2003)

28

32

Satair (2011)

56

TDC (2005)

8

41

Nørresundby Bank (2015)

46

Copenhagen Airports (2005)

46

Radiometer (2003)

41

ISS (2005)

35

Kompan (2005)

33

BHJ (2004)

29

DiBa Bank (2013)

28

Jeudan (2012)

28

Greentech (2011)

28

Falck (2004)

28 0

Initial offer period

14

29

40

Thrane & Thrane (2012)

29

14

28

First extension

42

56

70

Second extension

84

98

112

126

Third extension

Does a new offer document have to be prepared if the offer period is extended? An extension of the offer period can be made without preparing a new offer document. However, the bidder will be required to prepare a supplement to the offer document, which has to be approved by the Danish FSA and published in the same manner as the offer document. Does the expiry of the offer period trigger any obligations for the bidder? The bidder is required to publish an announcement within 18 hours of the expiry of the offer period stating, whether the takeover offer will be extended or shall be considered final. The announcement should state the preliminary result of the takeover offer. This announcement is to include as much information as possible on the result of the takeover offer, e.g. the number of votes the bidder expects to have obtained, and for voluntary offers whether the conditions to the takeover offer are presumed to be fulfilled. Not later than three working days after the takeover offer is considered final, the bidder shall publish an announcement stating the final result of the takeover offer.

30

This deadline should be taken into account when determining the length of the offer period and the date on which the offer period is to expire. We recommend that the 18-hour deadline is set to expire on a weekday, which is not a Friday, while still leaving sufficient time for a two-week extension within the maximum 10-week offer period.

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3.

The takeover process

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A voluntary takeover process is comprised by a preparatory phase, the actual offer phase and often completed with a redemption and delisting phase. Below is a figure that illustrates the key steps in a voluntary offer process.

Illustrative voluntary takeover process: Key steps

Preparation

Target approach

Shareholder approach

Offer submitted

Board statement

End of offer

Redemption and/or delisting

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4.

Preparation

34

4.1

Approach to target company

To whom in the target company shall a bidder make an approach prior to announcing an offer? Prior to making a voluntary offer, the bidder will often approach the target company for the purpose of obtaining a recommendation by the board of directors and to get access to a high-level due diligence. In a Danish context, it would be customary to direct the first informal approach to the chairman of the board of directors of the target company with the view to express an indicative and non-binding interest in the target company and to determine whether there is a basis for further discussions on a confidential basis. Depending on the company and the persons approached, a potential bidder may involve other people in the target company as well as external advisers. Discussions or negotiations should remain confidential. 4.2

Due diligence

May a bidder perform a due diligence prior to launching a takeover offer? The Danish Securities Trading Act stipulates that a takeover offer may be submitted subsequent to the bidder having carried out a due diligence investigation. The scope of such due diligence investigations would have to be agreed to by the board of directors of the target company. What is the typical due diligence approach? Typically, the bidder will initially conduct an outside-in due diligence prior to approaching the target company’s board of directors. After having negotiated the terms of the offer with the target company’s board of directors, the bidder may be granted access to a limited amount of confidential material – perhaps supplemented by Q&A sessions with the executive management and select key employees of the target company. Depending on the process, the target company may decide to make the data room available to several potential bidders in a structured auction process. The target company ought to be very diligent in setting and managing the restrictions on disclosure of confidential or inside information as well as be attentive of other commercial considerations, when providing potential buyers access to information during a due diligence process. Will the potential bidder have to sign a confidentiality agreement? Before access is granted to confidential and non-public information, the target company should invariably require that the potential bidder undertakes confidentiality obligations by signing a non-disclosure agreement. In connection with entering into the confidentiality agreement, it may also be relevant to consider exclusivity, standstill obligations and break fee arrangements, if any. 35

Will inside information obtained by the bidder through a due diligence process prevent the bidder from submitting a takeover offer? As is the case in most jurisdictions, insider trading is generally prohibited. However, the Danish Securities Trading Act explicitly exempts shares acquired as part of a public takeover offer from the general prohibition on insider trading, provided that any inside information was obtained in connection with a due diligence investigation of the target company carried out with the view to submit an offer. Following a due diligence process, it should be considered by the target company, whether there are any non-public matters related to the target company, which are relevant for the shareholders to be informed about in order for them to assess the terms of the takeover offer. To the extent there are such matters, the target company will usually choose to disclose such matters to the market prior to or in connection with the bidder’s publication of the terms of the takeover offer. 4.3

Market purchases

Is it possible to acquire shares in the market prior to, during or after the offer period? The bidder is not prohibited from trading target shares in the market prior to, during or following the offer period. However, if the bidder has obtained confidential information about the target company, which constitutes inside information, e.g. through a due diligence process, the bidder may depending on the circumstances acquire shares in the market following the announcement of the takeover offer and the publication of the offer document. A restriction that may discourage or altogether deter a bidder from carrying out such acquisitions is the principle of equal shareholder treatment and, more specifically, the pricing requirements associated with pre- and post-takeover target share acquisitions. Also, the bidder may be prevented from acquiring shares prior to the announcement of the offer, or be subject to restrictions in this regard, in the event the bidder has signed a standstill agreement with the target company. Do acquisitions in the market impact the offer price? The price offered by a bidder pursuant to a mandatory takeover offer must at a minimum correspond to the highest price paid by the bidder, or persons acting in concert with the bidder, for the shares already acquired in the target company during the six months (possibly 12 months, if the Danish FSA decides to adjust the offer price of a mandatory offer) preceding the offer. Additionally, the bidder is required to observe the principle of equal shareholder treatment.

36

During the offer period, the bidder is required to increase the price offered to the shareholders in the offer, if the bidder or persons acting in concert with the bidder acquire shares in the target company or enter into agreements with shareholders or others concerning sale or purchase of shares in the target company on more favourable terms than those offered to the shareholders of the target company in the offer document. The same compensation rule applies in a period of six months following the expiry of the offer period in order to limit any speculation in not selling shares during the offer period for the purpose of obtaining a premium for such shares after the expiry of the offer period where the bidder might be willing to pay an increased price for the remaining shares necessary to reach the 9/10 limit for compulsory redemption. The compensation shall be in cash and in the same currency as in the offer. If, at the time of the announcement of the offer, the bidder has decided to enter into or seeks to enter into agreements with individual shareholders or others regarding purchase or sale of shares of the target company, information thereon must be included in the offer document. 4.4 Disclosure obligations Is a prospective bidder required to disclose that it is considering submitting a takeover offer? In a voluntary takeover offer, there is generally no obligation for the potential bidder to disclose its approach to or its intentions in relation to a target company prior to submitting a takeover offer. However, as soon as the bidder has made the final decision to submit a takeover offer, the bidder is required to announce that decision as soon as possible thereafter. When and how shall the bidder announce the offer? Announcements with regard to a decision to make a voluntary takeover offer, or with regard to an obligation to submit a mandatory takeover offer, must be published as soon as possible via electronic media in such a way that the notice reaches at least the public in those countries, where the target company’s shares are admitted to trading on a regulated market or alternative marketplace. Simultaneously with the publication of the above announcement, the bidder is also required to submit the announcement to the Danish FSA and the regulated market or alternative marketplace, where the target company’s shares are admitted to trading. The Danish FSA will publish the announcement on its website.

37

Does the acquisition of shares in a target company trigger disclosure obligations? An acquisition of shares in a Danish listed company will trigger a disclosure obligation on the bidder, if the bidder crosses any of the thresholds of 5 %, 10 %, 15 %, 20 %, 25 %, 50 % or 90 % and limits of 1/3 or 2/3 of the voting rights or nominal value of the share capital of the target company as a result of the acquisition. The bidder is required to notify the target company as well as the Danish FSA as soon as possible after crossing the above thresholds. After receiving the notification, the target company shall publish the contents thereof. In addition, the target company is required to publish information related to major shareholdings received from a successful bidder in the Danish Public Register of Major Shareholders which is kept by the Danish Business Authority. Is the target company required to address rumours or information leaks in the market? In case of market rumours relating to a prospective takeover offer, the target company may be obliged to make an announcement to the market clarifying the particular rumour. The target company is not required to monitor market rumours or address rumours that are without substance. However, if such rumours relating to a prospective takeover offer, regardless of their merit or accuracy, are capable of affecting the share price of the target company, it may be relevant to publish a clarifying announcement in order to avoid adverse market reactions and potentially the stock exchange suspending trading in the shares. On the other hand, the target company will be required to address any information leaks in the market.

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4.5

Other preparatory actions

What is required to be in place prior to announcing the offer? The offer document must be approved by the Danish FSA before the offer document is made public. The bidder must submit the offer document and the offer advertisement in such time as to allow the Danish FSA to be able to approve the offer document and the offer advertisement no later than four weeks after the initial announcement of the voluntary offer, or when the requirement to make a mandatory offer was triggered. According to the Takeover Guidelines, the Danish FSA aims to have a review period of five working days, but such period will be extended by several weeks in a share exchange offer as the offer document will also have to meet the prospectus requirements. Each new draft may require up to five additional working days for review. On average, three drafts will be required with repect to cash-based takeover offers. Generally, the Danish FSA does not perform reviews or commentary on offer documents or offer advertisements before the initial announcement of a prospective takeover offer. However, there is a screening process in place in which the Danish FSA may state its opinion as to potential problems with a particular draft document. During this screening process, the Danish FSA typically takes particular note of concerns relating to conditions in voluntary offers, and the offer price in mandatory offers. To the extent that approvals from relevant competition authorities or other public authorities are required, the voluntary offer may be made conditional upon obtaining such approvals on satisfactory terms. As mentioned, the financing must be in place before the offer is publicly announced. Before the bidder announces its decision or obligation to launch a takeover offer, it must have ensured that it is fully capable of satisfying the necessary cash consideration and/or that it has taken all reasonable measures to ensure that any other form of consideration can be disbursed.

39

5.

Key documents

40

Which key documents are required in a takeover process? Prior to the announcement of a voluntary offer, the potential bidder will often want to have access to carry out due diligence and enter into discussions with the board of directors of the target company for the purpose of securing the board of directors’ recommendation upon announcement of the offer. In this connection, it is customary that the bidder and the target company enter into a confidentiality agreement relatively early in the process – often coupled with a standstill agreement. This may also include exclusivity provisions, provided that the board of directors of the target company remains able to satisfy its fiduciary duties, including the ability to consider a competing offer. Just prior to the announcement of the offer, the parties may enter into an agreement setting out the terms and conditions of the offer announcement and any obligations of the target company in this respect. The key documents in connection with the takeover offer are as follows: 1. Offer announcement: The bidder shall publish an announcement of the voluntary takeover offer as soon as possible after a final decision to that effect has been made, or when the obligation to make a mandatory takeover offer was triggered. 2. Offer document: The bidder is required to publish an offer document no later than four weeks after the final decision to submit an offer, or in case of a mandatory offer no later than four weeks after controlling influence has been obtained. The document shall contain the necessary information for the shareholders to form an informed opinion of the offer, including information on the financial and other terms of the offer. 3. Statement by the target company’s board of directors: Within the first half of the offer period, the board of directors of the target company is required to publish a statement setting out its opinion of the offer, and the reasons on which it is based, including its views on the effects of the implementation of the offer on all the company interests, the bidder’s strategic plans for the target company and their likely repercussions on employment and the locations of the company’s places of business. 4. Fairness opinion: The board of directors of the target company may decide to have its financial adviser prepare an independent financial evaluation of the offered price to assist the target company’s board of directors in forming its opinion of the offer.

41

42

May the terms of the takeover offer be amended? The bidder may at any time before expiry of the offer period amend the terms of the offer, provided that such amendment constitutes an improvement of the terms to the shareholders of the target company. In respect of voluntary takeover offers, the bidder may waive or reduce terms of the takeover offer. When amending the terms of the offer, the bidder is required to prepare a supplement to the offer document, which must be approved by the Danish FSA and published in the same manner as the offer advertisement and offer document. Amendments, including some waivers of conditions, to the takeover offer will automatically trigger a two-week extension of the offer period. What information is required to be included in an offer document? The offer document must contain information on the financial and other terms of the offer, including the deadline for accepting the offer and any other information, which is considered necessary in order for the shareholders to form an informed opinion of the offer. Furthermore, an offer advertisement summarising the terms of the takeover offer must be published. In the event of significant amendments being made to the information provided in the offer, which are deemed necessary for the shareholders to form an informed opinion of the offer, the bidder shall as soon as possible publish an announcement with regard to these amendments, e.g. changes in the management of the bidder or if the bidder sells any of its group companies. The Takeover Order stipulates that the offer document must as a minimum contain the information set out in the overview on the following two pages:

43

Minimum information to be contained in the offer document

1

Target company

2

The bidder

– Name, address and CVR no. – Organisational structure – Parties in concert with bidder – Current activities, management and ownership – Contact with target company prior to offer

3

Responsible person

– Name and address of person responsible for the offer on behalf of the bidder

Voting rights 4 & third party arrangements

44

– Name, address and CVR no. – Current activities – Key figures and expectations – Parties acting in concert with target company

– Share of voting rights – Extent of controlling influence – Transfer agreements – Agreements regarding voting rights or otherwise of relevance to the offer

5

Contact between bidder and target

6

Compensation of management

– Compensation and incentive schemes to management related to the shares of the target company

7

Future plans

– Future plans for the target company – Continued listing – Compulsory redemption of minority shareholders

8

Employment

– Changes in employment at target company – Changes in employment at bidder company

9

Distribution

– Distribution of funds within 12 months after completion of offer – Type and size of distribution

10

Offer price

– Offer price – Compensation if suspension/limitation of rights attached to shares – Impact on price from dividend payments in offer period

– Contact with target company prior to offer

11 Conside­ration

– Type of consideration – Method of cash payment – If bidder may improve offer – Exchange ratios – Timing regarding right to dividends – Exercise of voting rights

12

Shares as consideration

13

Financing

14

Offer period

– Offer period – min. four weeks/max. 10 weeks – Bidder’s right to buy shares in the target company in offer period

15

Acceptance

– Acceptance procedure – Shareholder rights maintained during offer period

16

Result and settlement

– Where and when result will be published – If conditions are fulfilled – Timing of settlement

17

Competing offer

– Withdrawal right if competing offer is submitted

18

Applicable law

– Legislation that governs agreements between bidder and shareholders

19

Number of shares (voluntary offer)

– Maximum and minimum number of shares bidder undertakes to acquire

20

Conditions (voluntary offer)

– Description of conditions – If bidder may reduce or limit conditions

21

Subsequent mandatory offer (voluntary offer)

– Potential obligation to submit mandatory offer

– Financing of the offer

45

6.

The statement by the board of directors

46

What are the formal requirements regarding the statement by the board of directors in the target company? Upon receiving a voluntary or mandatory takeover offer for the shares of a listed company, the board of directors of the company is required to draw up and make public a document setting out its opinion of the takeover offer and the reasons on which it is based. The board statement must include the board of directors’ views on the effects of accepting the takeover offer on all company interests and the bidder’s strategic plans for the target company and their likely repercussions on employment and the locations of the company’s places of business. In the statement, the board of directors should, as a minimum, advise on the offer price as well as any competing offers or conflict of interests. Furthermore, the board of directors will be obliged to correct any incomplete or misleading information in the offer document. Additionally, the Takeover Guidelines require the board of directors to address the advantages and disadvantages of the offer with specific regard to the target company’s expected development. Finally, the board statement is required to clearly point to any conflict of interests that the members of the board of directors of the target company may have. Examples of such may be if a board member of the target company is also on the board of directors of the bidder company, or if a board member of the target company has a significant shareholding in the target company. It is the responsibility of each board member to assess, whether a conflict of interests is to be mentioned in the board statement. In practice, there is a tendency towards more extensive board statements to the effect that the board of directors provides more specific comments on the offer price and the premium offered, the general liquidity of the shares, whether consideration is offered in cash or shares and the risks connected hereto, the identity of the bidder and the bidder’s overall plan with the target company as well as any conditions connected to the offer, e.g. minimum acceptance requirements, obtainment of necessary approvals and material adverse change-clauses. By providing the shareholders of the target company with the board of directors’ objective analysis of these matters based on the board of directors’ insight into the company’s affairs, the primary purpose of the board statement is to establish the best possible basis for the shareholders to make an informed decision as to whether to sell or keep their shares in the target company. The board of directors is not obliged to either recommend or advise against accepting the offer and may thus remain neutral. Historically, bidders have rarely been successful in their attempts to acquire a controlling influence in the Danish market by way of a hostile takeover offer, i.e. when the board of directors has advised against accepting the takeover offer. 47

The board statement must be published within the first half of the offer period. In addition, the statement must be published on the target company’s website and sent to the target company’s registered shareholders at the expense of the bidder. Simultaneously with the publication of the statement, the board of directors must communicate its opinion to the representatives of the employees of the target company. Will the board of directors be required to obtain a fairness opinion? Although not a requirement, it is common for the board of directors of the target company to obtain a fairness opinion on the offer price from an independent financial adviser to which the board of directors can refer in their statement. The fairness opinion obtained by the board of directors from a financial adviser will determine, whether the offer is fair to the shareholders from a financial point of view given the elements and assumptions stated in the fairness opinion.

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49

7.

Competing offers

50

What are the conditions for a competing takeover offer? A competing offer must be submitted before the expiry of the offer period of the initial takeover offer and must comply with the same rules and requirements as any other public takeover offer. Unless the initial takeover offer is withdrawn by the relevant bidder, the offer period of the initial takeover offer will automatically be extended until the expiry of the offer period of the competing offer. Shareholders in the target company, who have accepted the initial takeover offer are free to renounce this acceptance within three working days of the publication of the competing offer. In connection with the extension of the offer period, the initial bidder may choose to improve the initial takeover offer in response to a competing offer. A competing bidder is not required to raise the price by a certain minimum. Competing takeover offers are rarely seen in a Danish context, which is probably due to the fact that several takeover offers have been made following a structured process, whereby the board of directors and its financial adviser have explored possible interest in the market and received expressions of interest from potential bidders.

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8.

Takeover defences

52

Are takeover defences allowed? Neither the Danish Securities Trading Act nor the Takeover Order contain specific provisions as to the legality of defensive measures undertaken by the target company. The legality of such measures depends on general rules contained in the Danish Companies Act, including the duties and responsibilities of the board of directors of the target company to act in the interest of the company and in the interest of all shareholders. Part 18 of the Danish Companies Act contains regulation allowing for suspension of differentiation in voting rights and other control restrictions in connection with a takeover offer, but only as an “opt-in” regime to be approved in advance by a qualified majority of shareholders at a general meeting. The above resolutions only apply, if the target company becomes subject to a takeover offer proferred by a company in another EU/EEC country, which has adopted a resolution to the same effect or which is controlled, directly or indirectly, by a parent company, which has adopted a resolution to the same effect. Moreover, the current Recommendations on Corporate Governance of 1 May 2013 (updated November 2014) contain a recommendation, as set out below, as to the duties of the board of directors and rights of the shareholders in the event of a takeover offer, which apply to Danish listed companies on a “comply-or-explain” basis:

The Committee recommends that the company set up contingency procedures in the event of takeover bids from the time that the board of directors has reason to believe that a takeover bid will be made. According to such contingency procedures, the board of directors should not without the acceptance of the general meeting, attempt to counter the takeover offer by making decisions which in reality prevent the shareholders from deciding on the takeover offer themselves. Recommendations on Corporate Governance May 2013

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According to the commentary on the Recommendations on Corporate Governance, the board of directors is to prepare contingency procedures with respect to potential takeover offers. Such procedures are often referred to as a takeover response manual. The purpose of such procedures is to ensure that appropriate procedures are established in order to evaluate the takeover offer and allow the shareholders of the target company to decide, whether they want to dispose of their shares. Based on the reporting of the Large Cap companies for the financial year of 2014 on the Recommendations on Corporate Governance, the vast majority of the Large Cap companies follow this particular recommendation. What are common takeover defences? A distinctive feature of Danish company law is the recognition of voting ceilings and differentiation in voting rights – even in publicly traded companies. Shares may carry disproportionate voting rights, which is the case in a number of Danish listed companies, especially in companies with a foundation as the controlling shareholder. The combination of differentiation in voting rights and foundation ownership allows listed companies access to additional capital through the stock market, while at the same time making them less vulnerable to takeover attempts. Voting ceilings are also widely used in the financial sector in which such are arguably a contributing factor to the lack of consolidation seen in the industry despite the recent financial crisis. Examples of the types of provisions in the articles of association of Danish listed companies which could serve as defence mechanisms include: a) Voting restrictions by maximising the total number of votes of any one shareholder, irrespective of the total number of shares held; and b) A requirement of prior notification to the company and recording in the company’s share register in order to obtain voting rights at the company’s general meeting. By way of example, in the case of Danisco A/S, which was acquired by Dupont in 2011, the target company had removed a voting restriction from its articles of association less than half a year prior to the announcement of the takeover offer by Dupont.

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“Secondly, the Board has once again discussed whether the voting right restriction of 7 1/2 % serves its purpose of ensuring the Board a better negotiating position in case of a take­over bid. The Board has concluded that the value of the voting right restriction does not offset the negative impact on the share price. The Board therefore proposes to the Annual General Meeting to remove the voting right restriction laid down in the Articles of Association.” Extracted from the chairman’s report at the annual general meeting of Danisco A/S on 19 August 2010.

With specific regard to voting ceilings, the Danish Business Authority has indicated that it may in certain instances be willing to register a conditional amendment to the target company’s articles of association in order to remove existing voting restrictions subject to the imminent completion of a pending takeover offer in order to facilitate the process. In 2010, the previous 10 % threshold on treasury shares was abolished from the Danish Companies Act. The change entails that, subject to approval by the general meeting, a company will be able to acquire own shares without limitations for an amount equal to the distributable reserves. This increased flexibility opens up new opportunities for a takeover defence, whereby the target company can use the right to sell and acquire treasury shares only to place these with a “friendly” third party. A thorough review of the articles of association of the potential target company and an examination of whether any takeover defence resolutions have been adopted in the potential target company should be considered prior to determining whether to submit a voluntary takeover offer. Are hostile takeover offers common? A takeover is typically categorised as “hostile”, if the board of directors of the target company advises against accepting the takeover offer. These are somewhat of a rarity in Denmark as bidders will not often choose to launch an offer without having been granted access to a due diligence and having secured the recommendation of the board of directors of the target company prior to launching the takeover offer.

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9.

Shareholders, employees of the target company and other stakeholders

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9.1 Contact with other shareholders in the target company Before or during the offer period and negotiation process between the target company and the bidder, it may become relevant for the bidder to contact larger shareholders in the target company, as their position may have a decisive impact on the outcome of the takeover process and increase the likelihood of the takeover offer being accepted. A bidder will typically reach out to larger shareholders with a view to seek support or a form of irrevocable commitment prior to the announcement of the takeover offer. Not all larger shareholders would accept becoming insiders and will therefore be reluctant to engage in discussions prior to submission of a takeover offer. The target company is required to send the offer advertisement and the statement by its board of directors to its shareholders. Additionally, but limited to a total of three times during the offer period, the bidder is entitled to require that the target company forwards other information relating to the takeover offer to the shareholders of the target company at the expense of the bidder. The target company is entitled to enclose additional information as well as its opinion of the bidder’s enclosed information. After having forwarded such information to its shareholders three times on the request of the bidder, the target company is entitled to refuse any further requests by the bidder. This mechanism of allowing the bidder to have information forwarded to the shareholders of the target company may be especially relevant in hostile takeovers. 9.2 Role of employees The Danish takeover regime does not provide specific rights for employees in a bidding process other than the right of notification of the takeover offer and the right to have a separate opinion from the representatives of the employees regarding the effects of the offer on employment appended to the statement by the board of directors. The board of directors shall include considerations on the bidder’s future plans for the target company, including the retention of existing employees and management, and any significant changes in the employees’ terms of employment or the location of the company’s places of business in its statement but is not obligated to let such considerations have a decisive impact when deciding whether to support a takeover offer.

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9.3 Other stakeholders It is particularly relevant to pay attention to other stakeholders such as suppliers, lenders, customers and other contract parties with contractual relationships with the target company that contain change of control provisions affording a contract party certain rights such as consent, payment or termination in the event of a change of control in the target company. The potential bidder may need to conduct due diligence to identify contracts containing change of control provisions and determine the risk associated with triggering these provisions in connection with a successful takeover.

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10.

Public authorities, etc.

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10.1 The Danish FSA As previously mentioned in this guide, prior to publication, the offer document and the offer advertisement must be approved by the Danish FSA. Also, as described in the above section on offer price considerations, the Danish FSA is authorised to adjust the offer price of a mandatory takeover offer depending on the specific facts of the case. 10.2 Nasdaq Copenhagen The listing rules of Nasdaq Copenhagen require that listed companies file a notification to the stock exchange (but not to the market) in advance of any upcoming public takeover offers for its shares. Advance notification to Nasdaq Copenhagen is also required in connection with a listed company’s preparations for making a takeover offer with regard to the shares of another listed company. The potential bidder is obliged to notify Nasdaq Copenhagen when it has reasonable grounds to assume that its preparations will lead to the submission of a takeover offer. When receiving a notification of a prospective takeover offer with respect to a Danish listed company as target, Nasdaq Copenhagen will intensify the surveillance of the target company and the trading in its shares. The purpose of the intensified surveillance is to ensure that trading in target shares is carried out in accordance with the rules in the Danish Securities Trading Act and thereby prevent especially insider trading and market manipulation. 10.3 Competition authorities As completion of many takeover offers often triggers merger control filings and approval requirements with relevant competition authorities in the relevant jurisdictions, the takeover offer will often be made conditional on obtaining such approvals often resulting in an extension of the offer period.

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11.

Post completion of takeover

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11.1 Squeeze out/sell out Where a shareholder holds more than 9/10 of the shares in a company and a corresponding proportion of the voting rights, such a shareholder may, pursuant to the Danish Companies Act, deem that the other shareholders have their shares redeemed by that shareholder. In such case, the other shareholders must be requested to transfer their shares to the shareholder within four weeks. If the squeeze-out is initiated following the completion of a public takeover offer, the redemption price should be calculated in the same way as the price offered in the mandatory offer, unless a minority shareholder requests that the redemption price be determined through an arbitration procedure by independent experts appointed by the courts. The consideration to be offered to the minority shareholders may be the same as that offered in the original takeover offer or it may be in cash. However, the minority shareholders are able to demand cash consideration. The revised Takeover Order introduced a “cool-down period”, which requires a bidder to compensate the shareholders that accepted a takeover offer in the event that the bidder within six months of completion of the takeover acquires further shares in the target company on more favourable terms than those offered in the takeover offer, e.g. at a higher price. Specific requirements apply to the contents of the notice to the other shareholders regarding the redemption. Any minority shareholders, who have not transferred their shares to the controlling shareholder before the expiry of the four-week period shall be requested, through notification in the Danish Business Authority’s IT system, to transfer their shares to the controlling shareholder within a period of not less than three months. Shareholders owning 1/10 or more of the shares or votes of the target company will be able to block the redemption of the entire share capital of the target company. Conversely, where a shareholder holds more than 9/10 of the shares in a company and a corresponding proportion of the voting rights, the other shareholders may compel such shareholder to acquire their shares (a “sell out”). If the redemption price in a sell out completed within six months after completion of a takeover exceeds the offer price in the takeover offer, the former bidder (now redeeming shareholder) will not be obligated to compensate the shareholders that accepted the takeover offer. The 1/10 majority is calculated excluding any treasury shares held by the target company itself.

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11.2 Delisting Following a successful takeover offer, a target company may apply for delisting of its shares on a regulated market. It will be considered, whether delisting would be detrimental to the interests of the minority shareholders, if such exist. In practice, this means that if the bidder obtained legal ownership of more than 9/10 of the shares and the votes in the target company through the takeover offer, and the bidder has initiated compulsory redemption, an application for delisting will be approved. The procedure for delisting shares requires an application to be submitted to Nasdaq Copenhagen, and may in case of compulsory redemption pursuant to the Danish Companies Act take effect either at the beginning or the end of the four-week notice period afforded the minority shareholders. Shareholders owning 1/10 or more of the shares or the voting rights of the target company may under particular circumstances be able to block a delisting otherwise intended by the bidder as was the case in the 2005 voluntary takeover of TDC A/S in which the bidder, Nordic Telephone Company ApS, did not attract 9/10 of the existing shareholders or voting rights in TDC A/S. In effect, the bidder was prevented from squeezing out the minority shareholders and ultimately from delisting the target company.

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How to get in touch

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Gorrissen Federspiel | Copenhagen office H.C. Andersens Boulevard 12 1553 Copenhagen V Denmark T +45 33 41 41 41 | F +45 33 41 41 33 – Our offices are located in the center of Copenhagen – 20 minutes by car from Copenhagen Airport – 5 minutes walk from Copenhagen Central Station or Vesterport Station – Gorrissen Federspiel’s has limited free parking space available Public parking a few minutes away at: – Jernbanegade 1, 1608 Copenhagen V

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