However, the buyer may prefer to approach the target company or their shareholders directly. In practice, the parties may include several deal protection mechanisms in the transaction documents, especially in share purchase agreements in order to avoid any possible non-cooperative target company actions. For instance, a “break-up law firm istanbul turkey fee” may be introduced if either party does not proceed with the closing for any reason. The required documentation for acquisition transactions varies based on the nature of the transaction. In Turkey, these transactions take place mainly by way of share transfer, share subscription, asset sale or joint venture formation.

A typical private M&A transaction process in Turkey usually follows customary international practices. The potential buyer and the seller negotiate and execute a term sheet/memorandum of understanding, which outlines the major terms to be included in the final transaction documents. While due diligence is conducted, the main transaction documents and any ancillary documents are negotiated, and are normally finalised following completion of due diligence. As explained above in detail, foreign-to-foreign mergers are covered by Law 4054 on Protection of Competition to the extent that they affect the relevant markets within the territory of Turkey. To that end, penalties for failure to notify, late notification and breaches of a prohibition on closing do not differ in terms of foreign-to-foreign mergers.

What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?

Due Diligence investigations conducted by our team help the clients to mitigate risk, make the best well informed decisions, and take client business to the next level. From starting, growing, to selling the company, clieents let us empower their business to success. Having said that, foreign investments in sectors such as civil aviation, insurance, banking, radio and TV broadcasting, financial advisory, and mining are subject to certain restrictions. Restrictions mainly involve establishing a local investment vehicle in Turkey that is controlled by Turkish nationals. Thus, the Board evaluated that the transaction may cause significant competitive restrictions. Generally, the Competition Authority pays special attention to those transactions in sectors where infringements of competition are frequently observed and the concentration level is high.

Mergers & Acquisitions in Turkey

Although not discussed in this Q&A, limited liability companies have a wider remit to include provisions that limit share transfers or changes in management control under the articles of association. Private company M&A transactions are not subject to a specific regulatory approval process. However, as explained below, there are sector-specific and competition law related regulatory approval processes. As for acquisitions , either partial or complete acquisition is facilitated under the existing legal framework.

In which circumstances is an acquisition of a minority interest notifiable or reviewable

Similarly, in the Guidelines on the Assessment of Non-Horizontal Mergers and Acquisitions, the changes envisaged in the evaluation of vertical and multi-market merger transactions, especially updates related to digital markets, are detailed under the headings of unilateral and coordinated effects. In addition to the aforementioned changes, updates have been made on the Guide on the Assessment of Horizontal Mergers and Acquisitions, in the scope of potential competition, the proximity of competition analysis, damage theories related to digital markets, and innovation-based markets. Within the scope of these updates, it is aimed to subject the transactions related to the acquisition of technology enterprises to the supervision of the Turkish Competition Authority and to prevent the lethal acquisitions related to these enterprises. According to the report foreign investors conducted 60 M&A deals in Turkey this year worth $4 billion. We complement our Mergers & Acquisitions practice with other areas of law, such as competition, real estate, tax, intellectual property and the environment, which makes us more time and cost efficient, to the benefit of our Clients. We provide a full legal representation and support in Merger & Acquisition transactions and find the best possible solutions for a specific business, by preparing the essential contractual and regulatory framework.

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Other than contractual grounds mutually agreed to by the transaction parties, Turkish legislation does not provide any specific rules for the payment of a break-up fee. With this approach, the parties may also agree on reciprocal fees as a penalty to protect both sides with respect to any termination made on or before the contemplated closing date. If the target company is a private company, there is no obligation to announce the deal. However, if the deal requires the Turkish Competition Board’s approval under Competition Law No. 4054, upon the application, the Turkish Competition Board makes an announcement regarding such application and deal on its official website. However, if the target company is publicly held, any information that may affect possible investment decisions must be immediately disclosed via the Public Disclosure Platform. The effect of a merger or acquisition on employment relationships may differ according to the nature of the transaction.

Potential buyers must usually cooperate with the controlling shareholders to buy shares and acquire control of the company. The shareholders may receive more than they are entitled to, for various reasons given by the sellers, if the buyer approves. If the sellers transfer only a part of their shares in the deal, the buyer may offer put options to them. ADMD is among the most prominent law service providers in the field of mergers and acquisitions. We do not care about the financial size of your deal, and we try to provide the best and most efficient service that you may require to your family business or your multibillion dollar enterprise. Members of our office assist to a variety of issues regarding asset sales, stock sales, reverse, exit or cash-out mergers, leveraged buy-outs, employee stock options, venture capital transactions, strategic alliances and joint ventures.

Stock price reaction is analyzed over a period of 21 days around the announcement by using standard event study methodology. Results indicate that shareholders of Turkish target firms involved in M&A activities enjoy positive and significant cumulative abnormal returns ranging from 5.25 percent to 8.53 percent depending on the event window analyzed. This finding is consistent with previous studies which show that most of the benefits from M&As accrue to target companies and that acquirers pay a premium to control the rights in these targets. In practice, the ownership would pass to the buyer upon the closing of the deal and completion of closing actions (e.g., completion of condition precedents, obtaining required governmental approvals and/or clearance, completion of corporate documentation) in terms of a share transfer acquisition. Moreover, the board members nominated by the buyer must be registered with the trade registry to ensure ultimate control of the target. In terms of joint-stock companies, if a company issues share certificates, these certificates must be endorsed and delivered to the buyer in order to realise a share transfer.

II-26.1 has been published by the Capital Markets Board and entered into force on 16 October 2021. With this amendment, the Capital Markets Board has clarified some issues in the tender offer processes (e.g., tender offer price calculation and applicable exchange rate) and expanded the cases where neither the tender offer obligation, nor the exemptions arise. Moreover, a share acquisition that leads to the seizure of management control due to an inheritance or property regime between spouses or legal obligations has been introduced as an exemption of the tender offer obligation. On the other hand, in terms of limited liability companies, a share transfer agreement must be executed before a notary public and registered with the relevant trade registry and a general assembly must approve such share transfer. However, hostile bids are not common nor feasible in Turkey, as the transfer of shares are at the discretion of the relevant shareholder. A vast majority of publicly traded companies are controlled by a single or small group of shareholders, and the floating percentage is low, which makes a hostile takeover practically impossible.

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