Mandatory Tenders Offers

On 1 February  2021, the Capital Market Board made an announcement with respect to the proposed amendments to the Communiqué on Tender Offers No. II-26.1 (“Communiqué No. II-26.1”) and published the draft of the Communiqué Regarding the Amendments to the Communiqué on Tender Offers No. II-26.1 (“Draft Amendment to the Communiqué No. II-26.1”) on its official website.

The main amendments proposed under the Draft Amendment to the Communiqué No. II-26.1 are the determination of the offer price; exceptions and exemptions applicable to the tender offer; the liability arising from the tender offer information form and the scope of brokerage contracts.

1. Certain principles on the determination of (i) the shareholders who may benefit from mandatory tender offer and (ii) the share values are regulated:

Within the scope of the Draft Amendment to the Communiqué No. II-26.1; persons who are shareholders of a public company on the date of disclosure of the acquisition of management control will be able to sell their shares during the mandatory tender offer with respect to the shares they hold on the date of the disclosure of acquisition of management control.

The list indicating the shareholders who may sell their shares during the mandatory tender offer and the share values will be prepared by the Central Registry Agency (Merkezi Kayıt Kuruluşu) on the business day preceding the commencement of the mandatory tender offer.

2. Determination of the mandatory tender offer price:

With a more simplified calculation method, in case of a direct acquisition of control, the mandatory tender offer price for listed companies shall not be less than (a) the arithmetical average of daily adjusted averaged market price within 6 months preceding the disclosure of the acquisition of management control and (b) the highest price paid by the person(s) acquiring management control within 6 months preceding the acquisition of management control.

(i) Ancillary benefits which can directly be considered as a part of the price paid in share purchases triggering the mandatory tender offer obligation, or (ii) premiums and other similar items payable upon the occurrence of certain conditions after the date of transfer of shares shall be taken into consideration in the calculation of the tender offer price.

If and when the Capital Market Board takes a decision regarding (i) the implementation of the provisions of Articles 101 and 107 of the Capital Market Law No. 6362 with regard to the acts which constitute market abuse or (ii) the acceptance of existence of extraordinary developments affecting the economy or the market; the Capital Market Board may then decide to suspend the takeover bid or to re-determine the takeover bid price.

3. The exceptions as well as exemption conditions applicable to the mandatory tender offer have been expanded:

With the new amendment, it is now regulated that the Capital Markets Board may grant an exemption if the management control is acquired as a result of inheritance, portion of the inheritance or matrimonial property regime upon an application in this respect.

On the other hand, new exceptions to the mandatory tender offer have been offered for the following circumstances:

  • If, as a result of the obtainment of management control, the squeeze-out and sell-out rights are triggered
  • If the change of management control varies as a result of the existing shareholders acquiring shares through a capital increase where the pre-emptive rights have not been restricted,
  • In case of acquisition of the management control unintentionally due to reasons such as suspension of the voting rights of some shareholders, capital decrease through redemption method, amendment to the privileges attached to the shares or share repurchases by the company.

Also, it has been clarified that the mandatory tender offer obligation will not be triggered, if:

  • The voting rights granting the management control are transferred between the legal persons which are controlled by the same natural or legal persons or among such persons under management control (therefore a definition of “transfer between the group under the management control” is brought up),
  • A person who acquires a portion of the shares owned by the shareholders holding the management control of a partnership not only during a share transfer but also during a capital increase of such partnership, shares the management control of the partnership under a written contract equally or to a lesser extent and for the first time with the shareholders holding the management control before the share transfer; provided that 50% or less of the voting rights of the partnership are owned by those persons.

Additionally, as a new requirement, a public disclosure should be made by those who obtain the management control within two business days following the acquisition of management control if there is an exception to mandatory tender offer.

4. An addition has been made to the persons who are liable for the information in the information form relating to the tender offer:

Pursuant to the Communiqué No. II-26.1, an information form should be prepared for tender offer applications to the Capital Market Board. After the information form is approved by the Capital Market Board, if the information in the form turns out to be inaccurate, misleading or insufficient, bidders, the intermediary institution and the signatories of the intermediary institution shall be liable.

5. Certain arrangements have been introduced in respect of the content of brokerage contracts:

With this respect, it is prohibited to include provisions in the brokerage agreement preventing the shares which are subject to transaction restrictions, legal disputes or any other rights claims from participating to the tender offer. The purchase price of the said shares should be deposited in an interest bearing account until the finalization of the legal dispute or the cease of the transaction restriction.

Ergin Mizrahi
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