Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • CapitaLand Limited
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • Bank of America Merrill Lynch
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek Holdings
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • China Ocean Shipping Group Company (COSCO)
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • Royal Ahold (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • Nishimura & Asahi (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Mannheimer Swartling (Stockholm)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Rolf Watter
  • Bär & Karrer AG (Zürich)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

GLOBAL STATISTICAL UPDATE – XBMA Quarterly Review for Second Quarter 2017

Editors’ Note: The XBMA Review is published on a quarterly basis in order to facilitate a deeper understanding of trends and developments. In order to facilitate meaningful comparisons, the Review has utilized generally consistent metrics and sources of data since inception. We welcome feedback and suggestions for improving the XBMA Review or for interpreting the data.

Executive Summary/Highlights:

  • Global M&A volume in Q2 was ~US$823 billion, ~6% higher than Q1.
  • European M&A continued its strong trend in Q2, accounting for ~30% of deal volume, up substantially from prior years.
  • Aggregate inbound M&A volume into all BRIC countries reached nearly US$33 billion, marking the strongest Q2 in recent years, contributing to the strongest H1 in recent years, and more than doubling from H1 2016.
  • The Real Estate sector had the strongest Q2, with US$131 billion in total deal volume, posting its strongest quarter of the last four quarters, and jumping 90% relative to Q1.
  • The Industrials sector accounted for the most cross-border M&A volume in Q2, at almost US$75 billion and accounting for nearly 25% of all cross-border deal activity in Q2.

Click here to see the Review.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

EUROPEAN UPDATE – Guide to Public Takeovers in Europe 2016-2017

Editors’ Note: This guide summarises the main characteristics of the French, Dutch, German, Italian, Spanish and UK laws and regulations applying to public takeover offers as they stood at June 2016.

Executive Summary: The guide has been updated to reflect legal and regulatory changes made to the national takeover regimes since it was last published in April 2013. The Takeover Directive has been implemented in all of the countries which are covered. Its aim is to provide equivalent protection throughout the EU for minority shareholders of companies listed on an EU regulated stock exchange in the event of a change of control, and to provide for minimum guidelines on the conduct of takeover bids.

However, the Takeover Directive makes some of its provisions – relating to defensive measures and voting rights/restrictions – optional, which means that, even after implementation, different regimes exist in different countries.

Against this background, the intention is that this guide will not only be of practical use for users, but also that an understanding of how particular jurisdictions have changed their legal/regulatory systems and practices will be of additional help to users of this guide in understanding the ongoing implications of the Takeover Directive.

Click here to read the full report.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

DUTCH UPDATE – AkzoNobel v. Elliott: landmark case on board conduct in takeover situations

Editors’ Note: Contributed by Geert Potjewijd, managing partner at De Brauw Blackstone Westbroek, and a member of XBMA’s Legal Roundtable, and Arne Grimme and Reinier Kleipool, partners at De Brauw Blackstone Westbroek. De Brauw Blackstone Westbroek is a leading Dutch law firm with broad expertise in M&A and governance matters.

The Enterprise Chamber has ruled that a company’s response to an unsolicited takeover proposal falls within the board’s authority to determine the company’s strategy. The board does not have to consult with shareholders first, but remains accountable to shareholders for the company’s actions. The ruling sets out important viewpoints for board conduct and other aspects of corporate governance in takeover situations.

Background

Akzo Nobel N.V. recently received three unsolicited takeover proposals from PPG Industries, Inc. The AkzoNobel management and supervisory boards have unanimously rejected these proposals, in each case after an extensive and careful decision-making process. On 1 June 2017 PPG announced the withdrawal of its takeover proposal for AkzoNobel.

In response to the proposals by PPG, activist hedge fund Elliott International, L.P. demanded from AkzoNobel that it enter into discussions with PPG. After AkzoNobel rejected PPG’s third proposal, Elliott filed a petition with the Enterprise Chamber in Amsterdam requesting a corporate inquiry into AkzoNobel’s conduct and policies, and certain interim measures, including an extraordinary general meeting to vote on the dismissal of the chairman of AkzoNobel’s supervisory board.

Corporate governance in takeover situations

In its judgment of 29 May 2017, the Enterprise Chamber denied the requests by Elliott and others to order interim measures, as it did not see sufficient reason to order any such measures. The Enterprise Chamber will rule on the request for a corporate inquiry at a later date.

The ruling by the Enterprise Chamber sets out important viewpoints for corporate governance in takeover situations.

Authority and accountability of the board

  • A company’s response to an unsolicited takeover proposal falls under the authority of the management board to determine the company’s strategy, under supervision of the supervisory board.
  • Shareholders do not have to be consulted prior to the company’s response to an unsolicited takeover proposal, but the management and supervisory boards remain accountable to shareholders for the company’s actions.
  • In assessing an unsolicited takeover proposal, the board must be guided by the interests of the company and its stakeholders with a view to long term value creation. As a logical consequence, an unsolicited proposal could be reasonably rejected even against the will of (a majority of) shareholders.
  • While the Enterprise Chamber does not test the validity of the grounds for rejecting an unsolicited takeover proposal, it is important that the company show it has seriously considered the proposal by following a careful decision-making process. Relevant factors are:
    • the intensity and frequency of management and supervisory board meetings;
    • the assistance from respected external financial and legal advisers;
    • the range of topics considered when rejecting the proposal (e.g. value, timing, certainty and stakeholder considerations).

Duty to negotiate

  • There is no general obligation for a target company to enter into substantive discussions or negotiations with a bidder that has made an unsolicited takeover proposal, not even in the case of a serious bidder making a serious bid.
  • The obligation of managing and supervising directors to properly perform their duties may lead to a requirement to enter into discussions or negotiations with a bidder. Whether substantive discussions or negotiations with a bidder are required depends on the actual circumstances, which may include:
    • whether the company has decided to abandon its standalone strategy;
    • the bidder’s strategic intentions;
    • to what extent the company can assess the proposal without substantive discussions;
    • other interactions between the company and the bidder, including whether the company has given the bidder sufficient insight into the reasons for its rejection as to enable the bidder to improve on its proposal;
    • whether the company can realistically withdraw from such discussions or negotiations, especially if there are reasons to anticipate a breach of confidentiality, which could impact the company’s share price and shareholder base.

Relationship with shareholders

  • Shareholders are entitled to adequate information about the considerations underpinning those policies, not only with a view to exercising their rights as a shareholder, but also to determine their own investment policies.
  • A continued lack of confidence of a substantial number of shareholders in the company’s strategy as determined by the management and supervisory boards is harmful to the company and its stakeholders. It is in principle up to the boards of the company to consider how the company can normalise its relationship with shareholders.

With this ruling, the Enterprise Chamber confirmed that it is the exclusive authority of the boards of a Dutch company to determine the response to an unsolicited takeover proposal. The boards do not have a duty to consult with shareholders prior to responding to an unsolicited takeover proposal. In such a situation, the boards need to carefully take into account the interests of all stakeholders of the company and they remain accountable to shareholders on the position taken in response to an unsolicited takeover proposal.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

PERUVIAN UPDATE – The Impact of “Lava Jato” on M&A in Peru

Editors’ Note:  This post was written by Jose Antonio Payet and Mario Lercari Bueno of Payet Rey Cauvi Pérez, one of Peru’s leading firms with significant experience in foreign investment in Peru.  Mr. Payet is a member of XBMA’s Legal Roundtable.

Background: Lava Jato reaches Peru

Corruption has always been a sensitive issue when doing business in Latin America. In recent years, the Brazilian “Lava Jato” investigation has been in the spotlight for its implications throughout the continent. Brazilian construction giants such as Odebrecht, OAS, Camargo Correa, Andrade Gutierrez and Quieroz Galvao, among others, were indicted in Brazil and other jurisdictions with criminal charges for corrupt practices. As the evidence for this corruption network became clearer, the main representatives of these companies started to participate in leniency programs to reveal information concerning the officials of the respective countries that were involved in the corrupt practices. Peru has been no exception to this reality.

The indictment issued by the U.S. Department of Justice in late 2016 states that Odebrecht representatives acknowledged the payment of US$ 29,000,000 to Peruvian officials from 2005 to 2014. For these payments, Odebrecht allegedly received illegal benefits such as the award of investment projects with favorable conditions, the disqualification of other consortia in the bidding processes, and the execution of addenda to increase projects costs, among others alleged benefits.

This revelation started a political crisis in Peru in which it became clear that major investment projects during 2005 to 2014 were tainted by corrupt practices affecting bidders and Peruvian officials. Criminal investigations have been started against the responsible public officers  – some officers are already imprisoned and an international warrant has been issued for the arrest of former President Alejandro Toledo for charges of receiving a USD 20 million dollar bribe from Odebrecht.  In this context, the Government of Peru (“GOP”) has issued additional measures directed mainly to provide additional safeguards against corruption in public bidding processes, to prevent the sale of assets by companies involved in cases which would jeopardize payment of penalties to the Government, and to increase sanctions for companies involved in corruption practices.

The Government takes action: Measures to counter corruption practices

On October 2016, the Peruvian Congress passed an authoritative law in which it delegated to the executive branch faculties to legislate in the prevention and fight against corrupt practices, among other matters. Under such circumstances, the executive branch issued Legislative Decrees N° 1341 and N° 1352 that introduced severe administrative sanctions to companies convicted for corrupt practices and money laundering. Furthermore, on February 2017, the executive branch issue an Urgency Decree to prevent the sale of assets of companies convicted for such crimes. Finally, new legislation establishing criminal liability of legal entities has been passed.

All these measures have an important impact in M&A processes, including due diligence, structure, drafting and execution.

  • Modification of the State Procurement Law (Ley de Contrataciones del Estado): Legislative Decree N° 1341 modifies the State Procurement Law to incorporate new grounds for permanently disqualifying entities to contract with the GOP. In this sense, a company whose representatives have been convicted in any jurisdiction for corruption related crimes and/or money laundering will not be able to contract with the Republic of Peru. The same sanction applies if such representatives acknowledge the commission of such crimes in a leniency program in any jurisdiction.
  • Criminal and administrative sanctions for companies: Legislative Decree N° 1352 establishes administrative sanctions for the companies whose representatives have been convicted for corruption related crimes and/or money laundering, among others. In this cases, the liability of the company is determined in the criminal process of the person(s) that allegedly committed such crimes. The administrative sanctions that the criminal judge may impose are:
    • Fines of more than the double of the illegal profits obtained but less than six times such profits;
    • Disqualification in any of the following forms: (a) suspension of the company’s activities, (b) temporal or definitive prohibition to carry out the same activities in which the criminal conduct was performed and (c) to contract with the GOP.
    • Cancelation of licenses, concessions or rights or any other authorization granted;
    • Temporal or definitive foreclosure of their offices and/or establishments; and
    • Dissolution of the company.

The implicated company may avoid these administrative sanctions if, prior to the commission of the crime, it adopts and implements in its organization a prevention model appropriate to its nature, risks, needs and characteristics, consisting of appropriate monitoring and control measures to prevent the aforementioned crimes or to significantly reduce risk of their commission.

Change of ownership in a company does not affect liability for past acts.

  • Restriction of the Transfer of Assets: Urgency Decree N° 003-2017 and its Guidelines establish certain restrictions for companies which are included within its scope of application. The most relevant provisions include: (i) restriction on the transfer of funds abroad, (ii) the need for prior authorization from the Ministry of Justice in case of a transfer of rights and/or assets; and, (iii) the withholding of payments that GOP entities must execute in favor of the included companies. The subjective scope of this regulation will be applicable to the following companies:
    • Companies which have been convicted or whose officials or representatives have been convicted in Perú or abroad by a final decision for crimes against public administration or money laundering or equivalent crimes (if they have been committed in other countries) against the GOP.
    • Companies which have recognized or whose officials or representatives have recognized the commission of crimes against public administration or money laundering or equivalent crimes (if they have been recognized in other countries) against the GOP.
    • Related parties to the companies set forth in the preceding items.

To this date only the economic group of Odebrecht S.A has been included under the scope of this decree.

The GOP has dictated other measures to prevent and fight corrupt practices. In this sense, it is worth noting that all the new PPP Agreements shall include an anti-corruption provision that will permit the GOP to terminate any PPP Agreement in which corrupt acts were performed during bidding or selection process to award the PPP.

Lava Jato’s hangover: A new way of dealing with M&As

The Lava Jato investigation is having a profound impact in the political landscape in Peru. Information received in leniency programs in Peru, Brazil and the United States, have allowed Peruvian prosecutors to indict corrupt officials, and further investigations are underway. Although these investigations will have a short term negative impact in infrastructure investment in Peru, the long term effects will probably be beneficial.

On the other hand, companies involved in the Lava Jato investigation will probably need to sell some or all their Peruvian assets. These include assets in toll roads, electricity generation, irrigation, oil and gas, among others. Many of these M&A transactions will have to comply with the provisions of Urgency Decree N° 003-2017.

In addition, as criminal and administrative sanctions to companies have grown harsher, Peruvian companies must implement compliance and prevention models according to its nature, risks, needs and characteristics. Accordingly, legal firms are upgrading their compliance and white collar criminal law practices as future M&A transactions will surely include an in-depth revision of compliance and prevention models of the target companies.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

GLOBAL STATISTICAL UPDATE – XBMA Quarterly Review for First Quarter 2017

Editors’ Note: The XBMA Review is published on a quarterly basis in order to facilitate a deeper understanding of trends and developments. In order to facilitate meaningful comparisons, the Review has utilized generally consistent metrics and sources of data since inception. We welcome feedback and suggestions for improving the XBMA Review or for interpreting the data.

Executive Summary/Highlights:

  • Global M&A volume in Q1 totaled approximately US$778 billion, approximately 10% higher than Q1 2016, marking the second highest Q1 since 2011.
  • Cross-border M&A activity accounted for 43% of global deal volume in Q1, above 2016 levels, and led by activity in the Materials and Healthcare sectors.  Five of the 10 largest deals in Q1 were cross-border transactions.
  • European M&A activity accounted for almost 29% of deal volume in Q1, up substantially from recent levels, whereas Chinese and U.S. M&A accounted for smaller percentages of global deal volume than in recent years.
  • The Energy & Power sector accounted for over US$665 billion in global deal volume over the past 12 months, exceeding by nearly $190 billion and retaking the lead from the High Technology sector.
  • However, the Materials sector accounted for the largest share of cross-border M&A activity over the past 12 months, exceeding US$230 billion, with cross-border deals accounting for 59% of global deal volume in this sector.  Cross-border deals also drove deal activity in the Consumer Staples sector, representing 71% of total M&A activity.

Click here to see the Review.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

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