42
Legal Focus
SEPTEMBER 2014
Completing the Transaction BioAlliance Pharma and Topotarget Enter into Cross-Border Merger Agreement
LM speaks to Jean-Nicolas Soret, partner, and Fabien Pouchot, senior associate, from Altana about their involvement in the BioAlliance Pharma and Topotarget Corporate Cross-Border Merger.
Please introduce yourself and your firm.
Altana is a French business law firm with 60 lawyers, offering tailor-made legal assistance in high level cross-border and domestic transactions and litigations.
Our M&A team has a very strong international focus and several of our attorneys are admitted both to the Paris Bar and to the NY Bar. We advise on public and private mergers, acquisitions, divestiture, joint venture and carve out transactions, as well as group reorganizations. My own core practice is advising on cross-border mergers and acquisitions.
Please tell us about your involvement in the cross- border merger between BioAlliance Pharma and Topotarget.
Our client, BioAlliance Pharma, being the absorbing entity, we have been fully involved throughout the whole transaction, from the structuring of the deal until its final completion.
Our involvement was at a maximum for the main reason that this transaction was, to our knowledge, the first cross-border merger between two listed companies under the 2005 Directive on cross-border mergers. (Directive 2005/56/EC - A previous cross-border merger between two listed companies had been completed in 2013 under directive 2001/86/EC on European company).
On this transaction, we worked hand in hand with our top-tier Danish colleagues at Bech- Bruun, advising BioAlliance Pharma on the Danish aspects’ side. Topotarget was advised by Kromann Reumert and Dechert.
Why is this cross-border merger a good deal for all parties involved?
The corporate cross-border merger transaction structure enables achieving certain objectives that usual securities law transactions are rarely able to achieve.
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A cash for share or a share for share tender offer, for example, will almost never lead to obtaining 100% of the share capital and voting rights of the target company. Conversely and by definition, the merger will lead to the full and complete absorption of the target company by the absorbing company.
Therefore, corporate mergers represent a true combination for the creation of a single legal entity, whereas tender offers lead -in case of success- to the acquisition of the target’s control by the initiator, the target becoming a subsidiary of the initiator.
Moreover, in the tender offer scheme, the target company, as a subsidiary will, just like its parent company, remain listed, unless the threshold allowing for buyout offer with squeeze-out is crossed (which, under French law, implies holding a minimum of 95% of the share capital and voting rights), which can never be taken for granted, in particular where the free float is substantial.
It is true that corporate mergers require the approval of the shareholders’ meeting of each of the two merging entities, both deciding at a qualified majority for the extraordinary meetings . However, in practice, the support from the main shareholders of the merging entities through the undertaking to vote in favor of the merger, and a communication for the public’s information, is a key success factor for the completion of the merger.
The board of directors of both entities must in the course of the preparation of the transaction ensure that the terms and conditions proposed to the respective shareholders are attractive for the two sides, fair and reasonable. As long as the “price” proposed for the merger is nothing but the result of a comparative value appraisal of both companies (through the exchange ratio), a natural balance must be found to ensure that no shareholders’ group is felt adversely affected.
In any case, the shareholders’ vote is secured by a set of strict and protective rules. As a matter of
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