Could the proposed Directive lead to bids financed in an unsound way (such as by junk bonds)?
The proposed Directive would explicitly prescribe that an offeror must give information about the financing for the bid and announce the bid only after ensuring sound financing. In addition, when the consideration offered by the bidder did not consist of liquid shares listed on a regulated market in the Member States, such consideration would have to include at least some cash as an alternative. Such a solution would prevent a bidder from offering securities which were not easily marketable. Why has the full mandatory bid approach been adopted to protect minority shareholders? In the case of an acquisition or a change of control of a listed company, the proposed Directive would require Member States to adopt specific national rules to guarantee that minority shareholders were protected. The full mandatory bid method is seen as the only means of protecting the minority shareholders of a listed company.
