The Swedish Implementation of the
Takeover Directive
Rolf Skog
2006
Rolf Skog
Sweden – Takeover Activity
1960 – 1990
 1960s: 29 takeover bids
 1970s: 38 takeover bids
 1980s: 137 takeover bids
 First ”hostile” bid 1979
 Approx 10% ”hostile bids” during the 1980s
Rolf Skog
Sweden – Takeover Activity
1990 – 2004
 358 Takeover bids
 293 Completed bids; 20 bids/year, 7%
 Almost all bids voluntary, very few mandatory bids
 Approx 10% ”hostile” bids
 In 25 % a foreign bidder, increasing proportion
Rolf Skog
Sweden – Takeover Activity
2005
 15 Takeover bids
 10 Successful bids
 5 Unsuccessful bids (3 mandatory/2 voluntary)
 1 Large, ”hostile” bid: Old Mutual – Skandia
 In 2/3 of the 15 bids a foreign bidder
 (3 Mergers)
Rolf Skog
Sweden – The Takeover Regulation
 Public debate on takeovers in the late 1960´s
 Takeover Code 1971 (UK role model)
 Several revisions over the years, latest issue 2003
 Takeover Code included in the Stockholm Stock
Exchange Listing Agreement (sanctions)
 Securities Council (”Takeover Panel”) 1986
Rolf Skog
Sweden – The Takeover Code
 All bidders, all companies listed in Sweden
 ”Cash confirmation”
 Press release, Offer document
 Equal treatment of shareholders
 Pre-, During-, Post-bid acquisitions
 Board neutrality unless shareholder approval
 Mandatory bid, 30 %
 Squeeze out / Sell out (CA)
Rolf Skog
Sweden – The Securities Council
 Statements (written) and dispensation
 Consultations
 Approx 350 statements; majority on TO
 In 2005 more than 50 statements
 Speedy process; many statements within 24 h
 No sanctions, except public censure
 Sanctions by the Stock Exchange for listed bidders
and targets
Rolf Skog
Sweden – Implementation of the Directive
 The Committee on Takeovers, set up by the Ministry
of Justice in 2004
 Task: to put forward a proposal on form and
substance
 Report in June 2005 (”New Regulation of Public
Takover-bids”)
 Public consultation
 Bill to Parliament April 2006 – Decision May 2006
Rolf Skog
Sweden – Implementation of the Directive
Form
Basic alternatives:
 1) Legislation
 2) Legislation and regulation by delegation
 3) Legislation, regulation by delegation and self-
regulation
Rolf Skog
Sweden – Implementation of the Directive
Form
- The ”success” of the self-regulatory system
- Strong wish among market participants to keep as
much as possible intact, especially the Securities
Council.
Rolf Skog
Sweden – Implementation of the Directive
Form
The Swedish Constitution
No delegation of legislative power from the Parliament
to the Government within the private law area (personal
status of private subjects or their personal and
economic interrelationships)
Rolf Skog
Sweden – Implementation of the Directive
Form
 Combination of legislation and self-regulation
 All marketplaces must, by law, have rules on
takeovers
 All bidders must, by law, agree to follow the takeover
rules
 Mandatory bid by law
Rolf Skog
Sweden – Implementation of the Directive
Competent Authority
The Financial Supervisory Authority, with power to:
 Monitor the marketplaces
 Monitor bidders
 Monitor mandatory bids
 Dispensate from the mandatory bid and prohibition
on defensive measures (delegation possible)
Rolf Skog
Sweden – Implementation of the Directive
Marketplaces
 Must have rules on takeovers
 Monitor bids (bidders, targets, advisors)
 Interpret and dispensate from the rules
(delegation possible)
Rolf Skog
Sweden – Implementation of the Directive
Securities Council
 Continue on the basis of delegation from
– Financial Supervisory Authority
– Marketplaces
 Interpretation
 Dispensation
Rolf Skog
Sweden – Implementation of the Directive
Substance
 Art 1 Scope of application –
All bids on Swedish companies and foreign
companies listed in Sweden
 Art 2 Definitions – minor adjustments
 Art 3 General principals – implement strictly
Rolf Skog
Sweden – Implementation of the Directive
Substance
 Art 4 Supervisory authority and applicable law –
Financial Supervisory Authority
 Art 5 Protection of minority shareholders –
Mandatory bid, 30 % votes, bidprice not less than
highest price paid within 6 months
Rolf Skog
Sweden – Implementation of the Directive
Substance
 Art 6 Information concerning bids –
Pressrelease and offer document, minor adjustments
 Art 7 Time allowed for acceptance – 3–10 weeks
 Art 8 Disclosure – No amendments
Rolf Skog
Sweden – Implementation of the Directive
Substance
 Art 9 Obligations of the target company board –
Opt in, already in existence
 Art 10 Information on ”control mechanisms” –
Amendments to the Annual Accounts Act
Rolf Skog
Sweden – Implementation of the Directive
Substance
 Art 11 Break through –
Opt out, but amendments to the Sw Companies Act
Compensation by the bidder to be decided by the GM
 Art 12 Reciprocity - No
Rolf Skog
Sweden – Implementation of the Directive
Substance
 Art 13 Other rules – No amendments
 Art 14 Information to and consultation of employees –
Amendments
Rolf Skog
Sweden – Implementation of the Directive
Substance
 Art 15 Squeeze-out – No amendments
 Art 16 Sell-out) – No amendments
Rolf Skog
Sweden – Implementation of the Directive
Substance
Art 17 Sanctions – Mix of
- Prohibition of bid,
- Loss of voting rights,
- Fine.
Rolf Skog
Sweden – Implementation of the Directive
Substance
Art 21 Transposition – July 1, 2006
Rolf Skog