Blog Post

Share Acquisition Public Offer (OPA) - Review

November 07, 2011 in Shares by Alfredo Tapia Orezzoli

WHAT IS AN OPA?

Chilean law definition: “… it is what has to be formulated to acquire shares of public companies, whom from any media offer to the actual shareholders of those companies to acquire their shares, in conditions that allows the offerer achieve a percentage of the company in a determinate term” (art. 198, of the Securities Market Law).

On simple words, an OPA is an operation do in the securities market through one company publicly express it wishes to acquire a part or the totally of the shares of a public company. The operation target is all the shareholders of the company, to whom the buyer company offers a determinate price the purchase of their shares in a determinate term. 

This law objective is to inform the minor shareholders about the business running. 

WHO HAS TO SET UP AN OPA?

According to the article 199° of the Securities Market Law, the companies or persons that has to set up an OPA are the following: (classified on shares acquisitions)

- The acquisition that allows a person or company to take control of another company.
- If of a consequence of shares purchasing, a person or a company acquire 2/3 or more of the total shares of a company.
- The acquisition of the 75% or more of a company that controls another one obligates the acquirer to set up an OPA for the controlled company.

Example: If you buy the 75% of Company A* in order to take control of Company B, you have to set up an OPA for Company B.

* If Company A owns 50 +1 % of Company B. 

PRINCIPAL CHARACTERISTICS OF THE OPA PROCESS.

Everything starts when a person or a company offers to buy a part or the total of the shares of a public company, offer that has to be published at least on two national circulation newspapers. This offer has to be address to all the shareholders of a company. 

After the publishing, the offerer or acquirer has to publish a prospect where is shown the offer conditions, this has to be send the same day of the offer to the Santiago Stocks Exchange and to the regulatory institution (SVS).

The validity of this offer cannot be inferior of 20 days and not over 30. This term can be extendable just for one time of not less than 5 days and more than 15. The offer is irrevocable, but the offerers can establish caducity considerations to the offer. The only way to modify the offer is in order to offer to buy more shares or a better price.

There is a taxation incentive to the shareholders to sell, because the law that creates the OPA gave the shareholders tax liberation when they sell their shares in an OPA process.

Alfredo Tapia Orezzoli, lawyer, Prenafeta & Asociados