I overview of the market

In 2002, France became one of the first major European countries to introduce a listed REIT regime, referred to as 'SIIC'. The introduction of the SIIC regime provides listed property companies with a tax efficient regime, permitting them to unlock trapped value and attract significant investments. SIICs play a key role in the French real estate market, with an aggregate market capitalisation for French SIIC of approximately €70 billion in recent years.

A number of other investment structures designed for real estate investments are available, including SCPI2 and OPCI (a form of SCPI created in 2005, which is more flexible and provides heightened liquidity).3 OPCI (in the form available to qualified investors) tend to be the investment structure favored by sophisticated private equity funds for their non-public investments.

Both pan-European and French specific private equity funds focused on real estate are active in France, with significant portfolios of office space, as well as clinics, hotels, retirement communities, and student housing. Logistics have been a key deal driver in recent years. The last twenty years have witnessed an ongoing professionalisation and consolidation of the French real estate market.

France is one of the most attractive jurisdictions in the world for foreign investment, and real estate is no exception, with foreign investors, both from continental Europe and further afield, playing a key role.

II RECENT MARKET ACTIVITY

i M&A transactions

Unibail-Rodamco Westfield (2017–2018)

On 12 December 2017, Unibail-Rodamco, incorporated in France, and Westfield, incorporated in Australia, two of the largest REITs in commercial real estate, announced that Unibail-Rodamco had entered into an implementation agreement to acquire the Westfield Group to create one of the world's premier developers and operators of flagship shopping destinations. The transaction implied an enterprise value for Westfield of US$24.7 billion. A year and a half later, on 5 June 2018, Unibail-Rodamco-Westfield Group's 'stapled shares' were admitted to trading on the Euronext Paris and Amsterdam markets.

Among the many constraints of this transaction, it was necessary to maintain a tax regime that was generally equivalent to those of the two groups, even though their respective legal and tax frameworks were very different.

The Westfield group was acquired partly by Unibail-Rodamco and partly by a Dutch company WFD Unibail-Rodamco NV created for the occasion, in which Unibail-Rodamco held 40 per cent of the share capital (the remainder being held by the public) and whose shares were 'stapled' with Unibail-Rodamcos shares, thus creating a two-headed group. The stapling principle means that the shares of Unibail-Rodamco and WFD Unibail-Rodamco trade as a single security.

To this end, the shares of the French company and those of the Dutch company held by the market are linked to each other by reciprocal provisions in the articles of association of each group prohibiting separate purchase and sale. This is not a dual-headed structure, since the shares are not separately and independently traded on separate stock exchanges. As a result, each company maintains its own legal personality, legal and tax regimes (and in particular the benefit of the SIIC regime in France and the FBI regime in the Netherlands). However, both companies maintain a common shareholding structure and, in light of the stapling and Unibail-Rodamco's 40 per cent shareholding in WFD Unibail-Rodamco N.V., the group operates as a single financial group with accounting consolidation and global financing, which makes financial communication and rating at the group level similar to that of a traditional group. Finally, from the shareholder's point of view, the stapled shares are listed under a single quotation line similar to traditional trading in shares of listed groups.

Thus, the new group benefits from the advantages of two-headed group structures (such as dual-listed companies and other complex synthetic structures permitting to benefit from the legal and tax regimes specific to companies based in two separate countries) without suffering from the main disadvantages inherent in these structures.

Gecina/Eurosic – Foncière de Paris (2016–2017)

On March 2016, in order to create a new player in the service property sector, Eurosic, a SIIC, announced that it had entered into agreements and commitments accounted for a total of 79 per cent of Foncière de Paris SIICs' share capital and voting rights. Specifically, Eurosic had entered into outright share and purchase agreements with shareholders representing 26.6 per cent of the share capital and voting rights of Foncière de Paris, as well as contribution commitments with Covéa group and ACM VIE relating to an additional 52.5 per cent. In total these agreements and commitments accounted for a total of 79 per cent of Foncière de Paris' share capital and voting rights. This transaction was supported by Foncière de Paris' supervisory board.

On March 11, 2016, Eurosic filed a tender offer for the shares of Foncière de Paris for (1) a price of €136 per Foncière de Paris share contributed, or, at each tendering shareholders' election; (2) 24 Eurosic shares delivered for 7 Foncière de Paris shares contributed; or (3) 24 Eurosic OSRA delivered for 7 Foncière de Paris shares contributed.

This tender offer was cleared by the French Autorité des Marchés Financiers (AMF) on 27 April 2016 and the tender offer was opened on 19 May 2016.

However, on May 19, 2016, Gecina (which did not hold any shares in Foncière de Paris), another SIIC, also filed with the AMF a competing alternative tender offer to buy the shares of Foncière de Paris for (1) a price of €150 per Foncière de Paris share, or, at each tendering shareholders' election; (2) six Gecina shares delivered for five Foncière de Paris shares contributed; (3) 24 Eurosic OSRA delivered for seven Foncière de Paris shares contributed; or (4) 23 Gecina OSRA delivered for 20 Foncière de Paris shares contributed. At that time, Gecina was strategically refocusing on office real estate, and this transaction was expected to provide €2.6 billion fully complementary assets for a geographical coverage of Paris.4

Gecina's tender offer was cleared by the AMF on 13 July 2016 and the tender offer was opened on 29 July 2016.

The main shareholders of Foncière de Paris, notably Covéa and ACM Vie, reaffirmed their intention to contribute their shares in exchange for Eurosic shares, due in particular to the investment strategy and tax considerations. For this reason, but also because of the block of shares already held by Eurosic, Gecina's competing offer was blocked due to its failure to cross the 50 per cent threshold.

Challenging the reiteration of the commitments made by Foncière de Paris' main shareholders to contribute to a lower offer, the French Association for the defence of minority shareholders (ADAM) and Gecina submitted a request to the AMF to withdraw the clearance decision of Eurosic's tender offer published on 27 April 2016.

The ADAM and Gecina respectively argued that the AMF's clearance decision was obtained through fraud. According to them, the behaviour of Eurosic, Covea and ACM Vie, in particular because of the maintenance of the commitments to contribute to Eurosic's 'less expensive' offer, characterised on the one hand a concert between these shareholders which had not been declared and on the other hand, the irrevocable nature of the contribution commitments entered into by Covea and ACM Vie for the benefit of Eurosic.

In response to their request, the AMF informed the ADAM and Gecina on 11 August 2016 that no fraud likely to justify the withdrawal of the clearance decision had been demonstrated. The AMF considered that shareholders were free to tender their shares to a first tender offer after having had the opportunity to revoke their contribution commitments in the event of a competing offer and that proof of the existence of a concert was not provided and would in any event have no effect on the financial characteristics of Eurosic's offer. ADAM and Gecina appealed the AMF's decision before the Paris Court of Appeal in August 2016. All of ADAM and Gecina's arguments were rejected on appeal.

Finally, in June 2017, Gecina announced its plan to acquire all the shares of Eurosic, after unanimous approval by its board of directors. This friendly transaction between Gecina and Eurosic was supported by Eurosic's main shareholders, representing 94.8 per cent of the share capital, via the conclusion of firm agreements for the sale of blocks and commitments to contribute to the mandatory tender offer that would be filed thereafter.

Following the acquisition of the blocks of shares on 29 August 2017, Gecina held nearly 85 per cent of Eurosic's share capital on a diluted basis and filed a tender offer with a cash and an exchange option. Following the tender offer, Gecina held 47,079,603 shares, which represented 99.67 per cent (Eurosic share capital post dilution from convertible bonds and excluding treasury shares) of the share capital of Eurosic, and 17,491,754 OSRA (Obligation Subordonnée Remboursable en Actions, a sort of convertible bond) Eurosic, representing in total 99.75 per cent of the diluted capital. Therefore, Gecina announced its intention to proceed to a squeeze-out and delisting to allow the transfer of shares and OSRA of Eurosic not already owned by Gecina.

ii Private equity transactions

AccorInvest (2017–2018)

In a novel transaction completed in 2018, Accor SA spun off the property ownership of its hotel real estate (HotelInvest) permitting the entry of long-term financial investors into that business, including two sovereign wealth funds, Saudi Arabia's Public Investment Fund and Singapore's GIC Private Limited, an institutional investor, Predica, and two asset management firms, Colony NorthStar and Amundi Immobilier, while maintaining its franchising and management activities as a separate business (HotelServices). The purpose of the transaction was to enable the Accor Group to acquire the resources and agility needed to accelerate the growth of its core business, finance its various development projects (including digital diversification) and expand its offer through targeted acquisitions. At the same time, the new structure was designed to permit AccorInvest to optimise its strategy for the development of the hotel portfolio.

The first step was an asset contribution by way of spin-off governed by the law on demergers. At the shareholders' meeting on 30 June 2017, the shareholders approved (by a 99.67 per cent majority) the proposed creation of a new subsidiary, AccorInvest Group SA, a Luxembourg société anonyme, comprising all of the hotels operated by HotelInvest and dedicated to operating owned and leased hotels and managing the related hotel properties. This was accomplished through the contribution of all of the assets, liabilities, rights and obligations comprising Accor's AccorInvest business in continental Europe.

The shareholder approval paved the way for the next stage in the project, whereby Accor sold a controlling interest in AccorInvest, while retaining a significant minority stake in its capital. Accor negotiated with a group of French and International investors, for the sale of a controlling stake in AccorInvest's share capital. 

On 31 May 2018 Accor announced that it had completed the sale of 57.8 per cent of the capital of AccorInvest to Public Investment Fund (PIF) and GIC, Colony NorthStar, Crédit Agricole Assurances and Amundi. Accor retained 42.2 per cent of the capital of AccorInvest. A shareholders' agreement was entered into to govern relations between the investors and Accor.

For Accor, the transaction resulted in a gross cash contribution of €4.6 billion.

As part of the transaction, Accor and AccorInvest will maintain their close, long-standing relationship through very long-term partnership agreements. Commercial relations between the Accor Group and AccorInvest are governed by hotel management contracts describing Accor's commitments as operator towards hotel owners on terms consistent with the contracts generally entered into between the Accor Group and third-party hotel owners. A separate management contract has been signed for each hotel, covering a period of between 15 and 35 years depending on the hotel category.

Accor, AccorInvest and their respective subsidiaries also entered into a master partnership agreement organising the preferred relationship between Accor Group companies and AccorInvest Group companies, temporary reciprocal exclusive rights and reciprocal tag-along and drag-along rights for hotels, describing the basis for possible transfers of hotels and hotel management contracts, and agreeing possible waivers of certain terms and conditions of the hotel management contracts.

The master partnership agreement also includes a five-year exclusivity clause prohibiting AccorInvest entities from entering into a management or franchise contract on any hotels with another hotel operator, the restriction being gradually scaled down over this period. In return for this exclusivity clause, the AccorHotels Group entities would have a five-year obligation to offer AccorInvest companies a priority right to invest in any hotel acquisition or development projects and to enter into a hotel management agreement covering the hotels concerned.

Foncia (2016)

European private equity firms Eurazeo and Bridgepoint became shareholders of Foncia group in 2011 via a common subsidiary.

Foncia operates in residential real estate and property management services and in joint-property management, lease management and renting. Since July 2011, under the impetus of Eurazeo and Bridgepoint and its new management team, the group had radically transformed itself, focusing on service quality and innovation and completing more than 60 acquisitions. Foncia posted revenue of €696 million in 2015.

On 9 June 2016, Eurazeo and Bridgepoint announced that they had entered into exclusive discussions with Partners Group, the global private markets investment manager, with a view to selling Foncia in its entirety. Partners Group was leading a consortium of investors, including Caisse de dépôt et placement du Québec and CIC Capital Corporation, a wholly-owned subsidiary of China Investment Corporation, as well as Foncia's management team. The deal, involving the sale of the entire Foncia group, was concluded for an enterprise value of €1.833 billion.

In July 2016, the European Commission approved the takeover and the closing took place on 7 September 2016.

Partners Group announced that, following the acquisition, the Partners Group consortium will work with Foncia's management team to continue Foncia's successful strategy of consolidation in the French property management market, develop Foncia's offerings in related product areas, and accelerate its international expansion.

III REAL ESTATE COMPANIES AND FIRMS

i Publicly traded REITs and REOCs – structure and role in the market

Only publicly listed companies can benefit from the SIIC regime. There are currently 28 such companies in France. The success of the SIIC model has permitted them to attract and retain strong management teams, contributing to the professionalisation of the real estate sector. Today, SIICs are present throughout France with around 20 million square metres of assets, 208,000 jobs supported in 2018 and €13.5 billion in planned investments by 2022.5 The bulk of SIIC investments are in major metropolitan areas, with a strong focus on offices and shopping centres. SIICs typically focus on office and commercial property, sometimes with a sector focus, including shopping malls and commercial centers, offices, convention centres and exhibition sites and hotels.

When entering the SIIC regime, an exit tax of 19 per cent must be paid on unrealised capital gains on assets held by the corporation. In addition, at least 15 per cent of the share capital and voting rights of the SIICs must be held by persons holding, directly or indirectly, less than 2 per cent of the share capital and voting rights. In addition, 60 per cent or more of the capital or voting rights may not be held directly or indirectly by one or more shareholders acting in concert.

Other real investment structures permitting the taxation of gains at the level of shareholders rather than at the corporate level are available, including the SCPI; however this structure has enjoyed less success than the SIIC structure.6 As investment funds, SCPIs are regulated as alternative investment funds by the French market regulator, the Autorité des marchés financiers (AMF), pursuant to the European AIFM Directive. Accordingly, SCPIs must be managed by a management company and approved by the AMF. Other structural protections are built into the SCPI regime, including requirements for an independent real estate appraiser approved by the AMF and a custodian.

At the end of 2018, there were 175 SCPIs in France. The total market capitalisation of the SCPIs represented €55.4 billion.7 Yield SCPIs typically focus on regular rental income, including offices and commercial real estate.

ii Real estate PE firms – footprint and structure

Sophisticated private equity investors investing in real estate assets tend to prefer a variation of the SCPI structure called OPCI (the specific variation for qualified investors is the OPPCI (Organisme Professionnel de Placement Collectif en Immobilier) structure). Despite their name (which includes the term 'collective'), they are now available even for a sole investor. Like SCPIs, they are regulated by the AMF and must be managed by an AMF-approved management company. Today they are estimated to include a total capitalisation of approximately €80 billion. An OPPCI must hold at least 60 per cent of its assets in real estate assets, and at least 5 per cent in liquid assets.8

Private equity investors in France adopt a variety of classic strategies in relation to real estate, including investing in existing properties to improve the property profile or seeking to improve operations (for example in hotel franchises or clinics, where there is a management incentive aspect). Higher levels of leverage can often be achieved in real estate as compared to other forms of private equity investment in France.

IV TRANSACTIONS

i Legal frameworks and deal structures

The only permissible consideration in a merger involving a French company is stock of the continuing corporation in the merger (subject to limited cash boot). Accordingly, 'triangular' mergers are not permitted under French law. For public transactions, the tender offer (including exchange offers) is by far the most common structure. Cross-border mergers are also permitted under European law, but remain cumbersome in practice.

Board members and senior managers and other corporate decision-makers are required to act in their company's corporate interest.9 In addition, for publicly listed companies, the AMF must be informed of any actions by the company that may cause an offer to fail.10 In addition, AMF regulations require that the bidder, the target, and their respective concert parties, must respect the free play of offers and increased bids.11

The AMF requires that the target of a public tender offer designate an independent expert to issue a fairness opinion on the financial aspects of the offer whenever such offer 'could potentially create a conflict of interest' within the board which might undermine the objectivity of the board's recommendation or call into question the equal treatment of shareholders.12 A specific regime governs the issuance of such fairness opinions, including the expert's 'independence'.

ii Acquisition agreement terms

For block sales from major shareholders of a publicly listed company (including a SIIC) preceding a tender offer, sellers often request top up clauses. Support agreements (i.e., undertakings for a shareholder to tender its shares) are also authorised, unless they make any competing offer impossible (e.g., if they are irrevocable or have a break fee that is too dissuasive).

There is no obligation to enter into a formal acquisition agreement, although in practice the offeror, target (and in some cases its significant shareholders) will often seek to enter into an agreement governing the conduct of the tender offer and, where relevant, setting forth agreements with respect to the governance of the combined businesses after the transaction.

Any break-up fees (including any reverse break-up fees) must be considered to be in the best interest of the target. As a result, break fees given in the context of a negotiated business combination must be reasonable. There is, however, no express statutory or regulatory text on this topic and there is only limited jurisprudence.

Provided they are of limited duration, exclusivity agreements providing that the target's directors will not commence discussions with other potential offerors are generally regarded as permissible. These kinds of agreement (and 'no-shop' provisions or 'matching-rights' provisions) can, however, be challenged on the basis that they violate the general principles of free competition between offers and competing offers.

Once an offer has been filed with the AMF, there are very limited circumstances under which the offeror may withdraw the offer. As a corollary, at the time that the offer is first filed with the AMF, the irrevocable obligations and undertakings of the offeror must be guaranteed by at least one investment bank, which files the proposed offer with the AMF on behalf of the offeror.

In general, once filed with the AMF, the offeror may only withdraw its offer under very limited circumstances, including in the event of a competing bid, or with the AMF's prior approval if:

  1. the offer becomes without purpose, for example, in the event that previously competing offerors decide to initiate a joint offer;13 or
  2. the target takes actions which 'alter its substance' (either during the offer or in case the offer is successful) or increase the cost of the offer for the offeror.14

In addition, French tender offer rules permit only a limited number of conditions to the offer. The only conditions that may be included in an offer are:

  1. the offeror making a voluntary offer may condition the closing of an offer on a minimum level of acceptance by the target shareholders;15
  2. if the offeror simultaneously makes separate offers on two or more targets, the closing of one offer may be subject to success of the other offer;16
  3. to the extent such approval is required, an offer may be conditioned upon receipt of antitrust approval, with certain significant limitations;
  4. in certain cases, where the acquirer requires shareholder approval (e.g., to issue shares or to approve the tender offer); and
  5. the AMF may condition the opening of the acceptance period on the receipt of mandatory regulatory approvals.

iii Hostile transactions

As mentioned above, France has witnessed hostile takeover battles concerning public real estate companies, including most recently Gecina's hostile bid for Foncière de Paris discussed above.

In addition, in 2011, Paris Hotels Roissy Vaugirard (PHRV) whose share capital was owned by Allianz (31.4 per cent), Covéa group (31.4 per cent) and Cofitem-Cofimur (31.1 per cent), announced that it had made an unsolicited offer for Foncière Paris France (FPF), a French listed real estate company. The first offer was filed on October 7, 2011 with a price of €100 per share. On November 29, 2011 PRHV filed a higher bid with a price of €110 per share.

As regards both bids, the target's board, with the exception of the representative of Cofitem-Cofimur (acting in concert with PHRV) who dissented, concluded that the offer was not in the interests of Foncière Paris France or of its employees, shareholders and holders of securities giving access to the capital.

In 2014, France opted out of the passivity rule, so that the board of directors may take measures aimed at frustrating a hostile bid.17 This obviously provides companies with greater flexibility to negotiate with a potential bidder or an alternative acquirer or to refuse an offer they do not deem to be in the company's best interests. However, any defensive measures adopted by a target in the context of a hostile takeover must be consistent with its corporate interest.18

iv Financing considerations

French law prohibits a target company from advancing any funds, granting any loans, or granting any security (pledge, first demand guarantee, guarantee, etc.) on its assets in furtherance of the purchase of its own shares by a third party.19 Accordingly, in the context of leveraged buy-out transactions, French law prevents in particular any target company from, inter alia, providing security for any loans taken out for the purpose of financing the acquisition of its own shares. Any corporate officer of a target company which has granted any advance, loan, or security in violation of the prohibition on financial assistance, may be subject to criminal sanctions20 and civil sanctions, and/or the concerned advance, loan, or security may be declared void. No 'whitewash' procedure is available to permit exceptions to this prohibition on financial assistance. However, the offeror can give a pledge over the shares to be purchased in the offer as part of the security package to its financing parties.

In light of the foregoing, certain post-acquisition transactions should be undertaken with caution (e.g., leveraging up the target to pay a post-acquisition dividend to the offeror, or the post-completion merger of the target with the acquisition vehicle).

In the case of real estate assets, the use of leverage to acquire the real estate directly (rather than a corporate entity that owns the asset) does not pose similar issues.

v Tax considerations

With regard to the taxation of shareholders, and more specifically for the French tax resident, several rates are considered depending on the case:

The distributed income and capital gains subject to income tax are taxed as income from movable capital and those subject to corporate income tax are taxed at the standard rate (33.33 per cent).

For capital gains on the sale of shares that are subject to income tax, the progressive scale of the income tax applies and those subject to income tax the long-term capital gains (PVLT) regime may apply if the conditions are met (qualification of equity securities and holding period). In this case a specific rate of 19 per cent is applied.

For shareholders who are not French tax residents, there is a 30 per cent withholding tax concerning the distributed income and capital gains. Concerning the capital gains on the sale shares, there is an ordinary tax rate of 33.1 per cent, with some exceptions (for natural persons, companies whose profits are taxed in the name of shareholders, community companies subject to corporation tax and certain real estate investment funds)

vi Cross-border complications and solutions

The direct or indirect acquisition by a foreign investor of the control of a French company involved in certain activities considered as 'strategic' requires the prior approval of the French Minister of Economy. Strategic activities include:

  1. cryptology, intelligence, military and defense;
  2. gambling, private security, wiretapping, IT security, dual-use items; and
  3. the integrity, security and continuity of:
    • electricity, gas, hydrocarbons or other energy sources;
    • water supply;
    • transport networks and services;
    • electronic communications service networks;
    • an establishment, installation or work of vital importance; and
    • public health.

Certain variations are applicable to investors from within the EU. The French administration has been increasingly vigilant in its application of this regime, and so a conservative approach should be adopted in assessing whether the regime applies.

V CORPORATE REAL ESTATE

There are a number of precedents for separating corporate real estate from operating companies, including notably the AccorInvest transaction discussed above. Other examples include Mercialys (a SIIC created by Casino Group, which owns real estate assets comprised of specialised hypermarkets and shopping malls located on the Casino Group's hypermarket and supermarket sites and cafeterias as well as some sites including franchised supermarkets or mini-markets rented to third parties), and Carmila (a SIIC created by Carrefour and dedicated to the development of shopping centres adjacent to Carrefour hypermarkets in France, Spain and Italy).

VI OUTLOOK

The fundamentals generally appear solid for French commercial real estate; demand for office and commercial space remains strong. In particular, prime real estate in central urban areas enjoys historically low vacancy rights. Worldwide investment levels remain high and interest rates are low. 2018 set a record for investments in commercial real estate in France, supported by significant levels of foreign investment. The conjunction of the foregoing factors would seem to militate in favor of continued strong levels of investment in France, and a resulting potential for M&A. That being said, uncertainty surrounding historically high prices, ongoing geopolitical issues (protectionism, Brexit, etc.) and questions about the sustainability of the current market highs invites caution. Perhaps as a result, levels of M&A in France, including in the real estate sector, have been muted thus far this year, in comparison to the exceptional performance in recent years.


Footnotes

1 Marcus Billam, Bertrand Cardi and Forrest G Alogna are partners at Darrois Villey Maillot Brochier.

2 SCPI currently reflect a total capitalisation as of the end of 2018 of a little more than €50 million.

3 Today they are estimated to include a total capitalisation of approximately €80 billion.

4 E.g., Antoine Boidet, Bataille bousiére autour d'un portefeuille de bureaux parisiens Les Echos, 20 May 2016, available at https://www.lesechos.fr/2016/05/bataille-boursiere-autour-dun-portefeuille-de-bureaux-parisiens-230604.

5 Les sociétés immobilières cotées, partenaires des villes, FSIF et PWC, juin 2019, p. 4.

6 This may notably be attributed to the limitations resulting in SCPI having considerably less recourse to leverage than SIIC.

8 This figure is 10 per cent for OPCI – i.e., those funds that are available to retail investors.

9 Nicolas Rontchevsky, L'utilisation de la notion de l'intérêt social en droit des sociétés, en droit pénal et en droit boursier, Bulletin Joly Bourse, 1 July 2010 No. 4, 355 ¶6.

10 AMF Gen. Reg. Artticle 231-7 al. 2 ('Si le conseil d'administration ou le directoire, après autorisation du conseil de surveillance des sociétés concernées, décident de prendre une décision dont la mise en œuvre est susceptible de faire échouer l'offre, ils en informent l'AMF.').

11 AMF Gen. Reg. Article 231-3; see also AMF Gen. Reg. Article 231-7 al. 1.

12 AMF Gen. Reg. Article 261-1 I.

13 See Gen. Reg. Article 232-11 ¶2.

14 See Gen. Reg. art. 232-11 ¶2.

15 See Gen. Reg. art. 231-9 II. This is not permitted for mandatory offers. This minimum level of acceptance is necessarily above the automatic invalidity threshold, i.e., 50 per cent of the total number of equity securities or voting rights of the target. In addition, the AMF has rarely accepted a minimum condition above 66.33 per cent.

16 See Gen. Reg. art. 231-10.

17 C. com. Article L. 233-32. The board's exercise of its discretion is subject to the principles of the AMF takeover regime, the articles of incorporation and the limits of the powers granted by the shareholders' general meeting, as well as of the corporate interest of the company.

18 Article L. 233-32 code de commerce (any decision on defensive measures must be 'within the limits of the corporate interest'). See also Article 231-7 AMF Gen. Reg. ('Pendant la période d'offre publique, l'initiateur et la société visée s'assurent que leurs actes, décisions et déclarations n'ont pas pour effet de compromettre l'intérêt social et l'égalité de traitement ou d'information des détenteurs de titres des sociétés concernées.').

19 Article L. 225-216 of the French Commercial Code.

20 Article L. 242-24 of the French Commercial Code.