Mergers & Acquisitions Comparative Guide

1 Deal structure

1.1 How are private and public M&A transactions typically structured in your jurisdiction?

Private M&A transactions are typically structured as either a share deal or an asset deal. In a share deal, the buyer acquires all or part of the target's share capital, thereby indirectly taking ownership of its assets, liabilities and contractual relationships. In an asset deal, the buyer directly acquires specific assets and rights. Depending on the nature of the transaction, an asset deal may qualify as the transfer of a business as a going concern, in which case specific mandatory rules will apply.

In limited cases, mergers – whether by absorption or through the creation of a new company – can serve as a method of acquiring companies.

Public M&A transactions are typically conducted through takeover bids. A mandatory tender offer must generally be launched when a person or a group acting in concert acquires more than 30% of the share capital or voting rights of a company listed on Euronext Paris. Similarly, a tender offer is required if a shareholder or group holding between 30% and 50% of the share capital or voting rights increases its stake by at least 1% within 12 months. For companies listed on Euronext Growth, a mandatory tender offer is generally triggered only when a shareholder surpasses the 50% threshold of share capital or voting rights.

1.2 What are the key differences and potential advantages and disadvantages of the various structures?

In a share deal, since the legal entity remains unchanged, contracts, licences and relationships continue without requiring third-party consent (except where change-of-control clauses apply). However, the buyer assumes all past, present and future liabilities, including:

• tax risks;
• employee claims; and
• legal disputes.

These risks, however, are typically mitigated through representations and warranties (R&W) in the share purchase agreement.

An asset purchase allows the buyer to acquire specific assets while avoiding unwanted liabilities, making it a preferred structure where the target has identified legal risks. This approach offers flexibility in selecting assets and liabilities, but it often requires third-party consents and detailed contractual arrangements to define the scope of the transaction, which might be burdensome (see question 1.3). However, the acquired assets may be covered by specific and limited R&W negotiated as part of an asset purchase agreement to grant the buyer quiet enjoyment of those assets, specifically in the case of industrial or IP assets. However, depending on the structure, it may be that certain legal risks cannot be excluded, such employee claims should the deal entail the transfer of employees. Furthermore, the transfer tax under an asset deal is significantly higher than that under a share deal (see question 13.1).

Mergers can be an efficient way to streamline group structures or integrate businesses, sometimes without requiring unanimous shareholder approval. However, they can be complex and costly, as they involve the automatic transfer of all assets and liabilities of the absorbed company to the merging entity (or to the newly created company). Some contracts may terminate upon the merger, requiring prior consent from third parties to ensure continuity.

1.3 What factors commonly influence the choice of sale process/transaction structure?

The choice of transaction structure is primarily driven by strategic and commercial considerations, taking into account:

• the buyer's objectives;
• industry dynamics; and
• the specific characteristics of the target, as revealed through due diligence.

Share purchases are the most common form of acquisition in France, as they:

• allow for a straightforward transfer of ownership, including both assets and liabilities; and
• are generally more cost-effective from a tax perspective.

This structure avoids the need to individually transfer contracts, permits and assets, making the process more efficient.

By contrast, an asset deal provides greater flexibility, as the buyer can cherry-pick which assets to acquire while excluding unwanted elements and liabilities. However, this flexibility comes with additional complexity. The transfer process requires careful identification of the assets and liabilities in the asset transfer agreement, which must be mutually agreed upon by both parties. Additionally, certain assets – such as contracts or permits – may require third-party consent, adding to the transaction's complexity. Generally, the larger the target, the less attractive an asset deal becomes compared to a share deal. Consequently, share deals are typically preferred for larger transactions, where operational efficiency and legal certainty are key considerations.

Mergers and contributions are primarily used for internal reorganisations or strategic combinations, such as consolidations between companies or business units. These structures enable the automatic transfer of assets and liabilities by operation of law, often offering corporate, tax or operational benefits. As a result, they are typically employed as a second-step transaction following a share deal, allowing for the post-acquisition reorganisation of the corporate structure to enhance efficiency and integration.

2 Initial steps

2.1 What documents are typically entered into during the initial preparatory stage of an M&A transaction?

Typically, during the initial preparatory phase of an M&A transaction, several key documents are executed, as follows:

• a non-disclosure agreement (often granting access to a teaser, an information memorandum or some early limited information);
• a non-binding offer;
• a memorandum of understanding or letter of intent (which generally provides access to a proper data room and can include an exclusivity provision for a limited duration granted to the potential purchaser); and
• a binding offer (on which employees and the works council are generally informed and consulted).

2.2 Are break fees permitted in your jurisdiction (by a buyer and/or the target)? If so, under what conditions will they generally be payable? What restrictions and other considerations should be addressed in formulating break fees?

A break fee clause may be included in preliminary agreements to regulate the termination of negotiations. In such case, the clause should:

• clearly define the triggering events justifying its enforcement;
• specify the fee amount, which may be a lump sum or a percentage of the agreed valuation; and
• outline the conditions under which the fee is payable to mitigate the risk of disputes.

However, break-up fees are not commonly used in the French market for the acquisition of private companies, businesses or assets, despite there being no legal prohibition against them. Furthermore, if the agreed fee is deemed excessive compared to the actual damage suffered, a judge may reduce the amount to align it with the real financial impact of the termination.

In public M&A transactions involving friendly takeover bids, break-up fee arrangements may be used to compensate the bidder through agreements with the target's shareholders or the target itself (although fees paid by the target are uncommon and typically modest, given the directors' obligation to act in the best interests of the company). Conversely, if the bidder decides not to proceed with the transaction, a reverse break-up fee may be payable to the target or its shareholders.

Regardless of the circumstances, break-up fees must comply with the principles of:

• contractual freedom; and
• fair competition between bids.

The amount must remain reasonable and proportionate to ensure that it does not discourage rival offers. Moreover, any break-up fee agreement involving a publicly listed company must be:

• disclosed to the Autorité des Marchés Financiers at the time of filing the offer; and
• made public in the offer prospectus.

2.3 What are the most commonly used methods of financing transactions in your jurisdiction (debt/equity)?

Transactions are rarely financed exclusively through equity, as purchasers often rely on debt to fund acquisitions. In France, the most common form of debt financing is provided by traditional lenders, primarily banks, through syndicated loans or club deals. These financing arrangements typically include a mix of instruments, such as:

• term loans to refinance existing debt; and
• revolving credit facilities for working capital needs.

Beyond traditional bank loans, various alternative debt products are increasingly used, either as standalone financing solutions or in combination with senior secured loans. These include:

• mezzanine loans;
• unitranche financing;
• second-lien loans; and
• quasi-equity instruments such as straight bonds or convertible bonds.

In some cases, transactions are funded through private placements or high-yield bonds issued to institutional investors, including:

• pension funds;
• insurance companies; and
• asset managers.

Ultimately, the choice of financing structure depends on:

• the size and complexity of the transaction;
• the credit profile of the borrower; and
• prevailing market conditions.

2.4 Which advisers and stakeholders should be involved in the initial preparatory stage of a transaction?

Several key advisers are involved in the initial preparatory phase of an M&A transaction, each contributing to the successful execution of the deal by providing expertise in their respective fields:

• M&A advisers play a crucial role for both buyers and sellers. On the sell side, they assist in:
• • preparing the company for sale;
  • conducting valuations; and
  • drafting the information memorandum.
• On the buy side, they help to:
• • identify suitable targets;
  • coordinate acquisition audits; and
  • advise on financial, legal and tax structuring.
• Investment banks may also be involved, particularly in competitive processes, where they assist with:
• • deal negotiation;
  • financing strategies; and
  • market positioning.
• Lawyers are essential to the transaction:
• • handling negotiations;
  • drafting and reviewing legal documentation; and
  • conducting due diligence.
• They:
• • advise on the structuring of the deal;
  • assist in setting up acquisition vehicles when necessary;
  • ensure compliance with all applicable legal frameworks and regulatory approval; and
  • help to mitigate legal risks.
• Certified public accountants, statutory auditors and financial advisers may be engaged to:
• • perform financial audits;
  • issue certifications; or
  • conduct limited reviews of the target's accounts.
• Notaries are required in transactions involving real estate assets or certain industrial facilities, ensuring the legal transfer of property and compliance with formal requirements.
• Specialised experts provide due diligence in key areas depending on the industry and the specifics of the target business. These may include:
• • environmental consultants;
  • health and safety specialists; and
  • technical and operational experts.

2.5 Can the target in a private M&A transaction pay adviser costs or is this limited by rules against financial assistance or similar?

Under French law, the rule against financial assistance, as set out in the Commercial Code, prohibits a company from advancing funds, granting loans or providing security for the acquisition of its own shares by a third party. This restriction applies specifically to the target, not the seller. However, it does not encompass adviser costs as such.

More broadly, the rule is that any payment made by the target:

• must align with its corporate interest; and
• must not serve as an indirect means of financing the buyer's acquisition.

Accordingly, the target may pay adviser costs if they are justified by its own corporate interest. Such expenses may include those associated with:

• assessing the transaction's impact on the target;
• ensuring regulatory compliance; or
• negotiating transaction terms that directly affect the target.

Conversely, fees that exclusively benefit the buyer – such as due diligence costs or acquisition structuring fees – may be considered a misuse of corporate assets, potentially exposing the target's officers to civil and criminal liability.

3 Due diligence

3.1 Are there any jurisdiction-specific points relating to the following aspects of the target that a buyer should consider when conducting due diligence on the target? (a) Commercial/corporate, (b) Financial, (c) Litigation, (d) Tax, (e) Employment, (f) Intellectual property and IT, (g) Data protection, (h) Cybersecurity and (i) Real estate.

The scope and depth of due diligence will vary depending on:

• the target's business activities; and
• the specific characteristics of the transaction.

In general, the key areas assessed in M&A legal due diligence across all jurisdictions also apply to France. However, when reviewing a French target entity, several jurisdiction-specific factors should be considered:

• Corporate governance differs based on the company's legal form and statutory requirements.
• French employment law is highly complex and particular attention should be paid to both individual and collective employment relationships, as recurring non-compliance can lead to significant legal and financial risks.
• Taxation is another critical area due to the sophistication of French tax laws and potential exposure to tax audits.
• Real estate and environmental matters require thorough review, as:
• • local authorities may have pre-emption rights; and
  • buyers could inherit liabilities for historical pollution.
• Compliance is a key consideration, particularly regarding data protection and anti-corruption regulations:
• • The General Data Protection Regulation regime imposes strict obligations on companies handling personal data; and
  • Anti-corruption laws, such as the Sapin II Act, require robust compliance measures to mitigate legal and financial risks.

3.2 What public searches are commonly conducted as part of due diligence in your jurisdiction?

When the transaction involves a due diligence process, most of the information is typically found in the data room. However, certain information is publicly accessible, notably through the commercial court registers – that is, the K-bis extract, which:

• certifies the legal existence of a company; and
• provides details regarding:
• • its management;
  • the articles of association;
  • the annual financial statements; and
  • information regarding insolvency proceedings, pledges and encumbrances.

Depending on the assets of the company, additional specialised sources may be consulted, such as:

• the patent and trademark databases maintained by the National Institute of Industrial Property;
• land registers; and
• other sector-specific regulatory authority websites if the target is subject to specific regulation due to the nature of its business (eg, information concerning portfolio management companies may be found on the Autorité des Marchés Financiers' website).

3.3 Is pre-sale vendor legal due diligence common in your jurisdiction? If so, do the relevant forms typically give reliance and with what liability cap?

Vendor due diligence reports are sometimes used to streamline and accelerate the transaction process by providing potential buyers with comprehensive and upfront information about the target. They help to:

• reduce uncertainties;
• facilitate negotiations; and
• limit the scope of buyer due diligence.

These reports can also be shared with banks or other financial institutions involved in financing the acquisition.

A reliance letter may be issued by the adviser who prepared the report. This document confirms that the adviser:

• accepts responsibility for the report's content; and
• agrees to assume liability if it is found to be:
• • inaccurate;
  • misleading; or
  • otherwise flawed.

4 Regulatory framework

4.1 What kinds of (sector-specific and non-sector specific) regulatory approvals must be obtained before a transaction can close in your jurisdiction?

The approval of the Competition Authority is generally required for an M&A transaction involving a French target if the following cumulative conditions are met:

• The combined global turnover of all parties exceeds €150 million;
• At least two parties each generate more than €50 million in France; and
• The transaction does not fall within the scope of the European Commission (ie, in such case, EU law applies and clearance of the European Commission should be secured).

Specific thresholds apply to French overseas territories and the retail sector.

Foreign direct investment regulations in France may require a foreign investor to obtain prior approval from the Ministry of Economy before acquiring control of a French company operating in a sensitive sector. Failure to obtain the necessary authorisation when required can have serious consequences, including the risk of the transaction being declared null and void.

Additionally, under the EU foreign subsidies regulation, M&A transactions must be notified to the European Commission when:

• they involve targets, merging entities or joint ventures that generate a turnover in the European Union of at least €500 million; and
• such involved parties have benefited from foreign financial contributions exceeding €50 million in the last three years.

Such transactions cannot be completed pending the review of the European Commission.

Finally, certain regulations applicable to specific sectors may:

• constrain or prevent foreign investors from controlling French entities operating in regulated sectors, such as the press industry; or
• require the prior approval of regulatory authorities, such as in the banking and insurance sectors.

4.2 Which bodies are responsible for supervising M&A activity in your jurisdiction? What powers do they have?

In France, multiple regulatory bodies oversee M&A activity, each with specific responsibilities and enforcement powers.

The Autorité des Marchés Financiers (AMF):

• supervises public M&A transactions involving listed companies; and
• ensures:
• • market integrity;
  • transparency; and
  • investor protection.

The AMF:

• reviews and approves public offers;
• monitors disclosures;
• enforces compliance with securities laws, including takeover bid regulations; and
• imposes sanctions for non-compliance.

The Competition Authority is responsible for competition and merger control. It assesses whether proposed mergers or acquisitions could restrict competition in the French market. The Competition Authority has the authority to:

• approve transactions;
• impose conditions to address competitive concerns; or
• prohibit deals that could significantly harm market competition (see question 4.1).

The minister of economy oversees foreign direct investment in sectors considered strategic, such as:

• defence;
• energy;
• public health; and
• artificial intelligence.

Foreign investors must obtain prior authorisation before acquiring French companies operating in these sensitive industries. The minister has the power to approve, reject, or impose conditions on such transactions to safeguard national interests (see question 4.2).

Sector-specific regulators also play a role in supervising M&A transactions within regulated industries. For example, the Autorité de Contrôle Prudentiel et de Résolution oversees M&A activity in the banking and insurance sectors to ensure financial stability and compliance with prudential regulations. M&A in the banking and insurance sectors may be subject to the prior approval of this authority.

4.3 What transfer taxes apply and who typically bears them?

M&A transactions involve (corporate) income tax and registration duty considerations. M&A transactions are generally neutral from a value-added tax perspective – at least when they involve shares or autonomous businesses.

A sale of shares is subject only to limited registration duties (often 0.1% of the value of the shares, except in the case of mainly real estate investment companies which give rise to 5% registration duties). Listed shares of high capitalisation companies may also trigger a 0.3% tax on financial transactions. By contrast, a sale of assets trigger registration duties of 0% to 5%. Registration duties are usually borne by the buyer.

A sale of shares by a company that is subject to corporate income tax may, subject to minimum holding period and percentage requirements, benefit from the long-term capital gains regime, under which only 12% of the capital gain is effectively subject to tax. By contrast, a sale of business is subject to corporate income tax in full; in addition, it can jeopardise its carry-forward tax losses, if any.

For private persons, share transactions are usually subject to the flat tax of 30% plus, as the case may be:

• a 3% or 4% contribution on high income; and
• in 2025, a differential tax on high income; and

They can be further reduced for sellers that:

• invested in European small and medium-sized enterprises before 2018; and
• have held the shares for at least eight years;

In such case, where the shares are held in certain types of investment accounts, the capital gain may be:

• fully exempt from income tax; and
• subject only to social contributions of 17.2% when the cash is taken out of the account.

Specific taxation regimes also apply to shares acquired by employees or directors under employee investment schemes (eg, free shares).

Mergers and contributions of businesses remunerated by a share capital increase, however, can generally benefit from a tax neutrality regime, both for registration duties and for corporate income tax purposes; although the impacts on potential tax losses will still need to be assessed. The standard corporate income tax rate is currently 25% (with additional contributions applicable above certain thresholds).

5 Treatment of seller liability

5.1 What are customary representations and warranties? What are the consequences of breaching them?

Representations and warranties (R&W) typically fall into three categories:

• Fundamental representations and warranties cover essential aspects of the transaction, such as:
• • the seller's legal capacity to enter into the agreement;
  • the ownership and transferability of the shares;
  • the absence of encumbrance; and
  • the valid existence and proper organisation of the target.
• General warranties typically encompass all customary representations concerning the target's business, financial position and legal compliance, covering matters such as:
• • financial statements;
  • assets;
  • liabilities;
  • tax compliance;
  • material contracts;
  • real estate;
  • employment matters;
  • IP rights;
  • environmental issues;
  • product liability;
  • insurance; and
  • ongoing litigation.
• In some cases, key representations from this category may be elevated to fundamental warranties, depending on their importance to the transaction.
• Specific warranties are tailored to serious risks identified during the due diligence process. These warranties provide protection against known exposures, such as:
• • regulatory non-compliance;
  • pending disputes;
  • contingent liabilities; or
  • other material identified concerns specific to the target.

If R&W are found to be inaccurate after closing, the buyer may seek indemnification –typically through price adjustments.

5.2 Limitations to liabilities under transaction documents (including for representations, warranties and specific indemnities) which typically apply to M&A transactions in your jurisdiction?

Financial limitations: The seller's liability under R&W is generally capped at 10% to 30% of the purchase price, except for fundamental and specific warranties, which may have a higher cap – sometimes up to 100% of the purchase price. This ensures that, except in case of fraud or wilful misconduct, the seller's liability remains within predefined limits.

Indemnification is also subject to basket provisions, meaning that claims must reach a minimum threshold before the seller is liable. If total claims fall below this threshold, no indemnification is owed. Two common baskets are:

• tipping baskets (or threshold), where, once the basket is exceeded, the seller is liable for the full amount; and
• non-tipping baskets (or deductible), where the seller is liable only for losses above the basket.

Additionally, de minimis provisions may prevent claims below a specific amount.

Disclosure: Sellers can limit liability by disclosing relevant risks in the disclosure schedule of the purchase agreement, preventing the buyer from claiming indemnification for known issues. In some cases, data room disclosures may also be deemed sufficient, provided that the information was fair and apparent.

Time limitations: General R&W typically survive for 18 to 36 months post-closing; whereas fundamental and specific warranties generally remain in effect for the duration of the statutory limitation period applicable to the underlying risk.

Miscellaneous limitations and exclusions: Additional limitations or exclusions may apply to ensure fairness of the warranties, such as:

• acknowledging information publicly available before closing as disclosed for all purposes under the warranties; or
• excluding liability if a representation becomes inaccurate based on mandatory post-closing changes in accounting or tax policies.

5.3 What are the trends observed in respect of buyers seeking to obtain warranty and indemnity insurance in your jurisdiction?

Warranty and indemnity (W&I) insurance has become increasingly common in French M&A transactions and can be taken out by either the seller or the buyer. Its prevalence is closely linked to transaction size, with larger deals more frequently involving W&I insurance. However, its use is also growing in mid-market transactions, reflecting a broader market adoption. This trend is expected to continue, driven by evolving deal structures and risk allocation preferences.

5.4 What is the usual approach taken in your jurisdiction to ensure that a seller has sufficient substance to meet any claims by a buyer?

In French M&A practice, R&W are typically secured by one of the following methods:

• Bank guarantee: A bank provides a guarantee to cover the seller's potential liability under the R&W.
• Seller's parent guarantee: The seller's parent company issues a guarantee to secure the seller's obligations in case of warranty breaches.
• Deferred payment of the purchase price ('retention'): The buyer withholds a portion of the purchase price for a defined period, which can be used to cover any warranty claims. This mechanism is infrequently used as it is overly favourable to the purchaser.
• Escrow account: A portion of the purchase price is deposited into an escrow account, held for a specified period. Any warranty claims are offset against the escrowed amount.
• W&I insurance: W&I insurance provides coverage for warranty breaches, allowing the buyer to seek recourse against the insurer rather than the seller.

The bank guarantee and the escrow accounts are the most commonly used mechanisms in France to secure the seller's obligations, although W&I insurance is strongly gaining traction.

5.5 Do sellers in your jurisdiction often give restrictive covenants in sale and purchase agreements? What timeframes are generally thought to be enforceable?

Restrictive covenants are commonly used in M&A transactions, with the most prevalent being:

• confidentiality clauses;
• non-compete clauses; and
• non-solicitation clauses.

A confidentiality clause is a common and essential feature in sale and purchase agreements. French courts tend to be more lenient regarding the scope and duration of confidentiality clauses compared to other restrictive covenants. This is because confidentiality is considered crucial to protecting the integrity of the transaction and the parties' sensitive information.

To be effective, non-compete and non-solicitation clauses must be reasonable and proportionate in terms of:

• duration;
• geographic scope; and
• business activities.

The French courts closely scrutinise such clauses to ensure that they do not:

• impose unreasonable restrictions on competition; or
• infringe upon the seller's rights.

Typically, these covenants:

• are limited to a duration of one to three years; and
• must be narrowly defined in both territory and business scope to be considered valid.

If the seller is an employee of the target or becomes an employee upon closing, French labour law imposes additional restrictions on the non-compete provision, including a requirement to provide financial compensation as a consideration for the non-compete commitment. Failure to comply with such requirements may render the non-compete clause unenforceable.

5.6 Where there is a gap between signing and closing, is it common to have conditions to closing, such as no material adverse change (MAC) and bring-down of warranties?

Yes, conditions to closing are usual in a situation where there is a gap between signing and closing, including bring-down of warranties and MAC.

Bring-down of warranties is a standard provision in M&A transactions, requiring the seller's representations and warranties to remain accurate at closing, as they were at signing. On the other hand, MAC clause is typically subject to intense negotiation, especially when there is a significant gap between signing and closing. Buyers often insist on including a MAC clause to protect against unforeseen events that could materially impact the target's value during this period. Sellers, however, typically seek to limit the scope of the MAC clause by negotiating exemptions for events beyond their control, such as:

• macroeconomic changes;
• industry-wide impacts; or
• natural disasters.

Refusing a MAC clause outright is generally challenging when the time between signing and closing is substantial, as buyers view this protection as essential.

Ultimately, the outcome depends on the relative negotiating power of the parties, with stronger sellers often succeeding in narrowing the clause's scope, while buyers in a position of strength may achieve broader MAC protection.

6 Deal process in a public M&A transaction

6.1 What is the typical timetable for an offer? What are the key milestones in this timetable?

The bidder first prepares for the takeover; and in friendly transactions, confidential negotiations typically take place before any market disclosure. The target may grant due diligence access and open a data room containing non-public information, provided that:

• the transaction is significant (eg, an acquisition of control); and
• the bidder demonstrates a serious and credible interest.

The bidder may also:

• engage with the target and key shareholders;
• negotiate exclusivity agreements; and
• secure commitments to tender from certain shareholders.

In principle, a potential bidder must publicly announce any transaction that is likely to significantly impact the target's share price. However, confidentiality may be maintained if:

• it is necessary for transaction implementation; and
• the involved parties can effectively preserve secrecy.

Nonetheless, the Autorité des Marchés Financiers (AMF) may require disclosure in case of leaks, market rumours or public statements suggesting that a takeover bid is being prepared.

Once the preparatory phase is complete, the transaction is publicly announced and the bidder submits the preliminary offer documents to the AMF. The target's board of directors must issue an opinion on the bid and the company then files its preliminary response, which includes the views of the social and economic committee and the board's recommendation. In a friendly takeover bid, the bidder and the target may publish a joint offer document, rather than separate offer and response documents. The AMF then reviews and approves all submitted materials.

If the bidder holds less than 50% of the target's share capital or voting rights (ie, standard offer procedure), the offer period lasts 25 trading days. This period may be extended in case of:

• a reopening (minimum 10 trading days if the acceptance threshold is reached);
• a revised offer; or
• a competing bid.

If the bidder already holds more than 50% of the target's capital and voting rights (ie, simplified offer procedure), the offer must remain open for a minimum of 10 trading days (or 15 trading days for an exchange offer).

6.2 Can a buyer build up a stake in the target before and/or during the transaction process? What disclosure obligations apply in this regard?

The bidder is not prohibited from purchasing shares or derivatives before launching a public offer, subject to compliance with:

• the general principles governing takeover offers; and
• the market abuse and insider trading rules.

It must therefore immediately cease trading target shares if it receives any privileged information.

Between the public announcement and the filing of the offer (pre-offer period), the bidder cannot acquire any of the target's securities. From filing of the offer until publication of the results (offer period), the bidder can buy the target's securities outside the offer process, provided that:

• the offer is unconditional; and
• the offered consideration is entirely in cash.

The number of shares that can be bought outside the offer process is limited by the AMF General Regulation. Bidders must proceed carefully during this offer period. If bidders purchase shares for a price superior to the offer price, this price will automatically increase to reach the higher of:

• 102% of the opening price; or
• the highest price paid for the shares outside the offer.

Disclosure obligations apply when an investor crosses – whether upwards or downwards – the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 33.33%, 50%, 66.66%, 90% or 95% in the share capital or voting rights, knowing that the articles of association of the target can provide for follow threshold. The target's bylaws may also provide additional disclosure obligations if certain thresholds between 0.5% and 5% are exceeded. In addition, the crossing of any of the 10%, 15%, 20% and 25% thresholds requires the buyer to publicly declare in sufficient detail the objectives and strategy it intends to pursue over the next six months, including whether it plans to continue to purchase shares and take control of the target.

6.3 Are there provisions for the squeeze-out of any remaining minority shareholders (and the ability for minority shareholders to 'sell out')? What kind of minority shareholders rights are typical in your jurisdiction?

Upon completion of a takeover bid (voluntary or mandatory), the bidder may initiate a squeeze-out procedure to acquire all remaining minority shareholders' securities, provided that the bidder:

• holds, alone or in concert, at least 90% of the share capital and voting rights of the target after the bid; and
• reserves the right to do so in its bid.

The squeeze-out is carried out at the same price as that offered in the takeover bid.

In relation to minority shareholders, if a person or a group of persons acting in concert comes to hold at least 90% of the share capital or voting rights of a listed company, one or more minority shareholders with voting rights may request that the AMF require the majority shareholder(s) to initiate a public buyout offer. If the AMF deems the request admissible, it will request the majority shareholder(s) to submit a public buyout offer.

6.4 How does a bidder demonstrate that it has committed financing for the transaction?

The bidder must secure the necessary funds at the time of filing the offer documents with the AMF for approval. The draft offer must be submitted by one or more investment services providers authorised to act as underwriters, acting on behalf of the bidder. The filing is carried out through a letter addressed to the AMF, which guarantees the content and irrevocable nature of the bidder's commitments. This letter must be signed by at least one of the sponsoring institutions.

6.5 What threshold/level of acceptances is required to delist a company?

A company can be delisted through various methods, including a voluntary delisting decided by the company's shareholders' meeting. However, in the context of an M&A transaction, acquiring or holding at least 90% of the target's share capital and voting rights is necessary to achieve delisting. Once this threshold is reached, the squeeze-out procedure can be initiated (see question 6.3 above), allowing the target's shares to be delisted.

6.6 Is 'bumpitrage' a common feature in public takeovers in your jurisdiction?

Bumpitrage, which involves acquiring shares of a target during a takeover with the expectation that the offer price will be increased through a counteroffer or an improved bid from the initial bidder, is not a prevalent practice in public takeovers in France.

That said, under standard takeover procedures, counteroffers are permitted. At any time after the offer opens, but no later than five trading days before it closes, a competing offer for the target's securities can be submitted to the AMF. To be declared compliant, a competing public cash offer must propose a price that is at least 2% higher than:

• the price stated in the initial public cash offer; or
• any previous improved offer.

In the case of offers that are not fully in cash, the AMF will declare compliant any competing or improved offer that significantly enhances the terms provided to holders of the target's securities.

Furthermore, a counteroffer becomes mandatory when:

• a person or group acting in concert acquires more than 30% of the share capital or voting rights of a listed company; or
• a party acquires securities of the target in a way that positions it as a genuine competitor to the existing takeover offer.

6.7 Is there any minimum level of consideration that a buyer must pay on a takeover bid (eg, by reference to shares acquired in the market or to a volume-weighted average over a period of time)?

In voluntary offers under the standard procedure, the bidder has the flexibility to determine both the price and the form of consideration; while in simplified voluntary offers, the offer price must not be lower than the price calculated based on the volume-weighted average share price over the 60 trading days preceding the announcement of the offer.

For mandatory offers, the proposed price must be:

• in cash; and
• at least equivalent to the highest price paid by the bidder during the 12-month period preceding the event that triggered the obligation to file the offer.

However, the AMF may accept a modification of the proposed offer price if the characteristics of the target or the market conditions for its securities provide sufficient justification for such an adjustment.

If a bidder buys shares of the target during the offer period for a price superior to the offer price, this price will automatically increase to reach the higher of:

• 102% of the opening price; or
• the highest price paid for the shares outside the offer.

6.8 In public takeovers, to what extent are bidders permitted to invoke MAC conditions (whether target or market-related)?

Tender offers for public companies must be:

• be made for 100% of the shares; and
• be unconditional, except in limited instances involving voluntary offers.

For example, a bidder may condition the offer on obtaining merger control clearance or reaching a minimum acceptance threshold, typically set between more than 50% and two-thirds of the share capital and voting rights.

While MAC clauses are not accepted as such, the bidder may, with prior authorisation from the AMF, withdraw the offer if the target takes measures that alter its structure during the offer period or as a result of the offer's success. The offer may also be withdrawn if actions taken by the target lead to an increase in the cost of the offer for the bidder. In practice, such actions could include:

• a significant change in the company's share capital;
• a disposal or acquisition of major assets; or
• other actions that could be considered equivalent to a MAC event.

6.9 Are shareholder irrevocable undertakings (to accept the takeover offer) customary in your jurisdiction?

It is common practice for bidders to approach the target's key shareholders to secure commitments to tender their shares in support of the offer. Any such undertakings must be disclosed to both the public and the AMF.

To ensure compliance with fair competition principles among potential bidders, these agreements must be carefully drafted. Accordingly, they should include a clause stating that the commitments become void if a competing offer approved by the AMF is launched.

As an alternative, directly acquiring a stake from these key shareholders before the launch of the offer is often considered a more effective way for the bidder to secure the success of the transaction.

7 Hostile bids

7.1 Are hostile bids permitted in your jurisdiction in public M&A transactions? If so, how are they typically implemented?

Public takeover bids are considered hostile when the target's board of directors opposes the offer and formally advises shareholders not to tender their shares. However, hostile bids have become increasingly rare in France, as their success rate is significantly lower than that of friendly bids. Given the regulatory complexities, potential defensive measure, and valuation uncertainties, bidders generally seek the approval of the target's board before launching an offer, ensuring a smoother process and a higher likelihood of success.

For hostile bids, the general takeover process outlined in question 6.1 remains applicable, with notable differences. The bidder unilaterally files the offer with the Autorité des Marchés Financiers (AMF), without the target's prior approval and often without securing a pre-agreed block of shares from key shareholders. Unlike in friendly bids, the bidder does not gain access to non-public information, increasing due diligence risks. Additionally, the target's board may implement anti-takeover defences to counter the offer, as detailed in question 7.3.

7.2 Must hostile bids be publicised?

Yes. The process described in question 6.1 applies.

The public announcement may be sped up in certain cases, as the AMF can also require an announcement in case of leaks, market rumours or public statements leading to the belief that a person is preparing a takeover bid.

7.3 What defences are available to a target board against a hostile bid?

Except where the bylaws provide otherwise, the non-frustration rule does not apply in France. The board of directors is competent to take anti-takeover defensive measures, provided that:

• they are not against the corporate interest of the target; and
• do not fall within the powers reserved to shareholders.

The target can resort to a wide variety of takeover defences, such as:

• the disposal of essential assets (crown jewel defence);
• the acquisition of new assets increasing the target's liability (Fat Man defence);
• the launch of a hostile bid for the bidder's shares (Pac-Man defence);
• warrants allowing shareholders to subscribe for shares at a discounted price (poison pill defence);
• the assistance of a third party to repel the bidder (white knight defence);
• share capital increases; or
• share buy-back programmes.

8 Trends and predictions

8.1 How would you describe the current M&A landscape and prevailing trends in your jurisdiction? What significant deals took place in the last 12 months?

Following a period of slowdown, the French M&A market is showing signs of recovery, particularly in the tech sector. In 2024, activity was primarily driven by a small number of large-cap transactions, rather than a high volume of mid-market deals. This reflects a cautious but strategic approach, with buyers focusing on high-value acquisitions to strengthen their market position.

Notable transactions over the past year include:

• BNP Paribas' acquisition of AXA IM, reinforcing its asset management division;
• Lactalis and Sodiaal's purchase of General Mills' North American yogurt business, marking a significant expansion in the US market;
• the acquisition of Altice Media by CMA CGM, demonstrating a strategic diversification move into the media sector by the global shipping giant;
• FDJ's acquisition of Unibet, which positioned the group more strongly in the online gaming sector; and
• Sanofi's contemplated sale of Opella.

These deals illustrate a selective and strategic approach to M&A.

8.2 Are any new developments anticipated in the next 12 months, including any proposed legislative reforms? In particular, are you anticipating greater levels of foreign direct investment scrutiny?

The political instability following the most recent legislative elections has created an uncertain legislative environment in France. With no party holding a clear majority, legislative reforms and regulatory changes in the short term remain difficult to predict. However, areas such as the following remain key topics of interest and could see developments depending on the political climate:

• foreign investment controls;
• tax reforms; and
• ESG-related obligations.

Management packages were also recently reformed.

9 Tips and traps

9.1 What are your top tips for smooth closing of M&A transactions and what potential sticking points would you highlight?

To ensure a smooth closing in private M&A transactions, it is essential to establish clear deadlines and a structured timetable while ensuring effective coordination between all parties involved. A well-organised approach helps to maintain momentum and minimises execution risks. Adopting an operational mindset throughout the process ensures that negotiations remain focused on practical outcomes rather than legal formalities. On a technical level, the use of electronic signatures has become a significant advantage, allowing parties to execute documents remotely and accelerating the closing process.

Despite careful planning, certain sticking points can delay or complicate the transaction. Regulatory approvals remain a critical factor, particularly for deals involving foreign investment screening or competition clearance. Additionally, the negotiation of representations and warranties and indemnification mechanisms can become a source of difficulties, especially when due diligence reveals significant risks that require tailored protections. Transactions involving sensitive activities may also face heightened regulatory scrutiny or require additional approvals from authorities. Anticipating these potential challenges and addressing them proactively during the negotiation phase can significantly reduce closing risks and ensure a successful outcome.

This guide is dedicated to the memory of our partner and friend Lisa Becker. Her insight and dedication were invaluable to this work and continue to inspire all who had the privilege of working alongside her.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.