The Relationship between Takeover Bids and Mergers : Implications for the Internal Market of the European Union

The aim of this article is to examine the relationship between takeovers bids and mergers at EU level, and to discuss the possibility of combining these two methods of EU corporate restructuring within the context of the internal market. A merger can sometimes be the result of a successful takeover bid (i.e. acquisition of the offeree company’s shares and, subsequently, of corporate control), but is more often implemented by one company’s taking over of another, so that the terminating company’s assets and liabilities are transferred as a whole to an existing company, usually designated the continuing company. Combining these two corporate restructuring methods could result in a more effective business consolidation. Takeover bids and mergers fall within the protective scope of the fundamental freedom of establishment (Art. 43 EC Treaty) and of the free movement of capital (Art. 56 EC Treaty). Hence, the conduct of takeover bids and mergers, either separately or in combination, constitutes an exercise of these fundamental freedoms. Such exercise could prove to be beneficial for both EU corporate restructuring and for the strengthening of the EU market in corporate control, which constitutes parts of the internal market. EC market integration regarding corporate restructuring and business consolidation can be achieved only if EU companies enjoy the freedom to choose how and by which means they proceed to those control transactions that they believe to be more appropriate for them