IDEAS home Printed from https://ideas.repec.org/a/bpj/eucflr/v3y2006i3p249-286n1.html
   My bibliography  Save this article

Contingent Value Rights in Public Takeovers: Analysis under Swiss Law

Author

Listed:
  • Gerhard Frank

    (Dr. iur. LL.M. (Columbia), Attorney-at-law, Zurich.)

Abstract

The use of stock as acquisition currency entails the risk that the price of the acquirer's stock fluctuates significantly between the announcement and the closing of the deal, or even after the deal closes. A collar, setting a fixed value which pinpoints the exchange ratio at closing, may protect the target shareholders against stock price fluctuations prior to the closing of the deal. A contingent value right (“CVR”) offers a collar-like protection for a certain period after the deal closes. Given the increased volatility in the stock market, the use of hedging and protection devices designed to mitigate such future stock price variations could become more popular. After defining the CVR (I. 1.) and outlining its basic terms (I. 2.) – as well as its benefits and drawbacks (I. 3.–4.), we will determine its legal qualification under Swiss law (II. 1.) and analyse its various legal regimes, namely under corporate (II. 2.), takeover and securities (II. 3.) and finally, criminal law (II. 4.). This article shows that a proper structuring may help to overcome the legal uncertainties accompanying the use of CVRs.

Suggested Citation

  • Gerhard Frank, 2006. "Contingent Value Rights in Public Takeovers: Analysis under Swiss Law," European Company and Financial Law Review, De Gruyter, vol. 3(3), pages 249-286, September.
    • Handle: RePEc:bpj:eucflr:v:3:y:2006:i:3:p:249-286:n:1
    DOI: 10.1515/ECFR.2006.011
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ECFR.2006.011
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/ECFR.2006.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:eucflr:v:3:y:2006:i:3:p:249-286:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.