Will the UK model work in the Netherlands? An investor’s point of view

1. Will the UK model work in the Netherlands? An investor’s point of view Simmons & Simmons seminar on the Dutch Takeover Panel Presentation Rients Abma

2. Agenda • Background takeover regulation in the Netherlands • Problems with current regulation • Is UK model the solution? • Concluding remarks

3. Background Dutch takeover regulation • 1970 - 2001: self regulation (SER Fusiecode) • 2001: offer rules in law; AFM public supervisor • Judge (in practice: Enterprise Chamber) rules on disputes about the distribution of powers between the management board, supervisory board and the AGM (f.e. raising anti-takeover devices and approval of major board decisions) • Tabaksblat Code (2003): “Self regulation through a code is too weak an instrument for takeover battles and therefore not suitable”

4. However … • No mandatory bid provisions • Stork • No rules on competitive bids • PinkRoccade, ABN AMRO • No (clear) rules in the pre (possible) bid period • VNU, ABN AMRO, Stork • (Numico, Hagemeyer, Vedior) • No (clear) restrictions on frustrating actions • Stork, ABN AMRO • Acting in concert rules not clear • VNU, Stork • Legal merger instrument to squeeze out minority shareholder • Royal Dutch/Shell, Versatel

5. New Takeover legislation • 28 October 2007: implementation of Takeover Bids Directive • Implementation of mandatory bid rule (30%) • Competing bid provisions • Modernization of offer rules • Possibility for early interference by AFM • Introduction of right of appraisal minority shareholders (pending) • But … no restrictions on frustrating actions, no put up or shut up rule, acting in concert rules still vague

6. More fundamental “problems” • Less flexibility to anticipate on changing situations and tactics on capital market (law provisions in stead of code provisions) • Two supervisors on takeover bids • AFM and Enterprise Chamber • Takeover battle can last very long (no finality by auction)

7. Introduction UK model solution? • Criteria to consider introduction of possible UK style Takeover Panel, from the viewpoint of an adequate protection of shareholders and an adequate functioning of the takeover market • Clarity of bidding rules and of behavior of supervisor • Sufficient legal protection for all relevant parties • Short, but careful takeover procedures • Professional and independent supervisor

8. Takeover Panel as supervisor? • Doubts about effectiveness: • Do we really have independent persons in this small country? • Will it have enough authority? • 75% of Dutch shares owned by foreign institutions • 52% of Board members have non-Dutch nationality • Less “clubability” • Relatively high probability that parties will appeal and that ultimately Court will decide: “finality” would still be a problem • Dutch stakeholder model: no clear reference to base decisions upon

9. Model that investors prefer • Powerful and professional AFM that supervises legally binding offer rules • AFM can decide to appoint advisors or an advisory committee • Further improvement of offer rules • Introduction of “put up or shut up rule” • Guidance on acting in concert • Clear criteria for transactions that should be approved by AGM • Improving checks and balances Enterprise Chamber • Fast track approach • Possibility for board to start an inquiry procedure

10. Concluding remarks • There were good reasons to transfer offer rules from SER Merger Code to legislation • AFM is already ‘Marktmeester’ • Clarity of offer rules and fastness of enforcement crucial • Doubts about necessity to rebuild Dutch model • Further modernization of Dutch offer rules desirable