What is the Legal Basis for Mergers and Acquisitions in LU?
Mergers and Acquisitions (M&A) generally involve takeover bids for public companies. Through the Law of 19 May 2006 Luxembourg implemented the EU Directive 2004/25/EC dated 21 April 2004 regulating takeover bids. LU Mergers and acquisitions are also regulated
by corporate and anti-trust laws as well as by potential specific industry regulatory controls. Legal mergers may also be used as an acquisition mechanism. They are governed by the Law of 10 August 1915, as amended, on commercial companies.
The term spin-off describes a procedure where an independent company is created through a sale or distribution of new shares of an existing business or a division of a parent company.
A spin-off is a type of divesture. A spin-off is often used prior to a potential sale of a part of a business. It is expected such an individual entity will be worth more after being span-off and transformed into an independent entity.
The Leveraged Buy-out
A leveraged buy-out is a transaction where an investor acquires a controlling interest in a company’s equity by financing a significant part of the purchase price through leverage/borrowing. The assets of both the acquired company and the acquiring company are used as collateral for the borrowed capital. A combination of debt instruments (bank and debt capital market) is often used.
Joint Venture Agreements in Luxembourg
A joint venture is a business agreement on cooperation between two parties, which can take up various forms. The most usual one is developing and setting up a new entity for a specified period
of time through a purchase of specific assets with contributed capital. Both parties agree on rules for joint management and control as well as their share of revenues and expenses.
Why Choose Top Lawyers in Hance Law
Hance Law assists clients in preparation of takeover bid documentation, including offer documents, which need to be approved by the CSSF, advertisements with details on bid commencement, results and additional steps to be taken, forms of acceptance to be used for the offer and share and purchase agreements with the controlling shareholder.
We prepare documentation for filling applications for approval of competent authorities (anti-trust authorities and others). We assist clients with spin-offs, leveraged buy-outs and joint venture agreements. Furthermore, we help our clients through various phases of a joint venture: preparation of initial documents, negotiations on behalf of clients, feasibility study, incorporation of a corresponding Luxembourg corporate entity, preparation of an according shareholders’ agreement.