How to determine the adequacy of the offer consideration in public tender offers in Germany

What is it about?

The article deals with a recent German Federal Civil Court (Bundesgerichtshof) decision in the case McKesson/Celsion. The Court had to decide on the question whether convertible bonds which have been acquired over the secondary market must be taken into account when determining the consideration in public tender offers in Germany. The German Federal Civil Court argued that they have to be taken into account applying an extensive interpretation of the minimum pricing rules of the German Takeover Code (WpÜG). Furthermore, the Court confirmed that shareholders have an enforceable right against the bidder to receive an adequate compensation. The articles criticizes the broad interpretation of the minimum pricing rules applied by the German Federal Civil Court due to the detrimental effect on legal certainty and clarity which in the end could harm the German takeover market (potentially leading to more inefficient corporate governance structures in listed companies).

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Why is it important?

There have been only a few decisions of the German Federal Civil Court on the offer consideration and shareholder rights enforcing an adequate offer consideration since the German Takeover Code (WpÜG) has entered into effect in 2002. The most recent one is the case McKesson/Celesio. The article summarizes the most recent Court ruling and explains the impact on public takeovers in Germany.