M&A IN SPAIN
• Software agreements with all third-party providers whose products comprise the gambling platform, the games, the CPD, security and any other necessary element. • The corporate compliance level of the company: online gambling operators are subject to a high level of corporate compliance obligations (e.g. around AML obligations; need for a DPO in personal data protection; and others). Therefore, the validation of the fulfillment of all the necessary obligations under Spanish law is critically important. • Specific gambling regulatory validation: check whether there is any ongoing enforcement action. Fines in the Spanish gambling sector can reach €50 million (although fines to date have not exceeded €5 million). The commission of two serious breaches within a two-year period constitutes a very serious breach under Spanish law, and can therefore entail an economic sanction from €1 million to €50 million as well as the potential loss of the gambling license. Buyers are strongly advised to conduct through checks on the existence of previous fines from the gambling regulator. 5. Signing and Closing of the Sale and Purchase Agreement (“SPA”) The clauses of the SPA that will have to be more vigilantly negotiated will be: • Representations and warranties of the seller: the findings of the due diligence process will have to be duly analyzed and included in the representations and warranties contained within the SPA. • Limitations of responsibility: taking into account that the buyer will be assuming any contingency or liability that may arise in the future, the limitations of liability for the R&W made by the seller will play a key
issue in the negotiation of the SPA. • Price and payment structure: the operation may be structured in a wide variety of ways. The acquisition may be total (100% of the shares of the company) or partial (51% of the shares of the company or less). Additionally, in both cases, the parties may be interested in deferring or placing conditions on payment to gain specific results (e.g. making the payment of part of the agreed price conditional on company results being maintained or increased or certain KPI’s met and/or on the performance of key personnel). Likewise, with any stock or stock options held by key employees a procedure for the investor to acquire any shares not part of the initial equity investment shall be duly established in the SPA. Although prior approval by the DGOJ is not necessary, at his stage and before signing the SPA, we would recommend asking for a meeting with the DGOJ to explain the proposed transaction and any regulatory issues that could be of relevance. This is an opportunity to ascertain that the DGOJ does not foresee any major hurdles nor has any concerns.
6. Notification to the DGOJ
The transfer of shares has to be notified to the Spanish gambling regulator once executed, together with all the relevant information on the new owner of a gambling license (related parties; ultimate beneficial owner; etc.). Each M&A operation is different and we advise both buyers and sellers on the importance of thorough planning well ahead the transaction. Some transactions may also have added complexity where the vendor is a gambling operator located in Malta, Gibraltar or Ceuta. In these instances it is critically important to verify all corporate, regulatory and tax implications in those territories early on in the process.
XAVI MUÑOZ BELLVEHÍ Partner, ECIJA For information contact +34 933 808 255 xmunoz@ecijalegal.com
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IMGL MAGAZINE | JULY 2023
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