Table of Contents:
1. Market Context and Overview
5. Mandatory Tender Offers (MTO)
- Consequences of Nondisclosure
- Material Events Definition
- Timing of Disclosure
- Route to Delayed Disclosure
- Disclosure Responsibilities
- Market Practice in Disclosures and Strategic Considerations
7. Squeeze-Out and Sell-Out Rights
1. Market Context and Overview
The landscape of Turkish public companies has experienced remarkable growth in recent years. Borsa Istanbul has seen a substantial increase in initial public offerings, with the number of listed companies growing by nearly 200 since 2020. This expansion has elevated the total number of public companies to around 700 as of November 2025. This development has broadened the pool, creating a more dynamic environment for public company mergers and acquisitions.
This publication outlines the legal framework governing the acquisition of control in Turkish public companies listed on Borsa Istanbul. Each transaction in this context demands a careful, case-specific assessment, as there is no single standard structure applicable to all public M&A deals in Türkiye.
2. Regulatory Framework
Turkish law does not provide a standalone set of rules for public company acquisitions – instead, these transactions are subject to multiple layers of regulation. The Turkish Commercial Code No. 6102 establishes public companies and governs mergers and acquisitions for both public and private entities, and public companies are additionally regulated under capital markets laws and regulations. The Turkish Capital Markets Board (CMB) exercises regulatory and supervisory authority over public companies, as well as equity and debt securities.
For potential purchasers, key considerations before executing an M&A transaction include disclosure obligations, mandatory tender offer rules, squeeze-out and sell-out rights, and delisting requirements, as these elements significantly impact transaction structure and execution strategy.
Public companies operating in regulated sectors such as banking, insurance, or energy may also fall under sector-specific laws, requiring prior approval from the relevant regulatory authority. Furthermore, if the transaction exceeds certain thresholds under competition law, clearance from the Turkish Competition Authority is required, regardless of whether the target is public or private.
3. Acquisition Methods
Negotiated Deals – The Preferred Route
Acquisition of a Turkish public company can be made on a friendly basis pursuant to a definitive agreement to be negotiated with the controlling and non-free float shareholders. Where there is a negotiated deal, the purchaser conducts due diligence on the target and its operations and have access to the target’s management. The purchaser can conduct initial due diligence on publicly available information. However, a purchaser will normally conduct extensive due diligence on fiscal, tax, operational and legal matters in addition to the information that is publicly available.
Hostile Takeovers – Uncommon in Practice
Hostile takeovers are not common in Türkiye, because Turkish public companies would not be approached on a hostile basis due to composition of their shareholding structures, where they consist of low free-float (publicly-traded) percentages and the shares that are not publicly traded are held by persons that are members of the same family group or groups that act in concert. This significantly lowers the chances of a hostile bidder to acquire control of a publicly traded company.
4. Voluntary Tender Offers
Voluntary tender offers are the legal foundation for hostile takeovers under Turkish law and can be freely launched, without any price restriction, by the shareholders or third parties for all or part of the shares of a public company. The law does not provide the target company’s management with the authority to prevent voluntary tender offers but only grants a right to the board of directors of the company to disclose a report to provide with its opinion on the offer and to lay out strategic plans of the offeror on the company, and its potential effects.
The offerors are free to launch a partial voluntary tender offer for the specific class of shares and certain number of shares within a class. If the offeror acquires control of the company through voluntary tender offer targeting only a specific class of shares, the mandatory tender offer needs to be launched to the shareholders of other classes. The offer must be launched within six business days upon the CMB’s approval, and the offer period must be between ten to twenty business days.
5. Mandatory Tender Offers (MTO)
One of the most material aspects of a negotiated public M&A transaction in Türkiye would be takeover bids. Acquisition of ordinary or privileged shares as a result of which management control is acquired would subsequently trigger a mandatory tender offer (MTO) to be made to the entire remaining shareholders who held shares on the date the acquisition/closing was publicly disclosed.
Purchasers will want to determine in advance of the transaction whether an MTO will be triggered or whether an exception or exemption applies, as this has a significant impact on the financing structure of the deal. Failure to complete the MTO within applicable deadlines (as described below) results in voting rights suspension for the purchasers in addition to administrative fines that can reach the total purchase price.
Under Turkish capital markets law, the concept of management control is understood in the formal sense rather than the substantive sense. This preference, from a functional perspective, is considered to provide legal certainty. Accordingly, control is defined as holding, directly or indirectly by a person or group of persons acting in concert, management of a Turkish public company by way of acquiring shares having more than 50% of the voting rights of the company. Also, regardless of the 50% threshold, control may be deemed to be in place if the person or persons acting in concert have the right or power (through holding privileged shares) to appoint majority of the board members at the board of directors’ level or nominate the majority of the board members at the shareholders’ level.
The regulatory framework requires purchasers to purchase the shares of the remaining entire shareholder at equivalent or higher prices. This mechanism enables such shareholders to benefit from control premiums offered by acquirers to controlling shareholders. Shareholders receiving MTO retain complete discretion regarding acceptance.
MTO Procedures and Timeline
The MTO process begins with an application to the CMB within six business days of closing of the acquisition, either to initiate the MTO or seek an exemption. If exemption applications are rejected, the MTO must be launched within one month of rejection. If the MTO application filing receives CMB approval, it must be initiated within six business days following the approval and in any case within two months of closing of the acquisition.
The MTO must remain open for a period between 10 to 20 business days. Purchasers are required to disclose the outcome of their MTO application to the CMB and key details within three business days from the CMB’s decision, as well as the results of the MTO upon completion.
MTO Pricing Requirements
The following pricing requirements apply to direct acquisitions of management control, whilst additional provisions exist for indirect acquisitions.
In a direct change in management control of the public company, the MTO price shall not be lower than either the arithmetic mean of the daily adjusted weighted average price formed during the six-month period preceding the date of public announcement of the share purchase agreement, or the highest price paid for the same class of shares of the public company during the six-month period preceding the date on which the MTO obligation arose, including the share acquisition that gave rise to the MTO. If the CMB deems necessary, a valuation report may be required for determining the MTO price, based on the share transfer date.
Also, price adjustments, earn-outs, additional payment options or schemes, and other similar elements that increase the original purchase price paid to the seller will be taken into account in determining the MTO price.
Circumstances Excluding MTO Obligations
The legislation provides for certain exceptions or waivers. While exceptions apply automatically and relieve purchasers of MTO obligations, waiver cases require CMB approval applications within six business days of MTO triggering event. The applicability of either of these must be assessed individually on a case-by-case basis, under the MTO regulatory framework.
The rules enumerate several circumstances in which the tender offer requirement does not trigger. These exemptions include scenarios where existing shareholders gain control by participating in rights offerings, situations involving control obtained subsequent to a voluntary offer made to all shareholders, cases involving controlling interests or voting rights acquired through intra-group transfers among entities under common control, and instances of control-altering shareholder agreements receiving shareholder approval at shareholders meeting while providing dissenting shareholders with exit/appraisal rights in accordance with applicable CMB regulations. MTO also does not trigger if the buyer acquires shares representing less than 50% of voting rights from existing controlling shareholders and enters into a written agreement with them to jointly control management of the company for the first time at an equal or lesser level than the existing controlling shareholders.
The CMB has power to waive the MTO requirement in several circumstances. These include cases where the target company is in such a serious financial position that the acquisition of control would save or strengthen the financial position of the target, and in cases where the buyer undertakes to dispose of the controlling shareholding, provided the buyer have not exercised shareholder rights at shareholders meetings or effected any changes to the company’s board of directors. Sale of controlling shares in state-owned companies that are in the government’s privatisation portfolio also is a waiver ground under CMB rules.
6. Public Disclosures
Public disclosure obligations represent one of the critical aspects of Turkish public M&A transactions. The regulatory framework requires disclosure of material events and developments that could influence the value and pricing of capital market instruments or affect investor decision-making processes.
Consequences of Nondisclosure
Failure to comply with mandatory disclosure requirements not only undermines public confidence in the company and adversely affects valuation, but also exposes responsible parties to administrative penalties and, in certain circumstances, criminal liability for insider trading violations.
Material Events Definition
Any concrete information, act or development constitutes inside information (or widely referred to as material information) under the Disclosure Communiqué of the CMB if such information, act or development, in essence, would (if made public) be likely to have an effect on the trading price or value of securities of the company or might be something that a reasonable investor would expect to know about when making an investment decision. Whether an information, act or development triggers disclosure obligation will depend on the facts at hand and should be assessed on a case-by-case basis by the obligor who is required to disclose the inside information.
Timing of Disclosure
The timing requirements for public disclosure represent both the critical and ambiguous elements of the regulatory framework. Proper timing is essential because delays can result in administrative penalties, while premature disclosure may negatively impact transaction outcomes or share price valuations. The fundamental principle requires disclosure when the intention to buy or sell becomes concrete. However, practical interpretation varies considerably, ranging from early stages such as advisor appointments for feasibility assessments to later stages including term sheet execution. The application of these abstract principles to specific transaction circumstances requires detailed fact-based analysis.
Knowledge of a potential transaction involving sale of a controlling or significant stake in the public company will without doubt become inside information at some point prior to the execution of definitive agreements. However, it would be arguable whether it would have done so at an early stage, particularly at the time of signing of basic terms or term sheet. A term sheet, letter of intent or basic terms only setting forth parties’ trust to each other and good intention to negotiate may not reach the level of inside information. On the other hand, a term sheet or letter of intent that is signed with binding terms, exclusivity along with penalty clauses or after satisfaction of parties over a valuation may need to be treated differently.
Route to Delayed Disclosure
The regulatory framework permits postponement of public disclosure to protect legitimate company interests, provided there is no risk of misleading the public and information confidentiality is maintained during the delay period. Common applications include situations where disclosing ongoing negotiations could influence discussion outcomes. Importantly, only legitimate company interests, not third-party interests, are considered relevant. This safe harbour for delaying disclosure falls away if leaks occur.
In an M&A scenario, unless the public company is unaware of the potential transaction, the majority shareholder can inform the public company of such potential and can ask the public company to take a board decision to delay disclosure of the potential transaction.
Disclosure Responsibilities
It is principally the public company which is under the obligation to disclose inside information. In an M&A context, the selling majority shareholder is not under an obligation to notify the target public company about the potential transaction, but it is under an obligation to disclose the inside information on the Turkish public disclosure platform (KAP), thereby making it available not only to the company but also to the public. However, if majority shareholder notifies the target public company only, the company can resolve on delaying the disclosure of the inside information under the safe harbour rules by observing the required conditions described above.
The buyer is not under any obligation to disclose the inside information, but it may be under an obligation to make announcements in connection with the project in the relevant jurisdiction of incorporation and any jurisdiction where it is listed. In such case, such information will need to be required to be disclosed in Türkiye as well. Therefore, it would normally be suggested to enter into confidentiality agreements at the outset of discussions to be able to facilitate delaying disclosure.
Market Practice in Disclosures and Strategic Considerations
Though it may not qualify as an established market practice, there have been significant number of transactions where the seller makes a general disclosure referring to its intention to carry out a strategic review of its options in relation to its shareholding in the Turkish public company. This generic disclosure removes the pressure or questions in relation to whether there is any leakage or breach of disclosure obligation on the matter, and leaves room for the seller to keep silent up until any binding agreement is signed.
In order to fall and remain within the safe harbour, several steps should take place. As briefly mentioned above, the majority shareholder should inform the company about the potential project, the reasons for believing that premature disclosure would prejudice the company’s legitimate interests should be set out, and the reasons for delaying announcement and security measures taken to maintain confidentiality should be formally resolved by the management of the public company and the major shareholder. Every step should be taken to minimise the risk of a leak of the potential transaction, including use of code names, passwords and other security measures.
7. Squeeze-Out and Sell-Out Rights
Squeeze-out and sell-out rights are mechanisms under Turkish capital markets regulations that protect both controlling and minority shareholders when the controlling shareholding reaches near-complete. These rights are triggered when a controlling shareholder, holding shares either directly or indirectly, and acting alone or together with others, acquires at least 98% of the voting rights, or purchases additional shares after already reaching this threshold.
Although both rights are triggered simultaneously, their exercise follows a defined order: sell-out rights are exercised first by minority shareholders wishing to exit, and only after this period closes can the controlling shareholder proceed with a squeeze-out to acquire all remaining shares. Both rights apply equally to privileged and non-privileged shares.
Certain types of acquisitions do not give rise to these rights, such as shares obtained through bonus issues, rights issues where pre-emptive rights are maintained, or transfers through inheritance. In addition, neither right may be exercised within the first two years following the company’s initial listing.
Exercise Sequence and Timing
Once the controlling shareholder’s ownership of at least 98% of voting rights is publicly disclosed, the company must obtain an independent valuation report within one month and publish a summary of it. This report provides one of the main benchmarks for determining the price payable under both sell-out and squeeze-out procedures.
From the date of public disclosure of the valuation summary, minority shareholders have a mandatory two-month deadline in which to exercise their sell-out rights by submitting a written request to the public company. The sell-out must be for each shareholder’s entire holding of shares (i.e. partial disposals are not allowed).
Upon receipt of a valid sell-out request through the public company, the controlling shareholder must ensure that the full purchase price, calculated under the applicable rules, is made available to the company for payment. The company then completes the payment and the share transfer simultaneously, ensuring that minority shareholders exit fully.
Once the sell-out period has expired, the controlling shareholder may initiate the squeeze-out. This requires proof of sufficient funds or a bank guarantee covering the entire purchase amount. The company’s board then resolves on cancelling minority shareholders’ shares, applying to the CMB for approval of issuance certificate, and issuing new shares to the controlling shareholder.
This order of events ensures that minority shareholders have the first opportunity to sell their shares voluntarily before the controlling shareholder achieves complete ownership through the squeeze-out.
Pricing Mechanisms
For listed companies, the squeeze-out and sell-out price is the higher of the average market price over the relevant period (six months, or one month for Star Market companies) combined with the independent valuation report price, or the MTO price if the acquisition also leads to a change of management control.
Note that the MTO obligation is not triggered in a scenario where these rights arise at the same time as the acquisition of management control, which itself constitutes a trigger for squeeze out and sell-out. However, the pricing methodology applicable to MTO is still used to determine the highest price payable for squeeze-out and sell-out transactions.
8. Delisting
When squeeze-out rights are exercised in a listed company, a delisting application to Borsa Istanbul must be submitted at the same time as the application to the CMB for approval of the new share issuance. After certain procedures are completed, Borsa Istanbul reviews the application, issues a delisting decision, and permanently suspends trading in the company’s shares. Once delisted, the public company is deemed to be outside the scope of the capital markets law and regulations, and becomes private.
9. Key Takeaways
The concentrated ownership structure of Turkish public companies favours negotiated approaches over hostile takeovers, making early engagement with controlling shareholders essential for transaction success. Clients should expect that Turkish public M&A transactions require careful navigation of complex regulatory requirements in very early stages, particularly around MTO triggers, sell-out and squeeze-out rights as well as delisting and disclosure obligations. Understanding these is crucial for successfully navigating acquisitions of public companies. Among these, one of the most important ones is the MTO requirement which will trigger by acquiring the controlling shares, which therefore will require comprehensive assessment and acquisition financing considerations, unless an exception or exemption is available.
Getting to know disclosure rules in very early stages and throughout the transaction process is also strategically critical, and maintaining robust confidentiality protocols to preserve safe harbour protections during the negotiation phase is very important to avoid regulatory breaches and leakage of information, putting the whole transaction at risk.
Expertise and practical experience remain essential for achieving smooth and compliant public transactions in Türkiye. Given the significant increase in public companies and anticipated M&A activity, clients should be prepared for a more active and regulated environment requiring sophisticated legal and regulatory guidance throughout the transaction lifecycle.
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