Mergers & Acquisitions

Fourth Edition

Editors: Michael E. Hatchard & Scott V. Simpson

Published by Global Legal Group

CONTENTS
Preface

Michael E. Hatchard & Scott V. Simpson,

Skadden, Arps, Slate, Meagher & Flom (UK) LLP

Argentina

Marcelo E. Bombau & Adrin L. Furman, M. & M. Bomchil

Brazil

Fabiano Gallo, Rafaella Chiachio & Leonardo F. Torre,

Campos Mello Advogados

1
5

Bulgaria

Yordan Naydenov & Dr. Nikolay Kolev, Boyanov & Co, Attorneys at Law

Canada

Kurt Sarno, Shlomi Feiner & Rory ffrench, Blake, Cassels & Graydon LLP 25

Cayman Islands

Ramesh Maharaj, Rob Jackson & Melissa Lim, Walkers

36

China

Will Fung & Yu Xie, Grandall Law Firm

43

Ecuador

Daniel Pino Arroba & Gabriela Guzmn Flores, Coronel & Prez

51

France

Sandrine de Sousa & Yves Ardaillou, Bersay & Associs

55

Germany

Dr. Mark Odenbach & Dr. Hendrik Amus, Barber Odenbach,

Dr. Guido Holler, TIGGES Rechtsanwlte

Indonesia

62

Theodoor Bakker, Herry N. Kurniawan & Ms. Hilda,

Ali Budiardjo, Nugroho, Reksodiputro

Ivory Coast

15

72

Osther Tella, Hermann Kouao & Annick Imboua-Niava,

Imboua-Kouao-Tella & Associs

78

Japan

Yuto Matsumura & Hideaki Roy Umetsu, Mori Hamada & Matsumoto

83

Macedonia

Jasmina I. Jovanovik & Dragan Dameski,

Debarliev, Dameski & Kelesoska Attorneys at law

92

Mexico

Daniel Del Ro & Jesus Colunga, Basham, Ringe y Correa, S.C.

99

Morocco

Dr. Kamal Habachi, Salima Bakouchi & Houda Habachi,

Bakouchi & Habachi HB Law Firm LLP

109

Netherlands

Charles Hone, Katinka Middelkoop & Jelle Krings, Allen & Overy LLP

117

Norway

Ole K. Aab-Evensen, Aab-Evensen & Co Advokatfirma

127

Romania

Gelu Maravela, Alina Popescu & Marius Ptrcanu,

Maravela & Asociatii

Russia

Maria Miroshnikova, Sergei Kushnarenko & Svetlana Makurova,

Ivanyan & Partners

Serbia

144
152

Radivoje Petriki, Petriki & Partneri AOD in cooperation with

CMS Reich-Rohrwig Hainz

162

Singapore

Sing Yee Chan & Dawn Law, WongPartnership LLP

169

Spain

Marta Gil de Biedma, Ventura Garcs & Lpez-Ibor, Abogados

177

Switzerland

Dr. Mariel Hoch & Dr. Christoph Neeracher, Br & Karrer AG

186

Turkey

Dr. Umut Kolcuolu, zge Konuku & Mert Blbl,

Kolcuolu Demirkan Koakl Attorneys at Law

United Kingdom James Dawson and Max Mittasch, Macfarlanes LLP

USA
Vietnam

191
199

Thomas H. Kennedy & Ann Beth Stebbins,

Skadden, Arps, Slate, Meagher & Flom LLP

208

Anh Tuan Nguyen, LNT & Partners

213

Indonesia
Theodoor Bakker, Herry N. Kurniawan & Ms. Hilda
Ali Budiardjo, Nugroho, Reksodiputro
Overview
In general, both mergers and acquisitions (M&A) in Indonesia are regulated under Law
No. 40 of 2007 regarding Limited Liability Companies (New Company Law), and the
implementing regulation of the old company law, namely Government Regulation No. 27 of
1998 regarding Mergers, Consolidations and Acquisitions of Limited Liability Companies
(GR No. 27/1998). If the M&A involves foreign investors, it is also subject to Law
No. 25 of 2007 on Investment (Investment Law), its implementation regulation under
the President Regulation No. 39/2014 regarding Lists of Business Fields That Are Closed
to Investment and Business Fields That Are Conditionally Open for Investment (New
Negative List), and the Regulation of Chairman of Investment Coordinating Board (Badan
Koordinasi Penanaman Modal or BKPM) No. 5 of 2013 as amended by the Regulation
of Chairman of Investment Coordinating Board No. 12 of 2013 regarding the Guideline and
Procedure of Investment Licences and Non-Licences (BKPM Regulation No. 5/2013).
The implementation of M&A must also conform with Law No. 5 of 1999 on the Prohibition
of Monopoly and Unfair Business Competition, including its implementing regulation,
namely:
Government Regulation No. 57 of 2010 on Merger or Consolidation and Shares
Acquisition which May Cause the Monopoly Practice and Unfair Business
Competition, Business Competition Supervisory Agency;
Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha
or KPPU) Regulation No. 11 of 2010 on Consultation on Merger or Consolidation
of Business Entity, and Unfair Business Competition; and
KPPU Regulation No. 13 of 2010 as lastly amended by KPPU Regulation No. 2 of
2013 on Guidelines on Merger, Consolidation of Business Entity and Acquisition of
Shares which may cause Monopoly Practice and Unfair Business Competition.
When conducting acquisitions or mergers, the acquirers in acquisition and the surviving
company in merger are liable to notify and disclose the information regarding the M&A
transaction to KPPU to be assessed on the possibility of unfair business competition.
Disclosure is also required to be made to KPPU under the following conditions:
1. if the value of assets of the business entity resulting from the merger, consolidation
and acquisition exceeds Rp2.5 trillion;
2. if the value of sales of the business entity resulting from the merger, consolidation and
acquisition exceeds Rp5 trillion; and
3. particularly for the banking sector, if the value of assets of the business entity resulting
from the merger, consolidation and acquisition exceeds Rp20 trillion.
GLI - Mergers & Acquisitions Fourth Edition

72

Published and reproduced with kind permission by Global Legal Group Ltd, London

www.globallegalinsights.com

Ali Budiardjo, Nugroho, Reksodiputro

Indonesia

Specific regulations, i.e. Law No. 8 of 1995 on Capital Market (Capital Market Law)
and several regulations issued by the Capital Market and Financial Institution Supervisory
Agency (Badan Pengawas Pasar Modal dan Lembaga Keuangan or BAPEPAM- LK)
apply to Public Companies. However, it is important to note that currently the function
of BAPEPAM-LK has been transferred to the Financial Service Authority (Otoritas Jasa
Keuangan or OJK) based on Law No. 21 of 2011 regarding OJK which includes the
implementation of the following:
Rule Number IX.F.1 on Voluntary Tender Offers as an attachment to the Decree of the
Chairman of BAPEPAM-LK No. Kep-263/BL/2011 (Rule IX.F.1);
Rule Number IX.G.1 on Mergers and Acquisitions of Public Companies or Issuer
Companies as an attachment to the Decree of Chairman of BAPEPAM-LK No. Kep52/PM/1997 (Rule IX.G.1); and
Rule IX.H.1 on Public Company Acquisition as an attachment to the Decree of the
Chairman of BAPEPAM-LK No. Kep-264/BL/2011 (Rule IX.H.1).
Acquisitions are differentiated by share acquisitions and asset acquisitions. In the event of
a public company shares acquisition, a distinction must be made between:
an acquisition that causes no change of control in the target company, which must be
reported to OJK for the ownership of at least 5% shares of the total paid-up capital; and
a change of control in the said target companies: the new controller must conduct
a mandatory tender offer (MTO) as stipulated in BAPEPAM-LK Rule IX.H.1 on
Public Company Acquisition.
For a public company, if there is an MTO, the bidder shall submit an announcement draft
of MTO information disclosure and its supporting documents to OJK, as stipulated under
Rule IX.H.1.
For acquisition, the terms and the purchase price of the shares are subject to further
negotiation. However, for acquisition of a public company, MTO regulation also governs
the purchase price as follows:
a) if the acquisition is directly exercised over shares of the Publicly Listed Company
listed and traded at the stock exchange, the lowest MTO Price must be at least: (a)
the average of the highest price of the daily trading at the stock exchange during the
last 90 (ninety) days before the announcement on the acquisition or the announcement
on negotiation for acquisition; or (b) the exercise price of acquisition, whichever is
higher;
b) if during the period of 90 (ninety) days or more before the announcement, the said
shares of a Publicly Listed Company were not traded on the stock exchange or its
trade was temporarily suspended by the stock exchange, the MTO price must be at
least: (a) the average of the highest price of the daily trading at the stock exchange
during the last 12 (twelve) months, counted backwards from the last daily trading
day or the day it is temporarily suspended; or (b) the exercise price of acquisition,
whichever is higher;
c) if the acquisition concerns shares of either a Public Company (not listed) or an equity
issuer whose shares are unlisted, the MTO price must be at least (a) the exercise price
of acquisition, or (b) the fair price determined by the appraiser, whichever is higher;
d) if the acquisition indirectly concerns shares of the Publicly Listed Company listed and
traded at the stock exchange, the MTO price must be at least equal to the average of
the highest price of daily trading at the stock exchange during the last 90 (ninety) days
before the announcement on the acquisition or the announcement on negotiation for
acquisition;
GLI - Mergers & Acquisitions Fourth Edition

73

Published and reproduced with kind permission by Global Legal Group Ltd, London

www.globallegalinsights.com

Ali Budiardjo, Nugroho, Reksodiputro

Indonesia

e) if the acquisition is indirectly exercised over shares of the Publicly Listed Company
listed and traded at the stock exchange, but during the last 90 (ninety) days or more
before the announcement on the acquisition or the announcement on negotiation
for acquisition, was not traded at the stock exchange or its trade was temporarily
suspended by the stock exchange, the MTO price must be at least the average of
the highest price of daily trading at the stock exchange during the last 12 (twelve)
months counted backwards from the last trading day or the day the trade is temporary
suspended; and
f) in the event the acquisition is indirectly exercised over shares of either a Publicly
Listed Company or an equity issuer whose shares are unlisted and not traded on the
stock exchange, the MTO price must be at least equal to the fair price as determined
by the appraiser.
The period for price determination, as mentioned in items (a) and (d) above, will follow the
exercise period of the MTO in the event the exercise of the MTO exceeds the deadline of
180 (one hundred and eighty) days as of the announcement on negotiation for acquisition
(provided that this MTO price calculation is higher than the MTO price under items (a)
and (d) above).
Employees do not have a direct say in the merger or acquisition. However, if the merger
or acquisition results in a change of control, the following applies. The change of control
in a company entitles the employees of the company to request for termination and receive
severance payment from the company. Pursuant to the Labour Law, an employer may
terminate the employment of its employees for the reason of change in the companys
ownership, if the employees concerned choose to discontinue their employment with the
employer. The Labour Law requires the company to pay to such employees a severance
package as regulated under the Labour Law or the Company Regulation or Collective
Labour Agreement. The components of the severance package are severance pay, service
appreciation pay, and compensation pay. Pursuant to Article 127, paragraph 1 of the New
Company Law, the Company that organises an acquisition must announce in writing to its
employees the plan of any ownership change at the latest 30 days prior to the call for a
General Meeting of Shareholders. This is intended, among others, to gauge the potential
severance payment obligations if any employees refuse to continue employment after the
ownership change, and to comfort employees for their continued employment. Further, it
is also customary that the offer letter be co-signed by the prospective purchaser who will
obtain control over the management of the company, confirming or guaranteeing continued
employment after closing.
The New Company Law opens the possibility for any creditors of the target company
and creditors to the merging/surviving companies to file an objection against a merger
or acquisition transaction. Thus, proper notification must be given to creditors through
newspapers to let them know about the existence of such transaction.
The New Company Law also regulates the rights of minority shareholders which hold or
concurrently hold at least 10% shares, as follows:
a) The rights relating to the ownership of the share(s) specifically to attend and to vote in
the general meeting of shareholders (GMS) and to carry out other rights.
b) The right of a shareholder to stop detrimental actions. Pursuant to Article 61
paragraph 1 of New Company Law, any shareholder has the right to file a lawsuit
against the company to the court for any damage caused by the acts of the company
which are considered to be unfair and unreasonable resulting from any decisions of
the GMS, the Board of Directors and/or the Commissioners.
GLI - Mergers & Acquisitions Fourth Edition

74

Published and reproduced with kind permission by Global Legal Group Ltd, London

www.globallegalinsights.com

Ali Budiardjo, Nugroho, Reksodiputro

Indonesia

c) Pursuant to Article 62 of New Company Law, if a shareholder does not approve the
actions of the company in (i) amending the AoA, (ii) transfer or encumbrance of the
assets of the company, or (iii) merger, consolidation, acquisition or division of the
company, such shareholder may require the company to purchase its/his/her shares at
a reasonable price.
d) Pursuant to Article 126 paragraph (1a) of New Company Law, the company is
required to consider the interest of minority shareholder(s) in undertaking mergers,
consolidation, acquisitions of other companies and/or division.
e) Pursuant to Article 58 paragraph 1 of New Company Law, all shareholders including
the minority shareholders have a Right of First Refusal.
f) Pursuant to Article 43 paragraph 1 of the New Company Law, all shareholders
including the minority shareholders have a preemptive right, except: (a) if the shares
are to be issued to the employees of the company (under the scheme of the employee
stock options programme); (b) if the shares are to be issued to the bond holder(s) or
other instruments which can be converted into shares (which has been approved by
the GMS); or (c) if the shares are to be issued under the scheme of reorganisation/
restructuring of the company (which has been approved by the GMS).
Significant deals and highlights
One of the transactions in 2013 which is worth spotlighting is the acquisition of 95%
shares of PT Axis Tbk by PT XL Axiata Tbk with a total value of US$865m. Two of the
disclosed backgrounds of such acquisition were: the inability of Axis to pay the fee of
right-to-use frequency to the Indonesian government; and that Axis reported a negative
balance sheet for the last two years. The acquisition was considered to be a good move
since the loss suffered by Axis may affect the governments income from frequency rental.
Key developments
In 2011, the Indonesian Government issued Law No. 21 of 2011 on OJK. The enactment
of such law has caused the functions, assignments and authorities of BAPEPAM-LK in the
sectors of capital market, insurance, pension fund, financial institutions and other financial
service institutions to be transferred to OJK as of 31 December 2012. The same policy
also applies to Bank Indonesia, which is no longer acting as the authorised institution
for the banking sector as of 31 December 2013. Previous regulations issued by both
BAPEPAM-LK and Bank Indonesia remain in place to date.
In addition, KPPU amended its Regulation No. 13 of 2010 on Guidelines for the Merger
and Consolidation of Business Entities and Acquisition of Shares Which May Result in
Monopoly Practices and Unfair Business Competition, by issuing Regulation No. 2 of
2013 on the same subject matter. In general, the amendment stresses the explanation of
the forms of mergers, consolidations and acquisitions. It also changes the procedures of
notification, consultation and monitoring, and valuation of mergers, consolidations and
acquisitions, on how to calculate a threshold on the value of assets and sales which trigger
the requirement to notify a transaction.
In addition, recently the Government issued the new President Regulation (New Negative
List) to replace President Regulation No. 36/2010. One of the significant changes is a
new provision, particularly in Article 3, stating that business fields that are not listed in
Attachment I (List of Business Fields That Are Closed to Investment) nor in Attachment
II (List of Business Fields That Are Conditionally Open for Investment) as intended by
Article 2 are declared to be unconditionally open for investment.
GLI - Mergers & Acquisitions Fourth Edition

75

Published and reproduced with kind permission by Global Legal Group Ltd, London

www.globallegalinsights.com

Ali Budiardjo, Nugroho, Reksodiputro

Indonesia

Industry sector focus

For the last three years, the targeted sectors for M&A transactions in Indonesia have been
companies in the telecommunications, aviation, plantations/natural resources, e-commerce,
and food and beverages industries sector. These sectors are considered to have a promising
future in the Indonesian market.

GLI - Mergers & Acquisitions Fourth Edition

76

Published and reproduced with kind permission by Global Legal Group Ltd, London

www.globallegalinsights.com

Ali Budiardjo, Nugroho, Reksodiputro

Indonesia

Theodoor Bakker
Tel: +62 21 250 5125 / Email: tbakker@abnrlaw.com
Mr. Theodoor Bakker has worked in Southeast Asia since 1984. He has
considerable experience in: direct foreign investment; project finance
work, including private power and petrochemical projects; ship finance;
infrastructure development; and general manufacturing investment. He has
worked with international agencies, as well as for institutional investors
in the region. During the Asian financial crisis, he was involved in many
aspects of restructuring and insolvency, and has advised on foreign law issues
of bankruptcy reform in Indonesia. His work now also encompasses capital
market transactions and mergers and acquisitions. He has published various
articles on insolvency and cross-border investment issues. He is admitted to
the Amsterdam bar.

Herry N. Kurniawan
Tel: +62 21 250 5125 / Email: hkurniawan@abnrlaw.com
Mr. Herry Nuryanto Kurniawan became a partner in ABNR on 1 January
2012. His specified areas of practice so far are corporate mergers and
acquisitions, insolvency and restructuring, project and corporate finance,
energy and power sectors. He co-writes various articles and publications on
bankruptcy, as well as mergers and acquisitions.

Ms. Hilda
Tel: +62 21 250 5125 / Email: hilda@abnrlaw.com
Ms. Hilda joined the firm in August 2014. At ABNR, she has been involved
in various matters relating to general corporate, foreign investment, and
litigation.

Ali Budiardjo, Nugroho, Reksodiputro

Graha CIMB Niaga 24th Floor, Jl. Jenderal Sudirman Kav. 58, Jakarta 12190, Indonesia
Tel: +62 21 250 5125 / Fax: +62 21 250 5001 / URL: http://www.abnrlaw.com
GLI - Mergers & Acquisitions Fourth Edition

77

Published and reproduced with kind permission by Global Legal Group Ltd, London

www.globallegalinsights.com

Other titles in the Global Legal Insights series include:

Banking Regulation
Bribery & Corruption
Cartels
Corporate Real Estate
Corporate Tax

Employment & Labour Law

Energy
International Arbitration
Litigation & Dispute Resolution
Merger Control

Strategic partners:

www.globallegalinsights.com