Amendments to Takeover Bid Rules Alter Canada's M&A Landscape

The Canadian Securities Administrators (CSA) have published the final form of the much-discussed amendments to Canada’s takeover bid regime (the “Takeover Amendments”). The Takeover Amendments are substantially similar to the draft published in March of last year, though they include some important changes. The main elements of the Takeover Amendments that will affect takeover bids for Canadian companies are:

• Minimum Tender Condition.  All non-exempt takeover bids will be required to achieve a minimum tender requirement of more than 50% of the outstanding securities that are subject to the bid and held by disinterested securityholders. This requirement applies equally to partial bids, making them more challenging for bidders.
• Minimum Bid Period.  The minimum deposit period for bids will be 105 days. This period appears to reflect a compromise between certain jurisdictions that preferred a 90-day period and others that preferred a 120-day period. Shorter minimum periods are permitted, to as low as 35 days – the minimum bid period in the former regime – either at the discretion of the target’s board or if the target enters into an alternative transaction, such as a plan of arrangement.
• Mandatory Extension. The minimum deposit period must be extended by a minimum of 10 days after the minimum tender requirement and all other conditions are met or waived.