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After 12 years in the making, the European Union’s takeover directive was finally approved late Tuesday after legislators were able to overcome their differences. The fate of the legislation had been in jeopardy due to last minute concerns raised by Germany over a clause in the directive requiring target companies to first consult with shareholders when enacting defensive measures. The provision, known as Article 9, bans poison pill defenses — the issuance of additional shares to shareholders at a discount in order to dilute a takeover attempt — unless shareholders have authorized the measure. Some members of the European Parliament voiced Germany’s concerns, in particular German Christian Democrat Klaus-Heiner Lehne. Lehne was the chief architect of a number of amendments which threw the directive into the conciliation phase, a procedure bringing EU member states, the European Commission and parliament together to hammer out a last-effort accord. Despite German and parliamentary opposition, the European Commission and EU member states were able to save the provision by agreeing to a “freeze in period” for Article 9, which deals with defensive measures. According to the text agreed to by the three legislative bodies in the late hours of Tuesday night, EU countries will have four years to implement the takeover directive, but implementation of Article 9 will be frozen for an additional year. The agreement as a victory for the Commission and member states battling to keep Article 9 intact in order to insure one of the original objectives of the directive: to increase shareholder protection. “The takeover directive will be to the benefit of European industry and to the benefit of shareholders,” said one EU official on condition of anonymity. �Copyright 2001, The Deal, LLC. All Rights Reserved.

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