Overview

In times of economic crisis, the special rules of the Austrian Takeover Act (TA) applicable to distressed companies would be expected to gain in importance. For takeovers of such targets, the obligation by a bidder to launch a mandatory offer can be suspended (sec 25/1/2 Austrian Takeover Act). Alternatively, exceptions to the minimum price rules can be granted (sec 26/3/3 Austrian Takeover Act). Both exceptions must be cleared with the Austrian Takeover Commission. In the past the TC has applied these rules narrowly. During the 2008/09 financial crisis, the TC has, however, resolved the “distress” situations without reliance on these provisions.

To date, the TC has had to deal primarily with cases where core shareholders of companies listed on the Vienna Stock Exchange (VSE) went into distress. These situations posed a threat to the shareholder base and thus the target itself. The two leading cases in this context relate to the financially troubled AvW, an investment advisory business company and investor in the small caps S&T and C-Quadrat, both listed on the VSE. A differently structured case relates to STRABAG SE, listed on the prime market of the VSE. In the STRABAG case, the strategic investor Rasperia Ltd was forced to find a short and medium term solution for its 25% participation in STRABAG. Its participation was in danger of being auctioned off by the creditor banks following default of Rasperia on margin calls of the participation financed by a margin loan.

In both cases, the TC showed flexibility and allowed exceptions from the obligation to launch a mandatory offer, since such offers would have potentially harmed the interests of the free float shareholders.