The enforcement of the new regulations drafted by the National Securities Commission (CNVM) on tender offers will mean that anyone wishing to buy stakes during a tender offer will no longer be able to set whatever price they want but will have to offer a price at least equal to the one set under the regulations.
The regulations stipulate the price paid in tender offers will have to be higher than the price at which the shareholder in question has bought shares from the market over the last twelve months and higher than the average price of the shares on the market during the same period of time. So far, only those investors putting out mandatory tender offers were required to offer a minimum price.
RASDAQ for instance has a tender offer running, put out by Norwegian Kvaerner Group for every Kvaerner IMGB share not in its possession. If the Norwegians had put out the offer after the enforcement of the regulation, they would not have been allowed to offer 4,100 ROL/share, but would have had to come up with at least 4,600 ROL instead, i.e. the average price of the IMGB shares on the market in the last twelve months.
Brokers say this is a good step to take because understandings between the buyer and one of the shareholders to have the publicly offered price lower than what is actually paid can be avoided this way. “Setting a minimal price for the tender offers is an international practice included in the European directives, as well,” Ileana Agalopol, CNVM commissioner said.
Transferring a stake from one investor to another at a price lower than that registered on the market over the last twelve months cannot be completely avoided, though. This is because the sale offers are not bound by any rules to set a minimal price.
The shareholders unintentionally acquiring control of a company (such as in capital increase operations) are still bound to put out a tender offer in the event they do not want to sell some of the shares, yet the offer shall aim attaining 90% instead of the 100% required until now. The brokers say this stipulation could lead to a reduction in the number of companies delisted from the capital market, because those holding over 90% in a company are bound to have it delisted.
The regulation, which also modifies the authorisation of the offers, will come into force after publication in the Official Gazette. Some of the brokers feared they might have to resume the authorisation procedures for the tender offers already submitted to CNVM. “After the enforcement of the regulation, the old procedure for the offers submitted in view of authorisation will continue to be used, except for the one regarding the maximum offer price,” Agalopol said.