In the matter of Chanel Ltd & Fasa S.à r.l., the High Court approved a cross-border merger in which FASA S.à r.l. (a Luxembourg company) (“FASA”) would be absorbed into Chanel Ltd (a UK company) (“Chanel”).
The merger was conditional on a demerger in Luxembourg first taking place. Under that demerger, around €2 billion of assets were to be transferred to FASA.
The court was satisfied that, at the point of approving the cross-border merger, everything possible had been done to achieve the demerger. It was also happy that Chanel, with shareholder assets of €3.5 billion, was in a very healthy state and that creditors would not be put at risk.
It therefore approved the merger, subject to the sole condition that the demerger complete.
To date, there has been some discussion over whether a UK court would be prepared to issue a pre-merger certificate, or to approve a cross-border merger, where one or more conditions to the merger have not been satisfied. This decision suggests the courts will be willing to do so, provided the parties can demonstrate that have taken all steps needed to satisfy that condition, other than implementing the cross-border merger itself.