INTRODUCTION

Mergers & Acquisitions (“M&A”) refers to transactions involving the transfer of ownership of corporations. In contrast to Private M&A, Public M&A transactions involve corporations which are publicly listed on one or more stock exchanges such as the Singapore Exchange (“SGX”). The public M&A regulatory framework is contained in the Listing Manual of the Singapore Exchange (“Listing Manual”) which provides the regulatory and compliance obligations of publicly listed corporations, and the Singapore Code on Takeovers and Mergers (“Takeover Code”), which prescribes the obligations of parties involved in public M&A transactions.

WHAT YOU CAN EXPECT

• You may find yourself acting as either the Lead Counsel or Local Counsel in cross-border transactions – Acting as the Lead Counsel entails more oversight of the transaction, often coordinating between multiple Local Counsels, and also holding the pen on the key transaction documents. Acting as a Local Counsel requires in-depth knowledge of the local laws, and regulatory and licensing approvals that may impact the transaction. A good understanding of foreign direct investment laws is especially relevant when representing the Offeror in transactions involving corporations from India, China and several other Asian jurisdictions.
• The party seeking to acquire the publicly listed corporation is termed the Offeror or Bidder. The latter is more appropriate in circumstances where more than one party seeks to acquire the publicly listed corporation. The publicly listed corporation whose shares form the subject matter of the acquisition is termed the Offeree or Target.
• Performing Due Diligence on the Offeree, identifying risks and potential liabilities from the M&A transaction – The Offeree may set up a data room to allow access to its non-public information. The documents enable the Offeror to ascertain the Offeree’s assets, liabilities and shareholders’ equities including the ownership of real and personal property, encumbrances, contractual obligations, as well as the propriety of share and dividend issuances. Additionally, the anticipated change of control of the Offeree may affect its contractual obligations to suppliers and creditors. Financial advisors will work alongside you on the financial and tax matters concerning the Offeree. The results of the due diligence exercise will influence the viability of the public M&A transaction, the optimal transaction structure and the price which the Offeror may be willing to pay for the Offeree.
• The corporate finance professionals representing the Offeror are referred to as Financial Advisors. Under the Takeover Code’s requirements, they are engaged by the Offeror to provide the Cash Confirmation that the Offeror has sufficient financial resources to provide the consideration under its offer. These financial resources may come from its surpluses or obtained through debt facilities. Financial advisors also perform due diligence on the Offeree’s financial affairs and provide the Offeror with transaction structuring advice. Further, an Independent Financial Advisor (“IFA”) is appointed to advise the Offeree’s independent directors on the financial aspects of the deal, assisting them by providing recommendations to the independent shareholders (such as retail investors).
• Public M&A transactions require regulatory approvals – Public M&A transactions are subject to the scrutiny and approval of the Securities Industry Council (“SIC”), which administers the Takeover Code and may impose sanctions for non-compliance. Depending on the peculiarities of the public M&A transaction, other regulatory authorities may oversee the transaction. These include the Competition and Consumer Commission of Singapore (“CCCS”) and other industry-specific regulators. Approvals are typically sought from the relevant regulators prior to the announcement of the public M&A transaction. Transactions may also be contingent on the obtaining of requisite approvals.
• The Offer Timetable must be strictly adhered to – The SIC’s oversight of the public M&A transaction requires proper coordination at each stage of the transaction to ensure adherence to the Takeover Code. The Offer Announcement kicks off the offer timetable and the Offeror may revise the offer to the Offeree’s shareholders prior to the Offer Closing Date subject to the requirements prescribed by the Takeover Code. However, preparatory work for the public M&A transaction commences long before the Offer Announcement is made.
• The Offeror may have other parties acting in concert with it. These parties are referred to as Concert Parties. They may seek legal advice from their own corporate M&A lawyers. The shareholdings of Concert Parties are relevant in determining whether the Offeror and its Concert Parties have triggered certain obligations based on their combined shareholdings under the Takeover Code.
• Public M&A transactions involve Share Sales in which the Offeree is acquired as a going concern. The Offeror may purchase the Offeree’s shares from either the open market or from individual shareholders who hold substantial stakes in the Offeree. The Takeover Code sets out certain conditions which when triggered, impose on the Offeror the obligation to proceed with a Mandatory General Offer. The Offeror may also opt to proceed via a conditional Voluntary General Offer to the Offeree’s shareholders.
• Public M&A transactions may also occur via Schemes of Arrangement which are executed by the Offeree. Through the Scheme of Arrangement, the Offeror obtains full control of the Offeree with the Court’s sanction, provided the requisite approval is obtained from the shareholders’ and creditors’ meetings. Alternatively, a Statutory Amalgamation grants the Offeror full control of the Offeree by merging both corporations into a single entity.
• Takeover strategies are diverse and require a good understanding of the Offeror and Offeree’s businesses – The Offeror may extend a Cash Offer, Exchange Offer (consisting of the Offeror’s securities), or a combination to the Offeree’s shareholders as consideration for their shareholdings. Differing Shareholder Approval requirements between the various transaction structures will require you to weigh between competing takeover strategies to optimise the success of the transaction. For example, the requirement for Creditor Approval in a scheme of arrangement may create undesired uncertainty despite other positive aspects of the structure.
• Throughout the process of a public M&A transaction, some of the documents that you may help prepare include:
  • A Non-Disclosure Agreement which will govern the Offeree’s non-public information (information which is not subject to the continuous disclosure requirements pursuant to the Listing Manual) that is provided to the Offeror.
  • A Letter of Intent which sets out the key terms of the transaction between the parties on a “subject to contract basis” and may contain a legally binding “no-talk” or “no-shop” exclusivity agreement.
  • The Offeror Document from the Offeror to the Offeree’s shareholders containing the terms of the offer and conditions on which the offer may be contingent. This allows the Offeree’s shareholders to consider the offer.
  • The Offeree Circular from the Offeree to its shareholders setting out the IFA’s opinion and independent directors’ recommendations.