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Fairness opinions and independent board advice

Fairness opinions and independent board advice

Our team of valuations experts are ready to provide you with independent and objective advice on the fairness of a takeover offer or a proposed related party transaction. We help shareholders, boards or committees of independent directors of companies assess the fairness of an offered price and the financial terms of a potential transaction, as required by regulatory authorities. This can be in the context of:

Public takeover offers

This includes a review of the bidder’s bid price justification with respect to all valuation methodologies applied by the bidder to determine the bid price per share. This can be used as input for the ‘position statement’ of the target company’s board of directors.

Squeeze out procedures:

Our team will, within this framework, mainly focus on the assessment of the fairness of the price (fair market value) determined by the majority shareholder and confirmed by an independent expert.

Note: A Royal Decree was published in the Belgian Official Gazette on 5 October 2018 containing, among other things, amendments to the Takeover Decree (Royal Decree of 27 April 2007 on takeover bids) and the Squeeze-out Decree (Royal Decree of 27 April 2007 on squeeze-out bids).

In relation to the appointment of an independent expert and the opinion itself, important amendments to the Squeeze-out Decree include the following:

  1. The terms and conditions of the bid (including the price) should not jeopardize the interest of the holders of securities in the target company. This newly formulated requirement is based on existing case law.
  2. The appointment process of an independent expert must be compliant with new, stricter documentation rules, e.g. at least three possible providers of independent expert advice must be contacted and the basis for the final selection of the independent expert should be documented.
  3. The creation of stricter criteria and rules regarding remuneration and expertise of the independent expert to warrant the quality of the provided opinion. In addition, the independent expert must demonstrate how he or she meets the relevant independence requirements.

    The FSMA is allowed to appoint a new independent expert if it is of the opinion that the appointed independent expert does not meet the relevant criteria.
  4. The independent expert must declare – without reservation – that the price offered to the holders of securities in the target company does not jeopardize their interests.

A conflict of interest procedure

In this case, a committee of three independent directors is asked to evaluate a proposed related party transaction prior to its execution and provide advice to the board of directors (Article 524 of the Belgian Company Code). 

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