5%

A person with an interest of 5% or more in a company listed on the ASX (which has a broader meaning than simply being a registered shareholder) must file a substantial shareholder notice with the ASX and with the company. This notice is available to the public through the ASX website. Each change of 1% or more in the holding must also be notified, until the holding has fallen below 5%.

>10%

A person with a greater than 10% interest can prevent a bidder from satisfying the tests to compulsorily acquire any remaining shares.

>20%

There are limited methods by which an interest (which again has a broader meaning than simply being a registered shareholder) of more than 20% can be obtained. The two primary methods are by a takeover bid or a scheme of arrangement (see section 4.2 - Guide for Foreign Investors to Acquisitions in Australia).

>50%

Voting control is achieved for ordinary resolutions (e.g. appointment and removal of directors).

75%

A shareholder can ensure a special resolution is passed.

90%

Compulsory acquisition (squeeze out) of minority shareholders is generally permitted.

100%

Complete control of the target is achieved.

A takeover bid can be used for either agreed acquisitions or acquisitions which are contested / hostile.

Agreed or contested?

A scheme of arrangement requires the cooperation of the target company, so can only be used in an agreed transaction.

The acquirer can offer cash, shares in itself (or a related company), a combination of cash and shares, or a choice between various forms of payment.

Offer price

The acquirer can offer cash, shares in itself (or a related company), a combination of cash and shares, or a choice between various forms of payment.

The acquirer sends a bidder’s statement to all target company shareholders, providing details of the offer, source of funds, intentions in relation to the target and the formal offer terms.

The target company sends a target’s statement to all shareholders, containing the directors’ recommendation whether to accept or reject the bid.

The shareholders must be given at least one month to accept the offer (although it usually takes more than one month to satisfy all conditions of the offer).

The offer can be for up to 12 months to allow conditions to be satisfied.

Payments to shareholders are made when all conditions are satisfied or waived.

Process

The target company prepares a notice of meeting and explanatory statement, including the directors’ recommendation, for a meeting to approve the proposed scheme of arrangement. The bidder will provide information required for the notice of meeting.

ASIC is given at least two weeks to review the draft, before the target company seeks court approval to convene the meeting.

The meeting documents are sent to shareholders, at least 28 days before the meeting.

If shareholders approve the transaction, a final court approval is obtained.

Payments to shareholders are then made.

An offer will typically be subject to conditions such as:

+ minimum acceptances;

+ regulatory approvals (e.g. foreign investment and/or merger clearance); and

+ no material adverse change in the target’s business.

Conditions

An offer will typically be subject to conditions such as:

+ regulatory approvals (e.g. foreign investment and/or merger clearance);

+ no material adverse change in the target’s business; and

+ a favourable expert’s report.

Approval by shareholders at a general meeting is not required. However, to compulsorily acquire any dissenting minorities, the acquirer must have at least 90% of all shares at the end of the bid.

Shareholder approval requirements

The proposal must be approved by 75% of the votes cast (by number of shares) and 50% of the number of members who vote (by headcount).

A minimum of three months from announcement of the deal to completion.

Timing

Approximately three months from announcement of the deal to completion.

The acquirer must have at least 90% of the shares at the end of the bid, to be able to compulsorily acquire any dissenter’s shares on the same terms as the bid.

Squeeze out of dissenters

Not required as the scheme binds all shareholders, whether or not they voted in favour of the scheme.