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www.whoswholegal.comARTICLES 13M&A AND GOVERNANCE PRACTICEAREA REVIEWClemens Philipp Schindler, Schindler AttorneysDEAL ACTIVITY AND STATISTICSAccording to a recent study in M&AReview (issue 1-2/2017), Austria sawapproximately 390 deals in 2016, an 18per cent increase on 2015. It’s one of the10 biggest years in deal volume since 1988– a list topped by the 2000–2007 period,which peaked in 2005 with over 500 deals.Both public and private M&A levels haveseen an increase for 2016 as well as early2017 (against the same period last year).According to the EY M&A–Index Austria2016 report, the deal volume doubledfrom 2015 to 2016 and in total exceeded 10 billion, with two mega-deals comingin at 2.9 billion (Conwert/Vonovia) and 1.2 billion (Magnesita/RHI), respectively.The statistics published in M&AReview show that more than one-thirdof all 2016 deals were domestic (althoughEY’s report puts this figure at 27 percent), and that in cross-border deals thenumber of foreign investors acquiringAustrian targets (EY’s report puts this atone-third by German investors and onethird by non-German EU-investors) wasless than half of the number of Austrianinvestors buying into the foreign markets.According to the EY report, inbound andoutbound investments were even, andapproximately 80 per cent of the Austrianinvestments were made within the EU.As in recent years, the most soughtafter targets in 2016 were from the generalservice, electrical and medical engineering,and IT and telecoms sectors. It was alsoa strong year for the construction andbuilding materials industry, which saw thenumber of deals rise by 50 per cent.Deal activity in the real estate sectorwas particularly noteworthy in 2015 and2016, and this trend continued in early2017. In private equity, deal activitywas good and some major deals wereconcluded; this remains the case in 2017.Due to the limited number of big-tickettransactions, the major private equityfunds are not seen in Austria as frequentlyas mid-cap funds but, as the transactionsmentioned below show, the market doeshave certain targets that attract theirattention.Important sources for the dealvolume were distressed situations andthe continued restructuring of banks;these sources are expected to maintaintheir relevance, even though many of theaffected banks have sold substantial assetsover the past few years.Local fundraising hit an all-time lowof approximately 13 million in 2014;in 2015 this rose to approximately 111million, as reported by the AustrianPrivate Equity and Venture CapitalOrganisation (AVCO) (figures for2016 were not available at the time ofwriting). It should be noted, however,that the great bulk of this was securedby Austria-based Speedinvest, which isfocused on early-stage investments andwill likely source investors for a newfund later this year. Vienna is establishingitself more and more as one of the majorEuropean start-up hubs for entrepreneursin Austria and also in neighbouringcountries. In addition, business-angelsactivity is steadily increasing, enhancedby such institutional programmes asthe 32.5 million aws Business AngelFunds Austria programme (EAF Austria),aimed at co-investments with businessangels. This is a joint initiative of theEuropean Investment Fund and theAustrian federal promotional bankAustria Wirtschaftsservice GesellschaftmbH, which was rolled out in 2013 andincreased its funds in 2016.REAL ESTATEIn 2016 and early 2017, activity in the realestate sector remained remarkably busy.International investors have shown interestin listed Austrian real estate companiesalready for some time. In recent years,however, local players often outbidinternational investors; but the oppositehas been seen recently. Deals around themajor listed real estate companies in mostcases did, however, not involve privateequity or hedge funds, but rather otherreal estate investors.The take-over bid of Conwert by theGerman real estate company Vonovia,which valued the target at approximately 2.93 billion, has been the largestannounced transaction in Austria in2016. The takeover offer was accepted byover 90 per cent of the shareholders byearly 2017, so that Vonovia accomplishedto exceed the statutory squeeze-outthreshold in the target.Listed real estate companies CAImmo and Immofinanz are also in thespotlight. Russia’s O1 Group sold itsentire 26 per cent stake to Immofinanzfor approximately 604 million. Theacquisition of the CA Immo stake is a firststep towards a planned full combinationof Immofinanz and CA Immo by wayof a statutory merger. Prior to suchmerger, Immofinanz is expected to sell itsRussian asset portfolio. Owing to a delayin the sale, the merger is now scheduledto be implemented in 2018 instead of2017. Former Immofinanz subsidiaryBUWOG, which had a successful IPOin 2014, has been a good investment forfinancial investor Sapinda, which acquiredapproximately 19 per cent and sold, with asubstantial profit, after a few weeks.PRIVATE TRANSACTIONSUnicredit sold Bauträger AustriaImmobilien (BAI Group) to a 50-50joint venture of Austria-based real estateinvestors Signa and Investers UnitedBenefits for approximately 150 million.In another noteworthy deal, listedconstruction company Strabag entirelytook over real estate developer Raiffeisenevolution for a total investment ofapproximately 100 million.SINGLE ASSETS AND PORTFOLIOSA noteworthy property deal was the saleof IZD Tower (for an estimated price of 250 million– 300 million), by a jointventure of Signa Recap and the Germaninsurance group R V, to CBRE GlobalInvestors, which shortly thereafter andtogether with Universal-Investment alsopurchased the retail and hotel complexStafa Tower in Vienna. Conwert sold34 commercial properties to a specialfund of HanseMerkur Insurance groupfor 331 million, whereas LonestarEDITORIAL POLICY AND SELECTION CRITERIA: NOMINEES HAVE BEEN SELECTED BASED UPON COMPREHENSIVE, INDEPENDENT SURVEY WORK WITH BOTH GENERAL COUNSELAND M&A AND GOVERNANCE LAWYERS IN PRIVATE PRACTICE WORLDWIDE. ONLY SPECIALISTS WHO HAVE MET INDEPENDENT INTERNATIONAL RESEARCH CRITERIA ARE LISTED

14 ARTICLESpurchased a portfolio of 31 commercialproperties from HETA Asset ResolutionAG (the wind-down vehicle of theformer Hypo Alpe Adria AG) for anestimated price of approximately 350million. For 175 million CA Immopurchased the Millenium Tower officecomplex (measuring 70,400 squaremetres) in Budapest, whereas BUWOGsold over 1,100 apartments in Tyrol toLuxembourg-based real estate managerJargonnant Partners for over 120 million.UBM Development AG sold the DoppioOffices complex (measuring 8,000 squaremetres) in Vienna to Union InvestmentReal Estate Austria.HOTELSIn 2017, listed Thai investor U Citypurchased the hotel platform ViennaInternational Hotelmanagement, including28 hotels, from private foundationsmanaged by Warimpex, as well as afurther eight hotels from Warimpex, fora total of 330 million. In 2016 Frenchinvestor Eurazio purchased a portfolioof 85 IBIS, Mercure, Novotel andPulman hotels, including four hotels inAustria, for over 500 million. RaiffeisenZentralbank Österreich sold the ViennaHilton am Stadtpark for an estimatedpurchase price of 200 million to privateinvestors. In 2016 Starwood Hotels andResorts sold the five-star Imperial Hotelto the Al Habtoor Group, a UAE-basedinvestment company, for approximately 70 million, as well as Salzburg’s five-starhotel Goldener Hirsch for 20 millionto a German private investor. UBMDevelopment AG sold a three-star IbisHotel and a four-star Novotel in Viennato French asset manager Amundi RealEstate for approximately 85 million.Another expected transaction failed, asAustrian listed insurance company Uniqatried to auction the Vienna Sofitel for anexpected purchase price of approximately 100 million, but terminated such plansdue to the lack of acceptable bids in early2017. The building shall now becomeEurope’s biggest start-up centre.SHOPPING CENTRES AND RETAIL PARKSImmofinanz purchased eight retail parksin the Slovak Republic and Hungaryfor 79 million. South African propertyinvestor Accelerate Property Fund boughtWHO’S WHO LEGAL: M&A & GOVERNANCEa portfolio of specialty shopping centres– six of them in Austria and three inSlovakia. Leasinvest Real Estate SCApurchased the retail park Frunpark Asten,measuring 18,300 square metres and closeto the city of Linz, from developers DeVlier Retail Development and FocusReal Estate. Also in the vicinity of Linz,local investors purchased the shoppingcentre UNO Shopping from Bank AustriaReal Invest. Other prominent investorsinclude Warburg Henderson, purchasingVienna specialty shopping centreGewerbeparkstrasse 13 for approximately 70 million, and Allianz Real Estatebuying a significant minority stake inthe shopping centre Fischapark WienerNeustadt. In CEE/SEE, a large numberof stores within the Austrian supermarketchain Billa, owned by German ReweGroup, were sold in 2016, with Austriancompetitor Spar acquiring 62 stores inCroatia. Following the transaction bothRewe and Spar own approximately100 stores each, and French competitorCarrefour acquired all stores in Romaniafor an estimated 100 million.CONSTRUCTIONAustrian HABAU purchased BilfingerMCE from German Bilfinger Berger in2016, which in turn acquired MCE fromDeutsche Beteiligungs GmbH in 2009 for 350 million.CONSTANT PRIVATE EQUITY DEAL FLOWThere were some major private equityexits in 2016. Most notably, Swedishprivate equity firm EQT sold Automicto US-based software company CATechnologies for a reported price of 600 million; and Germany-basedprivate equity fund Capiton sold SchurFlexibles to US-based private equityfund Lindsay Goldberg for an estimated 300 million– 400 million. Both exitsfollowed a broad auction and attracteda lot of interest from strategic investorsand financial sponsors alike. The thirdsignificant exit was completed by FranklinTempleton and GSO Blackstone-financedRing International Holding, whichsold its coating division to Tokyo-basedKansai Paint for about 570 million,after several earlier attempts to divestthe coating division in 2014 and 2015(those discussions involved bidders such asAdvent and PIA (Goldman)).There were also a couple of interestingmid-market, mostly tech-related deals,notably French private equity investorArdian buying Austria-based RFID firmGantner; private equity-backed Scout24 group buying Austria-based onlineproperties platform Immodirekt; US-basedprivate equity investor Greenbriar buyingAustria-based Frauscher Sensortechnik;UK-based investor group Walstead buyingAustria-based Leykam Let’s Print; andDubai-based Vis Mundi and LeventCapital buying a significant minority stakein Powerhorse, an Austria-based energydrink producer.One of the most visible venturetransactions was the 154 millioninvestment of Insight Venture Partners inthe Austrian software company Tricentis,with Kennet Partners and Harbert exitingthe target. There were also a couple ofnoteworthy series A financing rounds,including a series A investment byAtomico, the VC vehicle of Skype founderNiklas Zennström; Austrian tech fundSpeed Invest, Y Combinator and DawnCapital investing in Bitmovin, an Austriabased videostreaming platform; andAustria-based private equity fund CudosCapital’s investment in Austrian opticaltools specialist firm In-Vision Digital.A target that had been in the spotlightof private equity investors was eventuallysold to a strategic investor: British gamingsoftware producer Playtech acquired 90per cent in its Austrian competitor BestGaming Technology for 138 million.PUBLIC M&A AND TAKING PRIVATETRANSACTIONSIn 2016 public M&A activity remainedsubstantial. Among two large-cap deals,the increase in partial takeover bids andprivate transactions was notable.The announced merger of theAustrian-listed refractory producer RHIand its Brazilian competitor Magnesita for 1.17 billion was the second largest dealin 2016, after Vonovia’s above-mentioned 2.93 billion takeover of Conwert. Thecombined company RHI Magnesita shallbe established in the Netherlands andlisted in London. Once completed; suchdeal will be one of the rare examples of amerger of equals like transaction, which isenvisaged for later this year.EDITORIAL POLICY AND SELECTION CRITERIA: NOMINEES HAVE BEEN SELECTED BASED UPON COMPREHENSIVE, INDEPENDENT SURVEY WORK WITH BOTH GENERAL COUNSELAND M&A AND GOVERNANCE LAWYERS IN PRIVATE PRACTICE WORLDWIDE. ONLY SPECIALISTS WHO HAVE MET INDEPENDENT INTERNATIONAL RESEARCH CRITERIA ARE LISTED

www.whoswholegal.comOther noteworthy transactions includeTaiwanese Foxconn, via its subsidiaryEnnoconn, investing in the Austriantechnology group S&T, which is listedon the Frankfurt Stock Exchange, toacquire 29.4 per cent and becomeits largest shareholder. The inflow offunds was used by S&T to increase itsparticipation in Kontron AG to 29.9per cent, of which it already ownedapproximately 5 per cent. S&T went onto purchase IT-Markt from RaiffeisenInformatik Group. Immigon, the bad bankof Österreichischen Volksbanken-AG(ÖVAG), sold approximately 3 per cent inthe listed Raiffeisen Bank International,for approximately 208 million, toinstitutional investors.Austria-based gambling companyNovomatic made a substantial outboundinvestment by acquiring a majorityin Australian listed Ainsworth GameTechnology for approximately 320million. Novomatic also played a majorrole in a very prominent domestic deal. Inearly 2017 Czech Sazka Group purchased,via its subsidiary Came Holding, anadditional indirect stake (via MedialBeteiligungs GmbH) in Casinos Austria(Casag) from insurance company Uniqaand Leipnik Lundenburger, bringing itsownership to 34 per cent; however, in late2016, Novomatic acquired a direct stakeof 17.2 per cent from MTB Privatstiftung,after a failed attempt to acquire theindirect stake sold to Sazka Group, whichhad in fact not been granted mergercontrol clearance. With a share of 33.2 percent, government-controlled state holdingcompany ÖBIB remains Casag’s secondlargest shareholder. In a related transactionNovomatic reduced its indirect stakein Casag’s subsidiary ÖsterreichischeLotterien Gesellschaft to approximatelyhalf the original stake that it purchasedin 2015, by selling 11.56 per cent of itsindirect participation to Sazka.Partial takeover bids, which haverecently increased, aim to stay belowthe formal control threshold of 30 percent (unless lowered in the articles ofassociation as implemented by severalAustrian companies), which triggers amandatory bid obligation for all sharesin the target, or are limited to only 26per cent, which is the ex lege cap ofexercisable voting rights (unless anotherARTICLES 15shareholder holds voting rights in excessof that threshold or a bid is launched).Often, though, they are followed bysubsequent bids, which usually triggera mandatory offer. One deal, however,was different: in 2015 Airports GroupEurope, an indirect subsidiary of IFMGlobal Infrastructure Fund, launched avoluntary partial bid to acquire 29.9 percent in Flughafen Wien AG, the operatorof Vienna International Airport, andsuccessfully acquired shares just below the30 per cent threshold. In 2016 it launcheda voluntary partial bid to acquire a further10 per cent for up to 210 million, whichdid not follow the rules of a mandatorybid. Their actions were based on theargument that, despite exceeding theformal control threshold of 30 per cent,no mandatory bid obligation is triggeredsince two shareholders were acting in asyndicate, which in total controls 40 percent of the voting rights.A notable increase in the taking ofprivate transactions can be reported.Hirsch Servo, an Austrian producer ofexpandable polystyrene (EPS), reportedthe intended delisting of its shares fromthe Vienna Stock Exchange (furthermore,it purchased the EPS insulation segmentof Arcon SRL, a producer of insulationand bituminous roofing membranes).Another expected delisting concernsthe Austrian sparkling wine producerSchlumberger AG (which in 2016acquired from American-Japanese liquorgroup Beam Suntory the Austrianchocolate spirits producer MozartDistillerie). Schlumberger is majorityowned by the Swiss holding Sastre,belonging to entrepreneur FrederikPaulsen, which in 2016–2017 successfullycompleted a take-over offer for over 90per cent, which is the statutory squeezeout threshold. Also in 2016, Austria-basedBioEnergy International announcedits delisting from the Frankfurt StockExchange. Furthermore, listed Viennabased asset manager C-Quadrat shouldhave been delisted through a squeeze-outprocedure as well, but such plans wereaborted for tax reasons.The largest ECM transaction reportedin the past few months involved the sugar,starch and fruit company Agrana, whichraised approximately 192 million. In2016, Agrana was also in the news when itacquired all shares in the Argentinian fruitpreparations producer Main Process SA.OTHER NOTEWORTHY DEALSListed Austrian oil and gas giant OMVhas been very active. In 2016 it soldall shares in its subsidiary OMV (UK)Limited to Scottish financial investorSiccar Point Energy Limited, for anamount of up to 1 billion. It also solda 49 per cent minority stake in GasConnect Austria to the consortium ofAllianz and Snam, Italy’s gas infrastructureoperator. Recently, it announced thesale of all shares in its subsidiary OMVPetrol Ofisi to VIP Turkey Enerji AS, asubsidiary of Vitol Investment Partnership,for an overall transaction value of 1.368billion. Likewise in 2017, it announcedthe purchase of 24.99 per cent interest inthe Yuzhno Russkoye gas field in WesternSiberia for US 1.850 billion.In early 2017, Swiss ABB purchasedAustria-based automation companyBernecker Rainer Industrie-Elektronikfor approximately US 2 billion, makingit the largest inbound investment so farthis year. Austria-based and Swiss-listedsensor and chip producer AMS acquired,for approximately US 570 million,Singapore-based Heptagon AdvancedMicro-Optics (plus an earn-out ofup to US 285 million), in one of thelargest private outbound investments in2016. AMS also acquired British noisecancelling specialist Incus Laboratoriesand British sensor manufacturerCambridge CMOS Sensors (the purchaseprice of each was not disclosed). Softwaredeveloper XiTrust Secure Technologiesacquired 21.24 per cent in IT-securityprovider A-Trust from Bank Austria,Schoellerbank and Immigon. Taiwan-listedDelta Electronics purchased an 85 percent stake in building automation expertLoytec for 72 million from its founders.TRAVEL AND TOURISMBuilding on a majority ownership,Austria-based tourism group Verkehrsbüroacquired all shares in Jumbo Touristik viaits subsidiary Ruefa. Austrian travel andtransportation company Blaguss becamesole shareholder in Austrian WESTbusGmbH, in which it already held 51 percent, from Rail Holding AG. It alsopurchased Austrian bus and tourismEDITORIAL POLICY AND SELECTION CRITERIA: NOMINEES HAVE BEEN SELECTED BASED UPON COMPREHENSIVE, INDEPENDENT SURVEY WORK WITH BOTH GENERAL COUNSELAND M&A AND GOVERNANCE LAWYERS IN PRIVATE PRACTICE WORLDWIDE. ONLY SPECIALISTS WHO HAVE MET INDEPENDENT INTERNATIONAL RESEARCH CRITERIA ARE LISTED

16 ARTICLEScompany Vorderegger, as well as the WienerDonauturm, an iconic tower and viewingplatform – and, at 252 metres, Austria’stallest building. In the airline sector, Tuiflyand Austria-based Niki have been bundledinto a joint holding company in Vienna;the three main shareholders are EtihadAirways (25 per cent), Tui (24.8 per cent)and Niki Privatstiftung (50.2 per cent).The shares in Niki, which will contributeto the new joint venture, were purchasedby Etihad for approximately 300 millionfrom Air Berlin.RETAILThe real estate company Signa maintainsits ambitions in the retail sector. In 2016Signa Retail, best known for owningGermany’s Karstadt, acquired 78 percent in Tennis-Point; 100 per cent in anonline outlet for designer fashions; 60per cent in Outfitter; and 87 per centin the bike and outdoor e-commercecompany internetstores. In early 2017the latter entered into a partnership withProbikeshop, to become the largest onlinebike retailer in continental Europe.FINANCIAL SERVICESIn early 2017 Italian technologycompany SIA Group purchased a cardsbusiness (processing services for debit,credit and prepaid cards, etc) in Austria,Germany and Italy from Unicredit for 500 million. Prior to this, in 2016,French asset manager Amundi purchased,from Unicredit, its subsidiary PioneerInvestments for 3.5 billion, withapproximately 11 billion of the total of 222 billion of assets under managementlocated in Austria. Uniqa sold the entire99.7 per cent stake in its Italian subsidiaryUniqa Assicurazioni to Italy-based SocietàReale Mutua di Assicurazioni for 295million. Heta sold its Italian leasingoperations Heta Asset Resolution Italia,with a book value of 657 million, toBain Capital Credit.Smaller transactions in the bankingsector included Wiener PrivatbankenSE’s acquisition of the Austrian bankingoperations of Valartis Bank (Austria)AG through an asset deal. MeanwhileBawag PSK (the Austrian retail bank ismajority-owned by private equity investorCerberus, and for many years has been anongoing candidate for purchase) boughtWHO’S WHO LEGAL: M&A & GOVERNANCEfrom Start-Bausparkasse and Immo-Bankfrom the Volksbanken Group. The newmerged receivables management giantGFKL Lowell, owned by private equityinvestor Permira, purchased the Austrianreceivables management company ISInkasso Service from Hannover Finanz for 23 million.TELECOMSTelekom Austria, which is majorityowned by telecoms giant América Móvil,completed two take-overs in Belarus andCroatia, by acquiring Atlant Telecom andTeleSet from Zubr Capital and EBRDrespectively. Telekom Austria also acquired,via its Croatian subsidiary Vipnet, amajority share of fixed-line providerMetronet telekomunikacije.MEDIAOne prominent management buyoutwas the purchase of 56 per cent of theAustrian publisher Verlagsgruppe Newsby Horst Pirker from the Bertelsmannsubsidiary Gruner Jahr. Additionally,the Austrian subsidiary of Germany’sProSiebenSat.1 Group purchased theprivate TV station ATV; and Germanmedia group WEKA purchased all sharesin Wiener Industriemagazin Verlag GmbH.LEGAL AND REGULATORY FRAMEWORKExperience shows that certain restrictionsunder Austrian corporate law oftencome as a surprise to foreign investorsstructuring a deal – particularly financingand intra-group transactions after thetransaction has been made. Austrian lawgenerally prohibits the return of equity toshareholders (ie, upstream and side-streamtransactions) of both a limited liabilitycompany and a stock corporation. Basedon this principle, Austrian courts haveestablished that a company cannot makeany payments to its shareholders outsidearm’s-length transactions, except in thefollowing instances: for the distributable balance sheetprofit; in a formal reduction of the registeredshare capital; or for the surplus following liquidation.The prohibition on return of equitycovers payments and other transactionsbenefiting a shareholder where noadequate arm’s-length considerationis received in return. To the extent atransaction qualifies as a prohibited returnon equity, it is null and void between theshareholder and the subsidiary (and anyinvolved third party, if it knew or shouldhave known of the violation). It mayresult in liability for damages.Austrian courts have developed caselaw suggesting that a subsidiary may lendto a shareholder, or guarantee, or providea security interest for a shareholder’s loan,if it receives adequate consideration inreturn; or if it has determined (with duecare) that the shareholder is unlikely todefault on its payment obligations, andthat, even if the shareholder defaults,such default would not put the subsidiaryat risk, and that the transaction is inthe interest of the Austrian subsidiary(corporate benefit).In addition, the Austrian StockCorporation Act prohibits a targetcompany from financing, or providingassistance in the financing of, theacquisition of its own shares or the sharesof its parent company (irrespective ofwhether or not the transaction constitutesa return of capital). It is debatable whetherthis rule should be applied, by analogy, tolimited liability companies. Transactionsviolating this rule are valid but may resultin liability for damages.Another area in which capitalmaintenance problems may arise is thatof deal and management fees charged byprivate equity funds to the Austrian targetor an Austrian acquisition vehicle. Again,the arm’s-length standard is relevant todetermine the compliance with Austrianlaw. The same applies to other intra-grouptransactions.Another area of interest to investors,besides the relatively low mergercontrol thresholds in Austria, is (foreign)ownership restrictions.In regulated industry sectors (eg,banking, insurance, utilities, gambling,telecoms or aviation) the acquisition ofa qualified or a controlling interest istypically subject to advance notificationto, or approval of, the competentregulatory authority. Sanctions for failureto notify or obtain approval in advanceinclude monetary penalties, a suspensionof voting rights, and a partial or totalshutdown.EDITORIAL POLICY AND SELECTION CRITERIA: NOMINEES HAVE BEEN SELECTED BASED UPON COMPREHENSIVE, INDEPENDENT SURVEY WORK WITH BOTH GENERAL COUNSELAND M&A AND GOVERNANCE LAWYERS IN PRIVATE PRACTICE WORLDWIDE. ONLY SPECIALISTS WHO HAVE MET INDEPENDENT INTERNATIONAL RESEARCH CRITERIA ARE LISTED

www.whoswholegal.comThe acquisition of ownership andcertain lease interests in real estate bynon-EEA nationals or the acquisitionof control over companies owning suchinterests is subject to notification orapproval by the local real estate transfercommission. Which interests are covered,and whether notification or approval isrequired, varies among the legislation ofthe nine states in Austria. Where the realestate is used for commercial rather thanresidential purposes approvals are usuallygranted.Under the Foreign Trade Act, theacquisition of an interest of 25 per centor more, or a controlling interest in anAustrian business by a foreign investor(for purposes of this law, that is aninvestor domiciled outside of the EU/EEA and Switzerland; if the investoris resident in that region, no advanceapproval is required, but ex officioinvestigations can be initiated withouttime limit) is subject to advance approvalby the Austrian minister of economicaffairs where that business is involvedin internal and external security (forexample, defence and security services) orpublic order and security, including publicand emergency services, such as hospitals,emergency and rescue services, energy andwater supply, telecommunications, trafficor universities and schools. Transactionssubject to approval cannot be completedpending approval. Failure to obtainapproval is subject to imprisonment andcriminal penalties.Another recurrent topic is the accessto documents and information to conductdue diligence. In this context, certaindifferences depend on the legal form inwhich the target is established.As a general rule, third parties donot have a right to obtain informationfrom the stock corporation besides thosethat are publicly available. The board isthus not obliged to disclose confidentialinformation to a prospective buyer.Even shareholders have very limitedinformation rights. They can requestthe financial statements, includingthe management report, as well as thesupervisory board report. Furthermore,shareholders have an individualinformation right at the shareholders’meeting in relation to the agenda, and tothe extent such information is necessaryARTICLES 17to properly assess an agenda item. Giventhat such information will usually notsuffice for purposes of a due diligenceby a potential investor, shareholderswill often request the management todisclose additional information. Thedecision on the disclosure of confidentialinformation, and thus the decision on theadmission or refusal of a due diligence, isa management measure, and thus generallydoes not require the consent of thesupervisory board or the shareholders. Themanagement has to avoid any damage tothe company and to consider all potentialadvantages, risks and disadvantages.Positive impacts may include, for example,new or cheaper means of financing,access to new customers or markets,access to product or technical know-how,advantages for the company’s productionor procurement, etc. Negative impactscould arise if, for example, a competitoror a major supplier or customer of thetarget can access the information. Thedecision to allow due diligence is notnecessarily an “all-or-nothing” decision;the greater the interest of the companyin due diligence, the more sensitive thedata that can be disclosed. The interestof shareholders also has to be taken intoaccount by the management, wherebyshareholders should generally be treatedequal in equal situations. Another aspectto consider is the time frame. The moreadvanced the stage of the acquisitionprocess, the more comprehensive anddetailed the information that can be madeaccessible to the buyer. Due diligence willmostly only be permitted if the buyer’sintention to a purchase has becomemore concrete, for example by signinga letter of intent. At the same time, theprospective buyer should also sign a nondisclosure agreement.The legal situation for limited liabilitycompanies is generally comparable tothat of stock corporations. Although itsshareholders have only limited access toinformation rights, the Austrian SupremeCourt states that every shareholder has tobe granted a comprehensive informationclaim. Therefore, the managing directorsare, in general, obliged to providerequested information to shareholders.However, this information claim does notapply without restriction. The purposeof the comprehensive information rightis to monitor managing directors; tocontrol the business situation of thecompany; and to prepare for generalmeetings. This information claim shouldthus only be used for these objectives.Accordingly, there is some legal argum

Pulman hotels, including four hotels in Austria, for over 500 million. Raiffeisen Zentralbank Österreich sold the Vienna Hilton am Stadtpark for an estimated purchase price of 200 million to private investors. In 2016 Starwood Hotels and Resorts sold the five-star Imperial Hotel to