BELGIAN UPDATE – M&A Outlook (2016)

Executive Summary: A review of M&A in Belgium in 2015 and outlook for 2016.

Main Article:

1          Legal Environment

1.1       General

The general legal environment for public and private M&A remained very stable throughout 2015. In 2014, Belgian tax payers (private individuals) feared that in the course of 2015 the tax regime with respect to capital gains on equity investments might be changed. Exempted gains would become taxable, so they thought. Reality has been different. So far the tax exemption has not been affected, although it must be said that a few striking M&A transactions (Omega Pharma and IVC), in which important capital gains were realised, gave rise to new debates on the subject. The government did in fact change the tax regime of income from capital by way of interests or dividends in the context of a so-called ‘tax shift’ but the capital gains rules have been left unaltered. As things have developed, there is no expectation that the capital gains regime will change in the immediate future.

1.2       Statutory law


On the corporate side no major legislative changes are to be reported. A reminder on the subject of the abolition of bearer securities:

Abolition of bearer securities – further developments

The law of 14 December 2005 on the abolition of bearer securities provided that the issuer had to proceed, before 30 November 2015, with the auction sale of all remaining securities that are represented by bearer securities but have not been converted into registered or dematerialised securities. The auction had to take place under the auspices of Euronext Brussels. Bearer security holders were only entitled to claim the auction proceeds, not the securities themselves. In December 2015, bearer securities that were not sold, had to be registered with the Deposito- en Consignatiekas / Caisse des Dépôts et Consignations (a governmental institution) and will have to remain there until 31 December 2025 unless they are validly reclaimed by the legitimate holder. After that, the issuer may repurchase the securities if it notifies its intention to repurchase no later than 31 December 2025. In the event of such repurchase the proceeds from the repurchase will go to the Belgian State. Absent such notice, the State will receive title to the securities.

Vulture Funds

A law of 12 July 2015 severely restricts the ability of funds that invest in sovereign debt to enforce their rights on the relevant debtor States or to obtain freezing orders against them, regardless of the law applicable to the relationship between creditor and debtor.

Case-law – Corporate

It is impossible in this newsletter to summarise all court decisions published in 2015 that may impact on Belgian M&A transactions. Here is a short summary of a few highlights (some reported case-law is older but was published in 2015):

Non-compete covenants

The Court of Cassation (in two judgments of 23 January and 25 June 2015) has taken important decisions on non-compete covenants:

  • A non-compete covenant that is not limited in time, as to its object (i.e. business scope) or as to the relevant territory, is contrary to public policy.
  • If the contract validly allows for partial nullity, e.g. if it provides that in the event of nullity only the excessive part will be declared invalid, the trial court may reduce the impact of the non-compete covenant to what is valid.

In the first matter at hand the non-compete was for 17 years, which the trial court judged excessive. It therefore decided that the clause failed entirely. The Court of Cassation holds that there was no need for nullity of the entire covenant, but that its effect could be reduced to what was valid under the circumstances.

In the second matter the non-compete had no territorial restriction (Belgium and abroad). The trial court judged that this was excessive and decided that the covenant failed entirely. The Court of Cassation reiterates that the trial court had the power to reduce the covenant’s effects to what could be a valid restriction.

Share price in forced sales or purchases of shares

Recent case law provides more guidance regarding the valuation of shares in the context of a forced sale or purchase of shares in order to settle lasting disputes between shareholders.

The Antwerp Commercial Court (30 May 2014) held that a shareholder which wants to leave the company has to prove that its rights and interests are seriously harmed by the other shareholders’ conduct (serious cause) and that it cannot reasonably be expected to remain on board as a shareholder.

The President of the Antwerp Commercial Court (section Hasselt) (6 June 2014) held that the value of the shares must normally be determined on the date of the transfer of the shares. The value of the shares should correspond to the price a third party would be willing to pay.

The Court of Cassation (21 February 2014) clarified that the trial court must not take into account the consequences of the serious cause on the value of the shares. Likewise, the court should not take into account the parties’ behaviour. This is a confirmation of previous case-law.

In a more recent judgment the Court of Cassation (20 February 2015) took a more explicit stance. The Court decided, first, that as a matter of principle, the valuation must be as per the transfer date (but there may be exceptions). Second, the valuation must be corrected in order to neutralise the impact of the conflict on the value of the shares. Third, the use of a cut-off date other than the transfer date may be a valid way for the judge to carry out this neutralisation. The consequence of this is that the cut-off date for the share valuation may be set prior to the share transfer date. Based on this case-law trial courts may exercise a more extensive power of appreciation to determine the value of the shares than was the case under previous case law.

Financial assistance

If certain conditions are met, Belgian company law allows a limited liability company to finance or guarantee operations effected in view of the acquisition of its shares by third parties. The Court of Cassation (30 January 2015) decided that credit facilities, loans or security interests will only be caught by the legal restrictions on financial assistance if they must be refunded or returned. Non-refundable payments will normally fall outside the scope of the financial assistance rules (but security interests remain caught by the rules).

Duration of a pre-emption right

It is open for debate whether a contractual pre-emptive right which is not limited in time may be terminated unilaterally by either party based on the mandatory law principle that no party may incur obligations for eternity. The Ghent Court of Appeal decided (11 December 2013, published in 2015) however that such a right is not terminable, on the grounds that its duration is deemed limited to 99 years and is thus for a fixed period of time. In addition, the Court held that a pre-emption right is normally not concluded intuitu personae and is therefore assignable to third parties.

Notification requirements for parties acting in concert

Belgian transparency rules oblige parties that acquire/dispose of shares in a listed company beyond certain thresholds to proceed with a notification. In a judgement of 21 February 2014 (published in 2015), the Court of Cassation clarified this requirement for parties acting in concert that meet the thresholds on a consolidated basis.

Tax – Legislative Changes

The Belgian government adopted several tax related measures in the course of 2015 both in the framework of the “Tax shift” agreement and the annual budgetary control. The following legislative changes adopted in 2015 may have a direct or indirect impact on M&A transactions in Belgium :

  • The Belgian government has introduced various measures with the overall purpose of reducing the cost of labour in Belgium. In this respect, the employer social security contributions will gradually decrease from 33% to 25%, the lump sum amount of deductible business expenses for employees will gradually increase, the tax brackets in personal income tax have been reorganized in view of increasing every employee’s net income, the income threshold for the tax free amount will substantially increase in the coming years and the current exemption of wage tax for night and shift work is increased up to 22.8%.
  • The ordinary (withholding) tax rate on income from movable property (i.e. interest, dividends, royalties, share repurchase bonuses and liquidation bonuses … ) has been increased from 25% to 27% as from 2016. The scope of application of the ordinary rate is also extended.
  • The Belgian government has introduced a “speculation” tax of 33% on capital gains made by private individuals on listed shares and certain derivatives within 6 months of their date of acquisition. Capital losses remain non tax deductible (subject to certain limited exceptions). The tax applies as of 1 January 2016.
  • The government has introduced various tax incentives for start-ups: an individual tax reduction for investment in new companies, an exemption of payment of wage withholding tax, an investment deduction for investments in digital assets and an incentive for crowd funding.
  • In the framework of the implementation of the CJEU’s decision in the Tate & Lyle case the government has introduced a withholding tax of 1.69 % on dividends paid by Belgian companies to companies located in the European Economic Area, which hold a participation of less than 10% that has an acquisition value of more than €2.5M.
  • A special tax for companies active in the diamond sector has been introduced. The tax is calculated on their turnover.

Tax – Other developments

The following developments that occurred in the Belgian and international tax environment in 2015 may have a direct or indirect impact on M&A transactions in Belgium :

  • The Fairness Tax, which was introduced in 2013, is a separate tax of 5.15 % on dividends distributed out of profits that were not effectively subject to the ordinary Belgian corporate income tax regime due to deduction of tax losses carried forward and notional interest. The compatibility of the Fairness Tax with the Constitution, double tax treaties and EU law was questioned from the beginning. A request to annul the Fairness Tax was filed before the Constitutional Court on 31 January 2015. The latter has raised a prejudicial question to the EU Court of Justice on 28 January 2015 with regard to one of the grounds for annulment. It will at least take another year before a final decision with respect to the annulment of the Fairness Tax will be handed down.
  • The international tax environment is changing rapidly and substantially. The G20 and the OECD have been taking actions to avoid or mitigate base erosion and profit shifting (BEPS). Lots of new developments in the BEPS project are following up on each other. In this respect, the OECD issued a package of 13 reports on 5 October 2015 which includes new or reinforced international standards as well as concrete measures to help countries tackle BEPS. Some of the revisions are immediately applicable such as the revisions to the OECD Transfer Pricing Guidelines, while others require changes that can either be implemented via tax treaties or in domestic law. The recent developments in the field of transfer pricing with as global purpose the aligning of profit allocation with value creation are becoming increasingly relevant in the M&A context, both in the field of tax due diligence as in tax structuring. Next to this, initiatives are also being taken on a EU level. Reference can be made to the EU anti-BEPS Directive, of which a first draft was published on 15 December 2015, including among others a new general anti-abuse rule, CFC rules and interest deductibility limitation rules. Also, the transparency measures taken both on EU level and OECD level will have a large impact on multinationals and the way they do business.

International: Bilateral Investment Treaties


The government has reached consent to ratify the BIT between the Belgium-Luxembourg Economic Union (BLEU) and Panama.

Case Law – International Investment Arbitration – China

Ping An, a Chinese investor in Fortis Bank, saw its investment drop dramatically in 2008. Ping An argued that Belgium failed to provide a stable and secure business environment for their investment and also failed to implement proper measures to prevent and resolve the Fortis liquidity crisis. The question for the arbitral tribunal was whether the 2009 BIT could apply to existing pre-1 December 2009 disputes based on breach of, and notified under, the 1986 BIT. On 30 April 2015 the tribunal declined jurisdiction.

2          M&A Business Environment

2.1       General

2015 has been a grand cru for Belgian M&A, particularly for private deals. The headline deals of 2015 were the sale of IVC by Mr. Filip Balcaen to Mohawk, the sale of Balta to Lone Star, the Delhaize-Ahold merger and the acquisition of Base by Telenet. AB Inbev’s announced acquisition of SABMiller is one of the deals that internationally have attracted enormous interest; it is by far the largest transaction with a Belgian bidder.

Public vs. Private

Although M&A activity targeting Belgian listed companies was quiet in H1 2015, activity picked up in the second half of the year when no less than six public takeover offers were notified to the FSMA against just one in the first half. Five of the H2 2015 transactions aimed at taking the target company private and the sixth involves the conditional voluntary takeover offer by AB InBev for “NewCo” in the framework of the takeover of SABMiller as the largest transaction ever recorded involving a Belgian bidder, valuing SABMiller at EUR 92 billion.

In addition to the public takeover offers discussed below, in 2015 Greenyard Foods listed on Euronext Brussels created a food and vegetable giant by merging with unlisted companies Peatinvest and Univeg; Picanol and Tessenderlo Chemie, both listed on Euronext Brussels, announced their intention to merge but these plans have faced some serious headwind following resistance by the companies’ major shareholders; Delhaize and Ahold announced their high-profile merger which now seems to be taking final form following publication of the merger proposal on 26 January 2016; and the financial press reported that Balta was keen to launch an IPO by the end of H1 2015, but its shareholders eventually opted for a private sale.

The proportion of public M&A transactions in relation to the number of the known private transactions remains small (ten public deals were announced (5.15%) vs. 184 known private deals (94.85%)). This is proportionately slightly higher than the public (4%) to private (96%) ratio in 2014 although in absolute numbers the amount of public deals has more than doubled.


Public Takeovers

In 2015, seven public takeover offers were notified to the Financial Services and Markets Authority (FSMA) and published on its website.

Groupe one point / Vision IT Group

Unconditional mandatory public takeover offer by Groupe OnePoint S.A., a French company, for all outstanding shares in Vision IT Group NV, a Belgian public limited liability company, whose shares are traded on the Alternext market of Euronext Brussels and Euronext Paris. The offer was completed on 21 August 2015 and Vision IT Group was delisted on 24 August 2015.

Shareholder Consortium / Antigoon Invest

Public squeeze-out by a consortium of shareholders, for all outstanding shares in Antigoon Invest NV, a Belgian public limited liability company, whose shares were traded on the Euronext Brussels Free Market segment. The offer was completed on 14 October 2015 and Antigoon Invest was delisted the following day.

Fosun International / Oddo & Cie / BHF Kleinwort Benson

Conditional voluntary public takeover offer by Billion Eastgate (Luxembourg) S.à r.l., an indirect wholly-owned subsidiary of Fosun International Limited, for all outstanding shares in BHF Kleinwort Benson Group NV, a Belgian public limited liability company, whose shares are traded on NYSE Euronext Brussels, which was withdrawn following a mandatory counterbid by Oddo et Cie, a French company. The acceptance period runs from 27 January 2016 until 10 February 2016 inclusive.

Saverco / CMB

Conditional voluntary public takeover offer by Saverco NV, a Belgian limited liability company, for all outstanding shares in Compagnie Maritime Belge (CMB) NV, a Belgian public limited liability company, whose shares were traded on Euronext Brussels. The offer was completed on 21 December 2015 and CMB was delisted the following day.

Perennitas / Pairi Daiza

Conditional voluntary public takeover offer by Perennitas SA, a Belgian limited liability company, for all outstanding shares in Pairi Daiza SA, a Belgian public limited liability company whose shares are traded on the Alternext market of Euronext Brussels. A prospectus has yet to be published.

AB InBev / SABMiller

On 11 November 2015, AB InBev and SABMiller announced that they had reached an agreement on the takeover of SABMiller, an English company listed on the London Stock Exchange and the Johannesburg Stock Exchange, by AB InBev, a Belgian public limited liability company, whose shares are traded on Euronext Brussels and the NYSE. The takeover process will involve three steps: (i) a UK scheme of arrangement under Part 26 of the UK Companies Act 2006 between SABMiller and its shareholders, (ii) a Belgian law voluntary cash takeover offer by AB InBev for all of the shares in a Belgian company to be formed for the purpose of the Transaction that will be held by the SABMiller shareholders following completion of the UK Scheme, and (iii) a Belgian law reverse merger between AB InBev and Newco pursuant to which Newco will be the surviving entity. The transaction is currently going through the various regulatory clearance stages and is expected to complete in the second half of 2016.

Finance & Industries / Spadel

Conditional voluntary public takeover offer by Finance & Industries NV, a Belgian limited liability company, for all outstanding shares in Spadel NV, a Belgian public limited liability company whose shares are traded on Euronext Brussels. Following the closing of the reopened acceptance period, the offeror failed to acquire the 95% of the Spadel shares required to be able to launch a public squeeze out. The offer was thus not successful and Spadel remains listed on Euronext Brussels for the time being.

Private Equity

In 2015 deals involving private equity represented 30% of the total number of transactions as opposed to 36% in 2014. This drop reflects the decreasing number of first-time institutional buy-outs on the Belgian marketplace, falling back 6% compared with 2014. The relative weight of secondary buy-outs and private equity exits remains stable. The vast majority of deals were trade sales among industry players – but the latter category also includes buy & build-transactions by private equity portfolio companies.


In 2015, management was slightly more active as investors on the Belgian M&A market compared to previous years. The ratio of management buy-outs to other deals (8% management buy-out, 92% other deals) increased with 2% compared to 2014. Often backed by private equity funds, management was especially prone to investment during the second half of 2015.

2.3       Sectors

In 2015 industrial & manufacturing have been extremely active sectors in M&A transactions, accounting for 16% of the total number of deals. These sectors concerned only 10% of the total deals in 2014. The consumer goods, food & retail sectors remain traditionally very strong in Belgium and are joined at the second place by computer, software & IT (each representing 13% of the total M&A deals). M&A activity in the other sectors remained relatively stable compared to 2014.


2.4       Geographical interest from investors

During 2015 investors from neighbouring countries have remained very active on the Belgian M&A market: similar to last year, 28% of the M&A deals feature a bidder from France, the Netherlands, Germany, Luxembourg or the UK. Interest from the UK in particular normalized to 8%, after a surprisingly low 3% involvement in M&A deals in 2014. Transatlantic deals remain an important component of the Belgian M&A market (9%), but suffer a significant fall back compared to last year (16%). Deals with Asian investors accounted for almost 4% of the total number of M&A deals, with only one single reported successful bidder originating from China.

The amount of domestic transactions has further increased to 40% since 2014, picking up significantly in the second half of the year. Most of the Belgian deals represent trade sales amongst industrial players and rarely count among the larger transactions.