Chambers Global Practice Guides: Corporate M&A 2017

IRELAND
LAW & PRACTICE: p.3
Contributed by Matheson
The ‘Law & Practice’ sections provide easily accessible information on
navigating the legal system when conducting business in the jurisdic-
tion. Leading lawyers explain local law and practice at key transactional
stages and for crucial aspects of doing business.
DOING BUSINESS IN IRELAND: p.231
Chambers & Partners employ a large team of full-time researchers (over
140) in their London office who interview thousands of clients each
year. This section is based on these interviews. The advice in this section
is based on the views of clients with in-depth international experience.
CHAMBERS
Global Practice Guides
Contributed by
Matheson
Corporate M&A
2017

IRELAND
LAW & PRACTICE: p.3
The ‘Law & Practice’ sections provide easily accessible information on
navigating the legal system when conducting business in the jurisdic-
tion. Leading lawyers explain local law and practice at key transactional
stages and for crucial aspects of doing business.

3
Law & Practice IRELAND
Contributed by Matheson Authors: George Brady, Madeline McDonnell
Law & Practice
CONTENTS
1. Trends p.4
1.1 M&A Market p.4
1.2 Key Trends p.4
1.3 Key Industries p.5
2. Overview of Regulatory Field p.5
2.1 Acquiring a Company p.5
2.2 Primary Regulators p.6
2.3 Restrictions on Foreign Investment p.6
2.4 Antitrust Regulations p.6
2.5 Labour Law Regulations p.7
2.6 National Security Review p.7
3. Recent Legal Developments p.7
3.1 Significant Court Decisions or Legal
Developments p.7
3.2 Significant Changes to Takeover Law p.8
4. Stakebuilding p.9
4.1 Principal Stakebuilding Strategies p.9
4.2 Material Shareholding Disclosure Thresholds p.9
4.3 Hurdles to Stakebuilding p.10
4.4 Dealings in Derivatives p.10
4.5 Filing/Reporting Obligations p.10
4.6 Transparency p.10
5. Negotiation Phase p.10
5.1 Requirement to Disclose a Deal p.10
5.2 Market Practice on Timing p.10
5.3 Scope of Due Diligence p.10
5.4 Standstills or Exclusivity p.10
5.5 Definitive Agreements p.11
6. Structuring p.11
6.1 Length of Process for Acquisition/Sale p.11
6.2 Mandatory Offer Threshold p.12
6.3 Consideration p.12
6.4 Common Conditions for a Takeover Offer p.12
6.5 Minimum Acceptance Conditions p.12
6.6 Requirement to Obtain Financing p.12
6.7 Types of Deal Security Measures p.13
6.8 Additional Governance Rights p.13
6.9 Voting by Proxy p.13
6.10 Squeeze-Out Mechanisms p.13
6.11 Irrevocable Commitments p.13
7. Disclosure p.13
7.1 Making a Bid Public p.13
7.2 Types of Disclosure p.14
7.3 Requirement for Financial Statements p.15
7.4 Disclosure of the Transaction Documents p.15
8. Duties of Directors p.15
8.1 Principal Directors’ Duties p.15
8.2 Special or Ad Hoc Committees p.16
8.3 Business Judgement Rule p.16
8.4 Independent Outside Advice p.16
8.5 Conflicts of Interest p.16
9. Defensive Measures p.16
9.1 Hostile Tender Offers p.16
9.2 Directors' Use of Defensive Measures p.17
9.3 Common Defensive Measures p.17
9.4 Directors' Duties p.17
9.5 Directors' Ability to Just Say No p.17
10. Litigation p.17
10.1 Frequency of Litigation p.17
10.2 Stage of Deal p.17
11. Activism p.17
11.1 Shareholder Activism p.17
11.2 Aims of Activists p.18
11.3 Interference with Completion p.18

4
IRELAND Law Practice
Matheson Corporate Group is one of the leading practices
in Ireland. Our lawyers are consistently chosen to advise on
the most significant corporate transactions involving Irish
and international companies. We advise on the full range
of domestic and international corporate transactions, in-
cluding mergers and acquisitions, joint ventures, corporate
restructurings, private equity, IPOs and other equity capital
markets transactions.
Authors
George Brady is a partner in the corpo-
rate department. He has advised on many
of the most significant Irish corporate
transactions of recent years including the
USD18 billion merger of Willis and
Towers Watson, Allergan’s USD66 billion
merger with Actavis, the Actavis USD8.5 billion acquisi-
tion of Warner Chilcott, the USD6.5 billion hostile bid by
Royalty Pharma for Elan Corporation, Medtronic’s
proposed USD42.9 billion acquisition of Covidien plc,
Eaton Corporation’s USD11.8 billion acquisition of Cooper
Industries, the USD5.6 billion merger of Questcor and
Mallinckrodt and the USD2.6 billion acquisition of
Auxilium Pharmaceuticals by Endo International. Brady
previously worked in the London office of a leading
international law firm and has been a partner since 2003.
Madeline McDonnell is senior associate
in the corporate MA group. She has led
on many significant domestic and cross
border deals, including public and private
company mergers, takeovers and acquisi-
tions. McDonnell has advised on a
number of the most innovative, high-profile transactions
in Ireland of recent years including: the USD18 billion
merger of Willis and Towers Watson, Allergan’s USD66 bil-
lion merger with Actavis; the USD2.6 billion acquisition of
Auxilium Pharmaceuticals by Endo International, the
Actavis USD8.5 billion acquisition of Warner Chilcott, the
USD6.5 billion hostile bid by Royalty Pharma for Elan
Corporation, Medtronic’s USD42.9 billion acquisition of
Covidien and the USD5.6 billion merger of Questcor and
Mallinckrodt.
1. Trends
1.1 MA Market
MA activity in Ireland in 2015 was at its strongest in terms
of deal value since 2008, with pharmaceutical and biotech-
led deals accounting for the vast majority of transactions.
Whilst overall EU economic performance has remained
sluggish, the Irish economy has undoubtedly turned a cor-
ner. Ireland’s early exit from the bailout in late 2013 instilled
confidence internationally in relation to the country’s future
growth prospects, which has in turn driven growth in MA
activity.
Deal values increased significantly in 2015, which saw a rise
of 316% from EUR45 billion in 2014, to EUR189 billion in
2015. These figures include two mega-value transactions,
namely Medtronic’s EUR33.9 billion acquisition of Covi-
dien, the largest European deal of 2014, and Pfizer’s (unsuc-
cessful) EUR172.6 billion bid for Allergan, announced in
November 2015. Excluding these transactions, deal values
increased by 41%, from EUR11.4 billion in 2014 to EUR16.1
billion in 2015. In contrast, deal volume decreased by 13%
during the same period, from 120 deals in 2014 to 104 deals
in 2015.
Inbound MA continued to be responsible for the highest
value deals, with nine of the ten largest deals by value in
2015 involving non-Irish bidders. Ireland has become one
of the most targeted countries by US companies, with 36
deals worth USD190.7 billion in 2015, representing an 8th
consecutive annual increase in US investment in Ireland.
Outbound activity also featured strongly, with outbound
deals accounting for half of all MA activity in 2015, com-
prising a 42% increase from 2014.
1.2 Key Trends
The mid-market sector was particularly active in terms of
domestic buyers, some of which were funded by private eq-
uity rather than traditional bank finance. There was also an
increase in alternative capital providers, primarily in the area
of property financing. It is expected that mezzanine finance
providers will also look to expand into other areas in 2016.
Consistent with this trend is the fact that larger Irish compa-
nies are increasingly turning to the bond market as a means
of raising capital.
Ireland continued to be one of the busiest loan sales markets
in Europe in 2015, which was a key factor in driving MA
activity. Whilst there is likely to be a smaller number of loan
portfolio sales during 2016, given that many of the key play-
ers in the banking sector have largely completed their de-
leveraging processes, it is also expected that 2016 will see an
increase in the number of secondary loan sales.

5
Law Practice IRELAND
It is also expected that private equity firms and international
funds invested in Irish assets will be active sellers in 2016,
whilst continuing to target acquisitions.
1.3 Key Industries
The sectors which have traditionally seen strong levels of
investment in Ireland, such as TMT (29% of deal volume in
2015), pharma, medical and biotech (12% of deal volume in
2015), agri-food and financial services, continue to see high
levels of activity and are expected to do so in 2016. A signifi-
cant strengthening of domestic-facing mid-market transac-
tions is now beginning to be seen in sectors which have, up
to now, lagged behind the Irish economic recovery, such as
retail and leisure (13% of deal volume in 2015). There was
also strong activity in the business services sector (13% of
deal volume in 2015), including the USD18 billion merger
of equals of Willis, the third-largest insurance broker in the
world, and financial management services provider, Towers
Watson.
2. Overview of Regulatory Field
2.1 Acquiring a Company
The primary acquisition structures for private MA in Ire-
land are as follows:
• a private purchase of shares in a target company, which is
typically documented by means of a share purchase agree-
ment; and
• a private purchase of a target company’s underlying assets
and, if applicable, liabilities, which is typically documented
by means of an asset and business transfer agreement.
A purchaser may pay in cash, securities or a combination
of both.
The Irish Takeover Panel Act 1997, Takeover Rules 2013
(the “Irish Takeover Rules”) provide the main regulatory
framework for the conduct of public MA takeovers of Irish
incorporated public listed companies. A takeover may be
structured as a tender offer, a court-approved scheme of ar-
rangement or a merger. On a tender offer, the bidder makes
an offer directly to target shareholders to accept or reject the
offer. In contrast to a tender offer, which is controlled by the
bidder, a scheme of arrangement is driven primarily by the
target company. Most of the Irish Takeover Rules apply in
an equivalent manner to a scheme of arrangement, as they
would to a tender offer, although there are some changes re-
quired by virtue of the different procedures and timeframes.
Consequently, there is more flexibility around the timing of a
scheme of arrangement. Structured properly, a scheme of ar-
rangement also allows the bidder to avoid stamp duty (1%).
A reverse takeover under the Irish Takeover Rules may also
be used to acquire control of an Irish incorporated public
listed company. This structure has been used in a number
of the more recent inversion transactions.
A public MA takeover may be either a voluntary offer,
which the bidder elects to launch, or a mandatory offer,
which the bidder is required to make under the Irish Takeo-
ver Rules. In either case, the views of the target board will
determine whether the takeover is recommended or hostile.
A new domestic statutory merger regime was recently in-
troduced in Ireland. A merger can be effected between two
or more Irish companies where at least one of the compa-
nies is a simplified form of Irish private company limited by
shares. The following types of mergers are possible and, in
each case, the transferor company is dissolved without going
into liquidation:
• merger by acquisition: an operation in which a company
acquires all the assets and liabilities of one or more trans-
feror companies in exchange for the issue by that company
of shares to the member(s) of the transferor companies;
• merger by absorption: an operation whereby a wholly
owned subsidiary transfers all of its assets and liabilities to
its holding company; and
• merger by formation of a new company: an operation in
which one or more transferor companies transfer all of
their respective assets and liabilities to a new company in
exchange for the issue by that company of shares to the
member(s) of the transferor company.
Such mergers can be carried out either by way of application
to the Irish High Court for a confirmation order, or by using
a summary approval procedure under Irish company law.
In each case, the directors of the merging companies must
draw up and approve common draft terms that must con-
tain prescribed information. Except in the case of a merger
by absorption, an explanatory report must also be prepared
and approved with respect to each merging company (but
this requirement may be dispensed with where all the hold-
ers of voting shares in the merging companies so agree).
Subject to some exceptions, an expert's (auditor's) report is
required, opining on the share exchange ratio involved in the
merger. There are also specific requirements concerning the
registration, publication and inspection of specified merger
documents.
The European Communities (Cross-Border Mergers) Regu-
lations 2008 (as amended), upon which the new domestic
statutory merger regime is based, continue to govern cross-
border mergers between Irish limited liability companies
and companies from different states within the European
Economic Area.

6
2.2 Primary Regulators
The Irish Takeover Panel (the “Panel”) is the regulator of
public takeovers in Ireland. The Panel administers the Irish
Takeover Rules and is designated as the competent authority
to undertake certain regulatory functions pursuant to the
Directive on Takeover Bids (2004/25/EC). The Panel op-
erates principally to ensure fair and equal treatment of all
target shareholders in relation to public takeovers (wheth-
er structured by way of tender offer or a court-approved
scheme of arrangement). The Panel works on a day-to-day
basis through an executive Director General; the current
Director General is Miceal Ryan.
The Panel has a statutory right, on its own initiative, or at
the request of certain specified parties, to enquire into the
conduct of any person where it has reasonable grounds for
believing that a contravention of the general principles on
which the Irish Takeover Rules are based, or the Irish Takeo-
ver Rules, has occurred or may occur. The Panel may, fol-
lowing an enquiry into the conduct of any person, advise,
admonish or censure that person in relation to such conduct
and may publish the fact that it has done so. A party who
has been so advised, admonished or censured has a right to
appeal to the Irish High Court.
The Central Bank of Ireland is the competent authority
in Ireland for the purposes of the Prospectus (Directive
2003/71/EC) Regulations 2005 and the Transparency (Di-
rective 2004/109/EC) Regulations 2007, as amended.
The Competition and Consumer Protection Commission
(CCPC) is primarily responsible for the enforcement of the
Irish merger control regime. The CCPC shares responsibility
for media mergers with the Minister for Communications,
Energy and Natural Resources.
The Office of the Director of Corporate Enforcement, Ire-
land’s corporate watchdog, carries out a number of func-
tions, including encouraging compliance with the Com-
panies Act, carrying out investigations and enforcing the
Companies Act by the prosecution of offences.
Depending on the relevant industry of the undertakings
involved (for example, airlines and financial institutions),
an MA transaction may also trigger the involvement of
additional regulators.
2.3 Restrictions on Foreign Investment
There are no restrictions on foreign investment in Ireland. In
some regulated industries in Ireland, regulatory consent and
clearances may be required to effect an MA transaction,
for example media mergers, airlines and financial services.
2.4 Antitrust Regulations
The Irish Competition Acts 2002 to 2014 (the “Competition
Act”) govern various aspects of the Irish merger control re-
gime. Business combinations that do not meet the financial
thresholds set out in Article 1 of the EU Merger Regulation
(Council Regulation (EC) 139/2004) (EUMR) fall to be as-
sessed under the Competition Act.
The Competition Act established the CCPC, which is pri-
marily responsible for the enforcement of the Irish merger
control regime. The CCPC shares responsibility for regu-
lating media mergers with the Minister for Communica-
tions, Energy and Natural Resources. The Irish courts have
jurisdiction to adjudicate on any allegation of breach of the
Competition Act and on any appeal against a merger deci-
sion by the CCPC.
Business combinations require prior notification to the
CCPC where the aggregate turnover in Ireland of the un-
dertakings involved is not less than EUR50 million, and the
turnover in Ireland of each of at least two of the undertakings
involved is not less than EUR3 million.
The CCPC is responsible for carrying out a substantive com-
petition review to determine whether the merger is likely to
give rise to a substantial lessening of competition. The CCPC
has 30 working days to reach a Phase I determination of
whether the merger or acquisition gives rise to a substantial
lessening of competition concern. If the CCPC is unable to
form a view in this time, it may open a Phase II review of
the merger or acquisition whereby it has 120 working days to
reach a determination of whether the merger or acquisition
gives rise to a substantial lessening of competition concern.
Alternatively, it may request further information from the
undertakings involved in the merger or acquisition.
Furthermore, “full-function” joint ventures are also caught
by the Competition Act. The relevant definition is included
in section 16(4) of the Competition Act: “The creation of
a joint venture to perform, on a lasting basis, all the func-
tions of an autonomous economic entity shall constitute a
merger.” The wording is closely based on the EUMR. The
CCPC and the European Commission adopt similar ap-
proaches in identifying whether joint ventures are subject
to merger control law.
Following its review, the CCPC must (i) determine that the
merger or acquisition may be put into effect, (ii) determine
that it may be put into effect subject to conditions, or (iii)
determine it may not be put into effect.
All media mergers must be notified to the CCPC and the
Minister for Communications, Energy and Natural Re-
sources, regardless of whether the financial thresholds set
out above are met. Following a CCPC review, the Minister

7
for Communications has responsibility for consideration of
whether the media merger gives rise to a media plurality
concern: namely, whether the result of the media merger
will not be contrary to the public interest in protecting the
plurality of the media in Ireland and this includes a review
of diversity of ownership and diversity of content.”
A notification must be submitted to the CCPC prior to the
implementation of the business combination, and may be
made if the undertakings involved demonstrate a good-faith
intention to conclude an agreement. This approach is in line
with practice under the EUMR. It is a criminal offence wil-
fully and knowingly to fail to notify of a merger that is caught
by the jurisdictional thresholds, which is punishable by fines
of up to EUR250,000.
2.5 Labour Law Regulations
The European Communities (Protection of Employees on
Transfer of Undertakings) Regulations 2003 (the “Transfer
Regulations”) apply to an asset purchase if there is a transfer
of an undertaking, in which case the employees of the target
company will transfer to the acquirer. Where the Transfer
Regulations apply, there are certain information and con-
sultation obligations imposed on both the purchaser and the
seller, which must take place, where reasonably practicable,
not later than 30 days before the transfer is carried out, and
otherwise in good time before the transfer is carried out.
The purchaser will require considerable information from
the seller in order to enable it adequately to match the trans-
ferring employees’ terms and conditions and incorporate
them into its workforce. Under the Employees (Provision
of Information and Consultation) Act 2006, a seller is re-
quired to notify a purchaser of all the rights and obligations
arising from a contract of employment existing on the date
of transfer which will be transferred to the purchaser, on
receipt of a written notice from the purchaser to the seller
setting out what information the purchaser believes may be
in the possession of the seller and requesting that informa-
tion. Furthermore, where the Transfer Regulations apply, it is
not permissible for the new employer (the purchaser) to vary
the terms and conditions of the transferred employees where
the reason for the variation is the transfer itself. The Transfer
Regulations also prohibit the dismissal of an employee where
the grounds for the dismissal are the transfer itself, unless
the employee is dismissed for economic, technical or or-
ganisational reasons which entail changes in the workforce.”
Unlike an acquisition of assets, a share acquisition will not
generally trigger a duty to inform and consult employee rep-
resentatives, or the automatic transfer of contracts of em-
ployment under the Transfer Regulations. However, there
may be broader obligations to inform and consult with trade
unions or other employee representative bodies (including
any works councils that may exist) about a proposed takeo-
ver, for example under the terms of any separate information
and consultation agreement, collective agreement, or agree-
ment with a works' council or other employee representative
body.
Further, subsequent business restructuring or rationalisa-
tion measures could trigger a requirement for the relevant
employing entity to make redundancies, in turn possibly
triggering collective redundancy consultation obligations
under the Protection of Employment Act 1977, as amended
(the “Collective Redundancies Legislation”), and exposure
to potential liability for employment-related claims, includ-
ing unfair dismissal, discriminatory dismissal, etc. Failure to
comply with the appropriate notification and consultation
obligations under the Collective Redundancies Legislation
(where applicable) may result in a claim against the employer
by any one of the employees. An adjudication officer of the
Workplace Relations Commission can award compensa-
tion of up to four weeks’ gross remuneration per employee.
Criminal sanctions may also be imposed on an employer for
failure to comply with the provisions of the Collective Re-
dundancies Legislation, which include a potential fine of up
to EUR250,000 where collective redundancies are effected by
an employer before the expiry of the 30-day period.
2.6 National Security Review
There is no national security review of acquisitions in Ire-
land.
3. Recent Legal Developments
3.1 Significant Court Decisions or Legal
Developments
A positive development in 2015 was the enactment of the
Companies Act 2014, which came into force in Ireland on 1
June 2015. The Companies Act consolidates and modernises
Irish company law, and is aimed at making it easier for com-
panies to do business in and from Ireland. The Companies
Act brings together 33 previous company law enactments
into one streamlined piece of legislation. It runs to over 1,400
sections and is the largest substantive statute in Irish history.
The Companies Act is divided into 25 parts: Parts 1 to 14 and
16 define the new types of private company and contain all
the company law provisions that apply to such companies.
Parts 17 to 25, amongst other things, define the remaining
company types and contain the company law provisions that
apply to each.
The principal changes under the Companies Act relate to
the private company limited by shares. There are now two
types of private company, which replace the previously exist-
ing single form. These are: (i) the private company limited
by shares (LTD); and (ii) the designated activity company
(DAC). One of the key distinctions between these two types

8
of company is that the LTD does not have an objects clause
and has unlimited legal capacity, whilst, by contrast, the ca-
pacity of DACs (and other company types) is limited by the
objects clause contained in the company's constitution.
There is an 18-month transition period running to 30 No-
vember 2016 (which may be extended), during which exist-
ing private limited liability companies must convert to either
an LTD or a DAC (or some other company type recognised
by the Companies Act). Private limited liability companies
that have taken no action by the end of this transition period
will automatically convert to an LTD. Existing private lim-
ited liability companies can opt out of the default company
scheme and re-register as a DAC by passing a shareholder
resolution. Other company types, such as public limited
companies, unlimited companies and guarantee companies,
will not need to convert (in other words, they will retain
their current legal form), although there are some changes
to the rules applicable to them.
The key distinction between public limited companies and
private companies is that only public limited companies may
list their shares on a stock exchange and offer them to the
public. Whilst the Companies Act contains few substan-
tive changes in relation to the law governing public limited
companies, it draws together that body of law from various
sources and sets it out with greater precision in one place.
The enactment of the Companies Act generally adds greater
clarity to the existing Irish company law framework, further
enhancing Ireland’s attractiveness as an investment location.
However, not unexpectedly, the Companies Act has given
rise to a number of issues which may require amendment,
or which will need to be considered on many transactions.
3.2 Significant Changes to Takeover Law
The Panel adopted new Irish Takeover Rules with effect from
6 January 2014, following a lengthy period of review and
consultation.
The following are some of the principal changes prescribed
by the Irish Takeover Rules:
Securities offers: a bidder may be required to make a se-
curities exchange offer, which the bidder (or any person
acting in concert with it) in exchange for securities, either
acquires any target shares of any class which is the subject of
the offer during the offer period, or has acquired during the
three-month period prior to the commencement of the offer
period, target shares carrying in aggregate 10% or more of
such class. The Panel has the discretion to remove the 10%
threshold.
Management incentivisation: one of the key principles of
the Irish Takeover Rules is that all target shareholders must
be treated equally. With limited exceptions, no special ar-
rangements can be made with any shareholder (including
members of the management team) which are not extended
to all target shareholders. The Irish Takeover Rules now re-
quire disclosure in the offer document of any management
incentivisation arrangements entered into or at an advanced
stage of discussion. The independent financial adviser to the
target must also state publicly that, in their opinion, the ar-
rangements or proposals are fair and reasonable. Disclosure
will also be required if incentivisation is intended but no, or
only limited, discussions have taken place; or if no incen-
tivisation is intended.
Equality of information to competing bidders: subject to
certain limitations, a target board is required to furnish any
information that has been given to one bidder to all bidders
(to the extent specifically requested by those bidders). The
Irish Takeover Rules clarify that the target may now impose
conditions in relation to confidentiality, non-solicitation of
customers and employees, and the use of the information
in connection with the offer or potential offer, as long as
those conditions are no more onerous than the conditions
imposed on any other bidder.
Preconditional offers: the Irish Takeover Rules provide for
the making of a firm intention to make an offer (under Rule
2.5 of the Irish Takeover Rules), subject to preconditions
with Panel consent. The preconditions in respect of which
the Panel may consider granting consent relate to certain
decisions by the European Commission under European
Merger Regulation, or other material official authorisation
or regulatory clearance relating to the offer, where (i) the
offer is publicly recommended by the target board or (ii)
the Panel is satisfied that it is likely to prove impossible to
obtain the authorisation or clearance within the timetable
prescribed by the rules.
Invoking conditions: a bidder may not invoke a condition or
precondition in order to lapse a bid unless the circumstances
are of material significance to the bidder in the context of
the offer, and the Panel is satisfied that in the prevailing cir-
cumstances, it would be reasonable for the bidder to do so.
Whilst the Irish Takeover Rules, in many respects, are quite
similar in scope, and indeed actual wording, to the City
Code on Takeovers and Mergers in the United Kingdom,
there are a number of material differences both in the draft-
ing and also the interpretation. For example, unlike the UK
Code, the Irish Takeover Rules do not impose an automatic
“put up or shut up” deadline, do not prohibit bid implemen-
tation agreements and restrict, but do not prohibit, break fee
arrangements. Anyone familiar with the UK Code would be
strongly cautioned against assuming that the Irish Panel will
take a similar approach on any particular issue.

9
4. Stakebuilding
4.1 Principal Stakebuilding Strategies
It is relatively unusual for a bidder to build a stake in a target
prior to launching an offer, although it does happen, primar-
ily for strategic reasons. A key advantage of stakebuilding is
that it can assist in reducing interloper risk from a compet-
ing bidder.
A number of restrictions apply to stakebuilding under the
Irish Takeover Rules.
Dealings of any kind in a target company’s securities are pro-
hibited under the Irish Takeover Rules by any person (other
than the bidder) who is privy to confidential price-sensitive
information concerning an offer or contemplated offer, until
an announcement has been made. There are also restrictions
under the Irish Takeover Rules on a bidder and its concert
parties from selling shares in the target once an offer period
has commenced. Similarly, any person who is privy to con-
fidential price-sensitive information concerning an offer or
contemplated offer is also restricted in dealing in securities
of the bidder, unless that information is not price-sensitive
in relation to those securities.
Dealings in the securities of a target company that is in an
offer period under the Irish Takeover Rules (and in certain
circumstances dealings in the securities of a bidder) could
potentially trigger a disclosure requirement. A person with
more than a 1% interest, or who acquires more than a 1%
interest in the securities of such a target company or, in cer-
tain circumstances the bidder, must publicly disclose all such
dealings during the offer period on the following business
day.
Other than with the consent of the Panel, the offer price must
equal the highest per-share price paid for target shares by
the bidder, or any person acting in concert with the bidder,
during the period beginning three months prior to the offer
period or, in certain cases, during the period beginning 12
months prior to the offer period.
The acquisition by a bidder of 30% or more of the voting
rights of a target will trigger an obligation to make an offer
to all other shareholders of the target. Such an offer must be
in cash (or carry a full cash alternative) at not less than the
price paid by the bidder, or any person acting in concert with
the bidder, in the previous 12 months and may be subject
only to a 50% acceptance condition and any required Irish
or European competition clearances.
The Substantial Acquisition Rules (SARs) are a separate set
of rules which are issued and administered by the Panel. The
SARs apply to Irish incorporated public listed companies
and regulate the means by which an acquisition of shares in
the target company may be made.
Stakebuilding may be totally prohibited if it constitutes in-
sider dealing, market abuse and/or market manipulation
under applicable laws or regulations.
4.2 Material Shareholding Disclosure Thresholds
Up to the time of announcement of a firm intention by a
bidder to make an offer under the Irish Takeover Rules, the
SARs (which are separate rules (from the Irish Takeover
Rules) issued and administered by the Panel) apply to a per-
son acquiring shares. The SARs restrict the speed with which
a person may increase a holding of shares in the target.
The SARs provide that, subject to limited exceptions, an ac-
quirer must disclose to the target company, and to the Panel,
any acquisition of voting rights in a target which when ag-
gregated with its existing holding exceeds 15% of the target’s
voting rights, or if the acquirer already holds between 15%
and 30% of the voting rights of the target, any acquisition
that increases their percentage holding. Any such disclosure
obligation must be discharged by the acquirer by 12 noon on
the day following the relevant acquisition.
The SARs also provide restrictions on the timing of acquisi-
tions, subject to limited exceptions. A person may not, in any
period of seven days, acquire shares (or rights over shares) in
the target company carrying 10% or more of its voting rights
if, following the acquisition, that person would hold shares
(or rights over shares) carrying 15% or more, but less than
30%, of the voting rights in the target.
Dealings in the securities of a target company that is in an
offer period under the Irish Takeover Rules (and in certain
circumstances dealings in the securities of a bidder) could
potentially trigger a disclosure requirement. A person with
more than a 1% interest, or who acquires more than a 1%
interest in the securities of such a target company or, in cer-
tain circumstances the bidder, must publicly disclose all such
dealings during the offer period.
The Transparency (Directive 2004/109/EC) Regulations
2007 (as amended) (which apply to a company listed on the
main market of the Irish Stock Exchange) require a stake-
holder to notify the listed company once the percentage of
voting rights acquired by that stakeholder reaches, exceeds
or falls below 3%, and then each 1% thereafter.
The Companies Act introduced a statutory disclosure regime
(replacing the regime existing under previous legislation)
requiring notification within a prescribed timeframe where
there is a change in the percentage of shares held by a person
in a public limited company resulting in:

10
• an increase from below to above the 3% threshold;
• a decrease from above to below the 3% threshold; or
• where the 3% threshold is exceeded both before and after
the transaction, but the percentage level, in whole numbers,
changes (fractions of a percentage being rounded down).
4.3 Hurdles to Stakebuilding
The statutory disclosure regime contained in the Compa-
nies Act, which sets out the thresholds and timeframe within
which a person must notify a public limited company of its
interests in voting shares, cannot be disapplied by the com-
pany.
4.4 Dealings in Derivatives
Dealings in derivatives are allowed, subject to the restrictions
and disclosure obligations that apply to dealings in shares.
4.5 Filing/Reporting Obligations
Dealings in derivatives are allowed, subject to the restrictions
and disclosure obligations that apply to dealings in shares.
4.6 Transparency
A stakebuilding bidder is not required to make known the
purpose of its acquisition of shares in a company, or its in-
tention regarding control of the company, at the time of the
acquisition.
With respect to public company acquisitions, the offer/
scheme document that is required to be sent to sharehold-
ers under the Irish Takeover Rules is required to include the
following matters:
• the intentions of the bidder regarding the future business
of the target and its subsidiaries;
• the bidder’s strategic plans for the target company and their
likely repercussions on employment and on the locations
of the target’s places of business;
• the bidder’s intentions regarding any redeployment of the
fixed assets of the target and its subsidiaries;
• the long-term commercial justification for the offer; and
• the bidder’s intentions with regard to safeguarding the em-
ployment of the employees and management of the target
company and of its subsidiaries, including any material
change in the conditions of employment.
There are no similar requirements on private company ac-
quisitions.
5. Negotiation Phase
5.1 Requirement to Disclose a Deal
An announcement obligation may be triggered under the
Irish Takeover Rules if the target company is subject to ru-
mour and speculation or if there is an anomalous movement
in its share price. The responsibility for the announcement
lies with the bidder unless it has approached the target, af-
ter which the target is primarily responsible. An announce-
ment obligation may also be triggered when negotiations
or discussions concerning a possible offer are about to be
extended to include more than a very restricted group of
persons. Unlike the UK Code, the Irish Takeover Rules do
not impose an automatic put up or shut up deadline. Ac-
cordingly, the Panel does not impose a specific period after
the issue of an announcement by which a bidder must make
a firm intention to make an offer (otherwise known as a
Rule 2.5 announcement under the Irish Takeover Rules), or
withdraw from the process.
The announcement of a firm intention to make an offer must
contain, amongst other things, the terms of offer and the
identity of the bidder.
5.2 Market Practice on Timing
Market practice on timing of a disclosure follows the re-
quirements of the Irish Takeover Rules, which are adminis-
tered by the Panel.
5.3 Scope of Due Diligence
Due diligence carried out by a bidder on a public takeover
(whether structured by way of a tender offer or a scheme of
arrangement) is usually more limited than is typically un-
dertaken on a private MA acquisition.
If a target company is not co-operative (ie in a hostile bid),
a bidder will generally be limited to publicly available in-
formation. Where the target is co-operative (ie in a recom-
mended bid), a bidder will typically provide the target with
a due diligence request list. A target will invariably require a
potential bidder to enter into a non-disclosure agreement to
protect the confidential nature of the information which may
be disclosed. The Irish Takeover Rules require a target board
to provide any information given to one bidder to all bidders,
subject to certain limitations. A second or subsequent bidder
will have to request specific information. It is not entitled, by
asking in general terms, to receive all information supplied
to the first bidder. The due diligence process tends to be quite
formal as a result, so that a target can track the information
that is provided to one bidder and is thus in a position to
provide that information to a competing bidder, if required.
5.4 Standstills or Exclusivity
For a private MA acquisition, a bidder will often look for
a period of exclusivity so that the target company may not
engage with any other potential bidder for a defined period
of time.
In a recommended public MA takeover, it is usual for a
bidder to seek an irrevocable undertaking to accept the offer
within a specified period from key shareholders of the target
and from any of the target’s board of directors who hold

11
shares. The irrevocable undertaking will usually provide for
the shareholder or director to refrain from doing anything
that might frustrate the bid.
Break fee arrangements are not unusual in Ireland in rec-
ommended offers. However, such arrangements require
approval of the Panel. The consent of the Panel, if granted,
will normally be limited to specific quantifiable third-party
costs subject to a cap of 1% of the value of the offer and
to receiving confirmation in writing from the target board
and its financial adviser that they consider the break/induce-
ment fee to be in the best interests of the target company's
shareholders.
In addition, if the target company is a listed company on the
Main Market of the Irish Stock Exchange, a break fee of 1%
or more will cause the transaction to be classified as a Class
1 transaction under the Irish Listing Rules. This means that
the company will be obliged to announce the transaction and
issue a circular to its shareholders seeking their consent to
the proposed break fee.
The offer/scheme document is required to contain details of
any break fee arrangements agreed to by the target company.
5.5 Definitive Agreements
In a recommended public MA takeover offer, it is not unu-
sual to negotiate a transaction conduct agreement, the con-
tents of which will be subject to the Irish Takeover Rules (as
the shareholders cannot be denied the opportunity to decide
on the merits of an offer).
The offer/scheme document is required to contain details
of the terms and conditions of the offer. In a public offer
structured as a tender offer, target shareholders are typically
asked to respond to the offer using a form of acceptance
which is enclosed with the offer document. Where the offer
is structured as a scheme of arrangement, the shareholders
will vote to accept or reject the proposed transaction at the
relevant shareholder meeting.
6. Structuring
6.1 Length of Process for Acquisition/Sale
The Irish Takeover Rules provide in detail for the timetable
which is to apply to public offers. The general principle is
that the target should not be subject to an excessive period
of siege, whilst allowing a bidder sufficient time to make its
offer and persuade the target company's shareholders of its
merits.
The key timetable requirements for a public takeover struc-
tured by way of a tender offer include the following:
• the offer document must be posted to shareholders within
28 days of the date of the firm announcement to make an
offer (otherwise known as a Rule 2.5 announcement under
the Irish Takeover Rules);
• the first closing date of an offer cannot be less than 21 days
after the offer document is posted;
• the condition setting out the minimum acceptance level
that will satisfy the offer (otherwise known as the accept-
ance condition) must be satisfied within 60 days of posting
of the offer document;
• all conditions, including regulatory conditions, must be
satisfied within 21 days of the acceptance condition being
satisfied;
• acceptances may be withdrawn if the acceptance condition
has not been satisfied within 21 days of the first closing date
of the offer; and
• the consideration must be posted within 14 days of the
offer becoming wholly unconditional.
The timetable requirements will need to be varied, with Pan-
el consent, in the case of an offer for a company listed only on
NASDAQ or the NYSE, in order to comply with SEC Rules.
The requirement to post, and the consequent timetable im-
peratives of the Irish Takeover Rules, may be delayed where
the bidder (with the prior consent of the Panel) imposes
preconditions which must be satisfied (or waived) before
it is committed to proceed. Allowable preconditions in this
context are limited to Irish or European competition clear-
ance, or another material official authorisation or regulatory
clearance that is likely to prove impossible to obtain within
the usual timetable.
A scheme of arrangement is driven primarily by the target
company, unlike a tender offer, which is controlled by the
bidder. Whilst many of the Irish Takeover Rules apply in
an equivalent manner to a scheme of arrangement as they
would to a tender offer, there are some key differences with
regard to the timetable by virtue of the different procedures.
In particular, there is no equivalent under the Irish Takeover
Rules for the requirement that the acceptance condition be
satisfied within 60 days of posting of the scheme document.
In a scheme, shareholders vote on a scheme as a body, at a
meeting convened by the Irish High Court and the scheme, if
approved by the shareholders, must then be approved by the
Irish High Court. As the timing of these steps is dependent
on the court timetable, there is more flexibility around the
timing of a scheme.
In the case of a competitive situation, both bidders would
typically be bound by the timetable established by the post-
ing of the later offer document, except as regards the ob-
ligation to post the offer document within 28 days of an-
nouncement and the period within which acceptances may
be withdrawn.

12
6.2 Mandatory Offer Threshold
Under the Irish Takeover Rules, a bidder is required to make
a mandatory offer for the remaining securities in a target
company if any of the following circumstances apply:
• it (or any persons deemed to be acting in concert with it)
acquires a holding of 30% or more of the voting rights of
the target;
• its holding (or its holding combined with any persons
deemed to be acting in concert with it) of less than 30% of
voting rights increases to 30% or more; or
• its holding (or its holding combined with any persons
deemed to be acting in concert with it) of 30% or more,
but less than 50%, of the voting rights increases by more
than 0.05% of the aggregate percentage of the voting rights
in that company in any 12-month period.
Such a mandatory offer must be in cash (or carry a full cash
alternative) at not less than the highest price paid by the
bidder, or any person acting in concert with it, in the previ-
ous 12 months and may not be subject to any preconditions
except a 50% acceptance condition and a condition for any
required Irish or European competition clearances.
6.3 Consideration
Cash consideration is the most common form of considera-
tion in public takeovers.
Any mandatory bid must be for cash, or include a full cash
alternative.
A bidder may be required to make a securities exchange of-
fer, which the bidder (or any person acting in concert with it)
in exchange for securities, either acquires any target shares
of any class which is the subject of the offer during the offer
period, or has acquired during the three-month period prior
to the commencement of the offer period, target shares car-
rying in aggregate 10% or more of that class. The Panel has
the discretion to remove the 10% threshold.
6.4 Common Conditions for a Takeover Offer
Although it is common for offerors to include wide-ranging
conditions in terms of an offer, the practical effect of those
conditions is limited by the Irish Takeover Rules and the
Panel’s approach to the application of those rules.
Other than with the consent of the Panel, or in the case of
required Irish or European competition clearance condi-
tions, an offer may not be made subject to any condition
the satisfaction of which depends solely on the subjective
judgment of the bidder, or which is solely within its con-
trol. A bidder may not invoke a condition to lapse an offer
unless the circumstances giving rise to the right to invoke
are of material significance to the bidder in the context of
the offer and the Panel, being satisfied that in the prevailing
circumstances it would be reasonable to do so, consents to
the condition being invoked.
In practice, it is very difficult for a bidder to invoke a condi-
tion, other than a material regulatory condition, an accept-
ance condition or a condition which is required in order
to implement the transaction, such as bidder shareholder
approval.
6.5 Minimum Acceptance Conditions
It is usual for the minimum acceptance condition in a tender
offer to be set at 80% or 90%, as the bidder will need to obtain
this level of acceptances in order to rely on the compulsory
acquisition (squeeze-out) procedure. The relevant threshold
for triggering the compulsory acquisition procedure where
the target company is fully listed on a regulated market in a
European Union or European Economic Area member state
(such as the main markets of the Irish Stock Exchange or the
London Stock Exchange) is the acquisition of 90% of the
issued share capital. Where the target is listed on the Enter-
prise Securities Market of the Irish Stock Exchange or the
AIM Market of the London Stock Exchange, NASDAQ or
NYSE, the relevant threshold for triggering the compulsory
acquisition procedure is 80% acceptances in value within
four months of publication of the offer.
A bidder will typically reserve the right to reduce its ac-
ceptance condition provided that it acquires shares carry-
ing more than 50% of the voting rights attaching to target
stock in issue. This 50% acceptance condition threshold is
the minimum permissible under the Irish Takeover Rules.
For court-approved schemes of arrangement, the resolution
to approve the scheme must be passed by shareholders rep-
resenting 50% in number of the target's shareholders of each
class and 75% of the target shares of each class, in both cases,
of those present (in person or by proxy) and voting. Shares
in the control of the bidder will be treated as a separate class.
6.6 Requirement to Obtain Financing
With respect to public company acquisitions, a bidder can
only make a firm intention to make an offer (otherwise
known as a Rule 2.5 announcement under the Irish Takeover
Rules) when, following careful and responsible considera-
tion, it and its financial adviser are satisfied that the bidder
is in a position to implement the offer.
Where the offer is a cash offer, or there is a cash alternative,
the Rule 2.5 announcement must include a confirmation
from the bidder’s financial adviser (or another appropriate
person) that sufficient cash resources are available to satisfy
full acceptance of the offer. Any required debt and equity
funding for the offer must be fully and, except with respect
to conditions relating to the closing of the offer, uncondi-
tionally committed prior to the Rule 2.5 announcement. If

13
this confirmation subsequently proves to be inaccurate, the
Panel can direct the person who gave the confirmation to
provide the necessary resources, unless the Panel is satisfied
that the person acted responsibly and took all reasonable
steps to ensure the cash was available and would continue
to be available at all relevant times.
There are no similar requirements on private company ac-
quisitions.
6.7 Types of Deal Security Measures
Whilst break fees are permitted under the Irish Takeover
Rules, the agreement of arrangements for break/inducement
fees without the consent of the Panel is expressly prohibited.
In addition, the consent of the Panel, if granted, will usually
be limited to specific quantifiable third-party costs, subject
to a cap of 1% of the value of the offer, and to receiving
confirmation in writing from the target company’s board
and its financial adviser that they consider the break/induce-
ment fee to be in the best interests of the target company’s
shareholders.
6.8 Additional Governance Rights
In practice, a bidder will rarely launch an offer unless it is
confident it can secure control of the target company. Other
than the voting rights that attach to shareholders of greater
than 50% and 75% (which are the relevant thresholds re-
quired to pass ordinary and special resolutions), a bidder’s
ability to secure additional governance rights is limited. Any
special rights or protections would need to be built into the
target company’s constitution.
In the event that a bidder does not hold more than 75%
of the target’s shares, it may not be in a position to ensure
that special resolutions are carried. Special resolutions are
required, amongst other things, to amend the target com-
pany’s constitution, disapply future pre-emption rights on
stock issuances for cash and approve certain other capital
restructurings.
6.9 Voting by Proxy
The Companies Act permits shareholders to appoint a proxy
to attend, vote and speak on their behalf at any general meet-
ing.
6.10 Squeeze-Out Mechanisms
When an offer is made in order to gain 100% control of a tar-
get company, the buyer may use a squeeze-out mechanism,
which is a statutory procedure to acquire compulsorily the
shares of the dissenting shareholders. The relevant thresh-
old differs, depending on the market on which the target is
listed.
The relevant threshold for triggering the squeeze-out mecha-
nism where the target is fully listed on a regulated market in
any European Union or European Economic Area member
state (for example, the main markets of the Irish Stock Ex-
change or the London Stock Exchange) is the acquisition
of 90% of the issued share capital. A bidder must notify the
dissenting shareholders that it wishes to exercise its squeeze-
out rights within three months from the last closing date
of the offer. Once a notice has been served by the bidder, a
dissenting shareholder has 21 days to make an application
for relief to the Irish High Court.
The relevant threshold for triggering the squeeze-out mecha-
nism, where the target company is listed on the Enterprise
Securities Market of the Irish Stock Exchange, the AIM Mar-
ket of the London Stock Exchange, NASDAQ or NYSE, is
receipt by the bidder of 80% of acceptances in value of the
target's shares within four months of the publication of the
offer. If the bidder already holds 20% or more of the shares
in the target, it must receive acceptances from shareholders
holding 80% in value of the remaining target shares and re-
ceive acceptances from at least 50% in number of the holders
of the target shares which are the subject of the offer. Once
a notice has been served by the bidder that it intends to ex-
ercise its rights, a dissenting shareholder has one calendar
month in which to make an application for relief to the Irish
High Court.
In addition to the squeeze-out mechanism, once the relevant
threshold is achieved, the remaining minority shareholders
can exercise buy-out rights, requiring the bidder to purchase
their shares.
6.11 Irrevocable Commitments
It is common for a bidder in a recommended bid to seek
irrevocable commitments from key target company share-
holders and target directors who are shareholders.
The terms of any irrevocable commitment are a matter for
negotiation between the bidder and shareholder. A hard
irrevocable commitment is binding in the event of a higher
competing bid, whilst a soft irrevocable commitment falls
away if there is a higher competing bid (sometimes with a
collar agreement).
A bidder may, with Panel consent, approach institutional
shareholders to seek irrevocable commitments shortly be-
fore making an announcement of a firm intention to make
a bid.
7. Disclosure
7.1 Making a Bid Public
When a person intends to make a bid under the Irish Takeo-
ver Rules, they must disclose this intention to the board of
the target, or to the target’s advisers, in the first instance,
before making any public announcement regarding the bid.

14
In circumstances where the bid is hostile, a phone call or a
letter to the target’s board or advisers immediately before
the announcement of the bid will be considered sufficient
prior notice.
A public announcement must also be made on a regulatory
information service. If the target’s shares are traded on the
Irish Stock Exchange, a copy of that announcement should
be sent to the Companies Announcement Office and to the
Panel. There are no requirements under the Irish Takeover
Rules for any prior notification to be given to any other body,
nor for other approvals to be obtained; however, obtaining
the necessary regulatory consents may be a condition of the
bid.
Where the offer is recommended, the bid is generally an-
nounced to the market through a joint announcement by
the bidder and the target, setting out the terms of the offer
and the target board’s recommendation.
The key triggers for when an announcement is required un-
der the Irish Takeover Rules are as follows:
• once a firm intention to make an offer has been notified to
the target board;
• where the target is the subject of rumour and speculation
or there is an anomalous movement in its share price and
there are reasonable grounds for believing that the poten-
tial bidder’s actions or intentions have led to that rumour,
speculation or price movement;
• immediately after an obligation to make a mandatory offer
arises; or
• where negotiations or discussions relating to a possible
offer are about to be extended beyond a very restricted
number of people (which also requires prior consultation
with the Panel).
The announcement of a firm intention to make an offer (oth-
erwise known as a Rule 2.5 announcement under the Irish
Takeover Rules) must contain, amongst other matters, the
terms of the offer and the identity of the bidder, together
with details of the identity of those ultimately controlling the
bidder. A Rule 2.5 announcement must also contain details
of the shares which the bidder owns in the target, in respect
of which it has received an irrevocable commitment to ac-
cept the offer, which it has contracted to acquire, or over
which it has options. A Rule 2.5 Announcement must also
include the detailed conditions to which the offer is subject.
7.2 Types of Disclosure
The type of disclosure required in a public takeover will vary
according to the nature and structure of the transaction. For
example, in a hostile bid, the bidder and the target company
will prepare separate and, possibly, multiple documents for
the target company's shareholders. In a recommended trans-
action, they will collaborate to produce a single document.
If the bidder is offering its own shares as consideration, or
it is a large acquisition, it may need to prepare a prospectus
and/or send a circular to its own shareholders.
The Irish Takeover Rules oblige the bidder and the target
company's board, as appropriate, to give sufficient informa-
tion (and the target's board is also required to give sufficient
advice) to shareholders of the target to enable them to reach
a properly informed decision as to the merits or demerits of
the offer. In the context of the provision of such information,
the obligation of the bidder will be no less than that of the
board of a company towards its own shareholders.
Responsibility
With very limited exceptions, each document issued and
every advertisement published in connection with an offer
by or on behalf of the bidder or the target (and jointly by the
target and bidder in a recommended bid) during the course
of the offer must state that the directors accept responsibility
for the information contained in the document and that, to
the best of the knowledge and belief of those directors (hav-
ing taken all reasonable care to ensure that such is the case),
the information contained in the document or advertise-
ment is in accordance with the facts and, where appropriate,
that it does not omit anything likely to affect the import of
such information.
A verification exercise will be conducted in respect of each
document and announcement to confirm the accuracy of all
such information.
A Rule 2.5 announcement
An announcement of a firm intention to make a bid (other-
wise known as a Rule 2.5 announcement) commits a bidder
to make an offer and should therefore be made only after
very careful and responsible consideration. The Irish Takeo-
ver Rules require the bidder to include certain fundamental
details in the Rule 2.5 announcement, including:
• the basic terms of the offer (eg amount and form of con-
sideration);
• the identity of the bidder;
• details of any target shares in which the bidder (or anyone
acting in concert with the bidder) has an interest;
• details of any irrevocable undertakings obtained by the
bidder;
• the conditions to the offer;
• details of any break fee agreed to by the target; and
• where cash comprises some or all of the offer considera-
tion, confirmation by the bidder's financial adviser that
resources are available to the bidder sufficient to satisfy
full acceptance of the offer.

15
Offer/Scheme Document
The offer document is the formal legal document by which
the offer is made, where the offer is structured as a tender
offer. Where the offer is structured as a scheme of arrange-
ment, the principal documents sent to the target company's
shareholders are a scheme circular and form of proxy.
The Irish Takeover Rules set out detailed minimum require-
ments applying to the content of an offer/scheme document,
which include the terms of the offer and all conditions to
which it is subject. Any subsequent documents are subject
to separate requirements.
The offer/scheme document is required to satisfy the same
standards of accuracy, completeness and fair presentation as
would be required of a prospectus.
A bidder may not include in the offer document any state-
ment which, even if not factually inaccurate, may mislead
shareholders and the market or may create uncertainty. A
bidder may not include a statement to the effect that it may
improve its offer, or that it may make a change to the struc-
ture, conditionality or the non-financial terms of its offer,
unless it commits itself to doing so and specifies the im-
provement or change.
Target Response Circular
The Irish Takeover Rules require the target board of direc-
tors to circulate to the target's shareholders its views on the
offer, as well as the substance of the advice provided by its
financial advisers. In a hostile bid, this opinion is set out in
a separate defence circular to be posted within 14 days of the
offer document; in a recommended situation, it forms part
of the offer document itself.
Prospectus
If the bidder is offering its own shares as consideration, or
it is a large acquisition, it may need to prepare a prospectus
and/or send a circular to its own shareholders. A prospectus,
if required, has to be approved by the Central Bank of Ireland
prior to being published.
7.3 Requirement for Financial Statements
If the offer is not a securities exchange offer under the Irish
Takeover Rules, the bidder is required to include the fol-
lowing financial information about the bidder in the offer
document:
• for the last two financial years for which information has
been published, turnover and profit or loss before taxation;
• a statement of the net assets of the offeror shown in the
latest published audited accounts; and
• the nature of the business and its financial and trading
prospects.
There are additional detailed requirements in terms of the
minimum financial information a bidder is required to in-
clude, where the offer is a securities exchange offer under the
Except with the consent of the Panel, the bidder must make
available for inspection at an address in Ireland, and pub-
lish on a website, the audited consolidated accounts of the
bidder for the last two financial years for which these have
been published.
7.4 Disclosure of the Transaction Documents
Except with the consent of the Panel, a bidder must, from
the time the offer document is published, make available for
inspection at an address in Ireland, and publish on a web-
site, a copy of the offer document. The target company has
a similar obligation to make available for inspection and to
have published on a website, a copy of the target response
circular from the time at which the target response circular
is published.
8. Duties of Directors
8.1 Principal Directors’ Duties
Each director of an Irish incorporated company has a duty
to ensure that the company complies with the Companies
Act. Upon their appointment, a director is required to ac-
knowledge that, as a director, he or she has legal duties and
obligations imposed by the Companies Act, other statutes
and at common law.
The Companies Act sets out eight primary fiduciary duties
of directors, which are as follows:
• a director must act in good faith in what the director con-
siders to be the interests of the company;
• a director shall act honestly and responsibly in relation to
the conduct of the affairs of the company;
• a director shall act in accordance with the company’s con-
stitution and exercise his or her powers only for the pur-
poses allowed by law;
• a director shall not use the company’s property, informa-
tion or opportunities for his or her own or anyone else’s
benefit unless that is expressly permitted by the company’s
constitution, or the use has been approved by a resolution
of the company in a general meeting;
• a director shall not agree to restrict the director’s power to
exercise an independent judgment unless this is expressly
permitted by the company’s constitution, or approved by
the company’s members in general meeting;
• a director shall avoid any conflict between the director’s
duties to the company and to the director’s other (including
personal) interests, unless the director is released from this
duty in accordance with the company’s constitution, or by
a resolution of the company’s members;

16
• a director shall exercise the care, skill and diligence which
would be exercised in the same circumstances by a rea-
sonable person having both the knowledge and experience
that may reasonably be expected of a person in the same
position as the director, and the knowledge and experience
which the director has or may be reasonably expected to
have; and
• a director shall have regard to members’ interests (in addi-
tion to the duty to have regard to the interests of the com-
pany’s employees in general).
Directors’ duties are owed to the company. In addition, if a
company is insolvent or there is a significant risk that the
company will become insolvent, even if it is not yet in liq-
uidation, the directors must have regard to the interests of
the company’s creditors. In such circumstances, the direc-
tors have a duty to the creditors to preserve the assets of the
company, or at least not to dissipate them.
Individuals who are not formally appointed to the board of
directors but act as directors and occupy the position of di-
rector (de facto directors) are bound by the same duties and
obligations and are subject to the same liabilities as formally
appointed directors. A shadow director is an individual who
has not been formally appointed to the board of directors,
but is a person in accordance with whose directions or in-
structions the directors of the company are accustomed to
act. In most respects, Irish company law treats such an indi-
vidual as a director and holds him or her to the same duties
and liabilities.
Breaches of the Companies Act may give rise to criminal or
civil liability on the part of the director. Directors may find
themselves and their actions exposed to increased scrutiny
in times of financial distress, whether by shareholders, the
Office of the Director of Corporate Enforcement, or the Irish
courts.
8.2 Special or Ad Hoc Committees
It is common for boards of directors (whether of the tar-
get company or the bidder) to establish a committee and
delegate day-to-day responsibility relating to the bid to that
committee. In particular, such delegated committees are fre-
quently used where there is a conflict of interest which may
prevent a director from being eligible for involvement in the
consideration of the offer. This allows the board to establish
an independent body to conduct and consider the bid sepa-
rately from the interested directors.
Whilst the board may delegate the day-to-day conduct of a
bid to individual directors or to a committee of directors,
delegation will not abrogate each director’s responsibilities
and duties, or absolve any director from the requirement
to accept responsibility for any document issued. The full
board of directors must ensure that proper arrangements
are in place for it to monitor the conduct of the bid, so that
each director can fulfil his or her responsibilities under the
8.3 Business Judgement Rule
There is no specific Irish law equivalent of what is referred
to in the US as the “business judgment rule” under which a
board of directors’ decision is protected unless it is shown
that the directors breached their duty of care or duty of loy-
alty. However, in reviewing the decisions of directors, the
Irish courts tend to operate a similarly deferential standard
of review of the decision-making process of the directors
that, in general terms, is similar to the “business judgment
rule,” provided there is no proven breach of a specific duty
of a director.
8.4 Independent Outside Advice
Parties to any public takeover will generally have financial
and legal advisers.
The target board in a public takeover must obtain compe-
tent independent advice on every offer and revised offer and
must despatch a circular to its shareholders setting out the
substance and source of that advice, together with the con-
sidered views and opinions of the board. If the target board
considers it impossible to express a view on the merits of an
offer, or if there is divergence of views amongst members of
the board or between the board and its financial adviser, the
board must, in its circular to shareholders, draw attention to
this and set out fully the arguments for acceptance or rejec-
tion of the offer.
A bidder can only make a firm intention to make an of-
fer (otherwise known as a Rule 2.5 announcement) when,
following careful and responsible consideration, it and its
financial adviser are satisfied that the bidder is in a position
to implement the offer.
8.5 Conflicts of Interest
The level of judicial scrutiny in Ireland on conflicts of inter-
est has generally been limited.
Under the Irish Takeover Rues, a conflict of interest may
prevent a director from being eligible for involvement in
the consideration of any offer (including the formulation
and communication of advice to shareholders). The board
of directors of the target company must obtain competent
independent advice on every offer and revised offer.
9. Defensive Measures
9.1 Hostile Tender Offers
Although hostile tender offers are permitted in Ireland, they
are not as common as recommended offers. The most high-
profile hostile offers of recent years include Royalty Pharma’s

17
bid for Elan, Ryanair’s bid for Aer Lingus and Worldview’s
bid for Petroceltic.
9.2 Directors' Use of Defensive Measures
There is flexibility to implement a range of poison pill and
similar protections before a hostile offer is tabled. Once the
board of a potential target company has reason to believe
that a bona fide offer is imminent, many defensive measures
may be closed under the Irish Takeover Rules as they could
be deemed to be frustrating actions. Any defensive meas-
ures used by directors must be in compliance with the Irish
Takeover Rules.
The target board is prohibited under the Irish Takeover Rules
from taking certain actions (except pursuant to a contract
previously entered into) without shareholder approval and/
or the consent of the Panel, either in the course of the offer,
or if the target board has reason to believe that an offer is
imminent. Such frustrating actions include:
• the issue of any shares or the grant of options in respect
of shares;
• the sale, disposal or acquisition of assets of a material
amount, or agreement to do so;
• the entry into of contracts otherwise than in the ordinary
course of business; and
• the taking of any action, other than seeking alternative of-
fers, which may result in frustration of a bid or sharehold-
ers being denied the opportunity to decide on the merits
of an offer.
Except for limited exceptions under the Irish Takeover
Rules, information given by a target to one bidder must be
made available to all bidders. A second or subsequent bidder
will have to request specific information; it is not entitled, by
asking in general terms, to receive all information supplied
to the first bidder.
9.3 Common Defensive Measures
Irish law does not expressly authorise, nor expressly prohibit,
a target company from adopting a shareholder rights plan
as a defensive measure. Automatic rights plans have been
adopted/considered by some “inverted” companies.
9.4 Directors' Duties
Directors cannot block a tender offer to shareholders. They
can (generally) block a scheme of arrangement. When en-
acting defensive measures, directors must ensure that they
observe their fiduciary duties to the company and act hon-
estly and in good faith in the best interests of the company.
The fiduciary duties and other obligations of the directors
of an Irish target company will be governed by Irish law.
These duties and other obligations will apply to the target's
directors in deciding whether to engage in a process with a
potential bidder which may result in an offer for the target,
and ultimately in deciding whether to recommend, or not
recommend, an offer.
9.5 Directors' Ability to Just Say No
The Irish Takeover Rules provide that the board of the tar-
get company must obtain competent independent advice on
every offer and revised offer in respect of the target and must
despatch a circular to its shareholders which sets out the
substance and source of this advice, together with the con-
sidered view and opinion of the board of the target company
on the offer. In the event that any directors have a conflict of
interest, an independent committee may need to be estab-
lished to consider the offer.
10. Litigation
10.1 Frequency of Litigation
Litigation by a bidder or target company in connection with
a public takeover tends to arise more commonly in a hostile
takeover than in a recommended transaction. Litigation by
shareholders is very unusual.
10.2 Stage of Deal
Litigation can be initiated at any stage during a sales process
and/or post-completion.
If the Panel considers that a ruling or direction has not been
complied with, or is unlikely to be complied with, it may
apply to the Irish High Court for an appropriate order of
enforcement.
A person may question the validity of a ruling or direction of
the Panel, a rule of the Irish Takeover Rules, or any deroga-
tion from or waiver of a rule of the Irish Takeover Rules, only
by way of application to the Irish High Court for judicial
review of the matter concerned.
A person who has been advised or censured by the Panel
may appeal the matter to the Irish High Court, which may
confirm the Panel’s decision or annul it. In the latter case, the
court will either direct the Panel to conduct a fresh enquiry,
or require the Panel to publish a notice of the decision of
the court.
Litigation by shareholders is unusual in connection with a
proposed takeover.
11. Activism
11.1 Shareholder Activism
In recent years, there has been increasing growth in the US
and Europe in both the volume and intensity of activist cam-
paigns, as shareholders look to influence the behaviour of
companies in an attempt to increase or release shareholder
value. Whilst hedge funds and other activist shareholders

18
have not traditionally played a significant role in the Irish
market, Irish listed companies, particularly those with a sig-
nificant US shareholder base, are subject to increased inter-
est from activist investors.
11.2 Aims of Activists
Activist investors may seek to encourage companies to create
value through spin-offs, divestments (including sales of non-
core assets), mergers or acquisitions. Whilst shareholder ac-
tivism has become an increasing trend in Ireland, it remains
relatively rare and has not tended to be a material factor in
MA transactions to date.
11.3 Interference with Completion
Common objectives of activist shareholders may also in-
clude:
• corporate governance issues, such as gaining board repre-
sentation, addressing executive compensation or changing
management teams;
• returning capital to shareholders, including dividends,
share buy-backs and other balance sheet restructurings; or
• otherwise influencing operational changes, including
changes to corporate strategy, focus and general cost-cut-
ting.
The strategies used by activist shareholders typically include
one or more of the following:
• building up a stake in a company to influence decisions at
shareholders' meetings;
• using public announcements to promote particular actions;
• calling or requisitioning a general meeting of the share-
holders of the company to consider resolutions to effect
changes; or
• requesting a copy of the register of shareholders of a com-
pany with a view to contacting other shareholders.
Matheson
70 Sir John Rogerson's Quay
Dublin
County Dublin
Ireland
2
Tel: +353 1 232 2000
Fax: +353 1 232 3333
Email: dublin@matheson.com
Web: www.matheson.com

Chambers Global Practice Guides: Corporate M&A 2017

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