Supreme Court of Finland: Market price did not reliably demonstrate the redemption price for minority shares in Ahlstrom-Munksjö Oyj
The reliability of the market price formed in trading prior to the commencement of the arbitration proceedings had been undermined to such an extent that it could not as such be used as the basis for determining the redemption price.
On 24 October 2025, the Supreme Court of Finland (KKO) issued a significant precedent in corporate law (KKO 2025:94), in which the Supreme Court assessed the redemption of minority shares in Ahlstrom-Munksjö Oyj, a company listed on the Helsinki and Stockholm stock exchanges, and in particular the determination of the redemption price. Merilampi represented the minority shareholder in the matter.
In September 2020, a voluntary public tender offer was announced for the shares in Ahlstrom-Munksjö Oyj. The offer was made by a consortium formed by the principal shareholders, which owned 31.42 per cent of the shares in the target company, and a private equity fund. During the offer period, one member of the consortium also made a separate exchange offer to certain shareholders of the target company, following which the consortium's ownership increased to 68.18 per cent.
Although the offer period was almost three months, only shareholders representing 81 per cent of the shares, including the consortium, accepted the offer. Due to the low acceptance rate, the offeror initiated a subsequent offer period, during which the target company published, at the offeror's request, a notice convening an extraordinary general meeting. The notice proposed, inter alia, an extension of the board's share issue authorisation from ten to one hundred per cent and instructed the board to investigate relocating the registered office to another EU country. Ultimately, approximately 90.6 per cent of the shareholders accepted the tender offer, and the redemption proceedings were commenced on 19 March 2021.
Why was the tender offer price not a fair redemption price?
Pursuant to Section 7(3) of Chapter 18 of the Finnish Limited Liability Companies Act, the price offered in a public tender offer is deemed to be the redemption price unless there is specific reason to the contrary. In this case, specific reasons were established in the Arbitral Tribunal and the District Court, and the Supreme Court did not, despite the redeemer's request, re-examine their existence. The following specific reasons led to the tender offer price being set aside:
Exchange offer: The exchange offer implemented by a member of the consortium divided the shareholders into two groups with different positions regarding their expectations and risks. Some had the opportunity to continue indirectly as owners of the target company, whilst others did not. This divided the shareholders into two groups, particularly regarding the target company's future development and returns and the tax consequences.
Notice of general meeting: The notice convening an extraordinary general meeting published during the subsequent offer period could justifiably be perceived as coercive.
Low number of independent acceptances: Combined with the above, the consortium's significant ownership in the target company and the small proportion of acceptances of the tender offer independent of the redeemer constituted a specific reason for setting aside the price presumption.
With specific reasons being present, the redemption price was determined according to the fair price prevailing prior to the commencement of the arbitration proceedings. The question thereafter was whether the market price demonstrated the fair price of the share in this situation as well.
Reliability of market price – why does the stock exchange price not always demonstrate fair price?
In determining fair price, the starting point is generally the market price, which in the case of a listed company is based primarily on the target company's stock exchange price. During a tender offer, however, the target company's stock exchange price typically locks in at the level of the tender offer price.
When assessing the reliability of the market price, it must be determined whether the locking of the stock exchange price to the tender offer price is substantially due to factors other than those relating to the target company and the value of its shares. If this is the case, the stock exchange price may not necessarily demonstrate the fair price of the share. As a significant guideline concerning the standard of proof, the Supreme Court stated that particularly in situations where it has already been considered that there are specific reasons to deviate from the price presumption, the threshold for undermining the reliability of the share's market price is not particularly high.
In this case, the consortium behind the tender offer and the parties irrevocably committed to the tender offer had a significant toehold in the target company already at the time of the offer and particularly after the completion of the exchange offer (consortium 68.18 per cent and pension insurance companies 5.38 per cent). Due to the offeror's large toehold, the market did not expect a competing tender offer. This supported the conclusion that the stock exchange price was locked to the tender offer price due to factors unrelated to the target company and the value of its shares.
Despite the offeror's significant toehold, the redemption threshold was not reached. The target company timed, at the offeror's request, a notice of general meeting for the subsequent tender offer period, which anticipated an extension of the board's share issue authorisation such that the tender offer could go through without increasing the tender offer price. The Supreme Court held that particularly the notice of general meeting and the proposal concerning the share issue authorisation stated therein were likely to have influenced the acceptances of the tender offer and trading in the shares outside thereof.
In conclusion, the Supreme Court held that the relatively small number and slow progress of acceptances independent of the consortium, and particularly their timing to a significant extent in the period following the notice of general meeting, supported the conclusion that the locking of the stock exchange price to the tender offer price was not primarily due to the offer price being considered a fair price. Taking also into account the positive price development of the target company's peers, the Supreme Court held that the reliability of the market price formed in trading prior to the commencement of the arbitration proceedings had been undermined to such an extent that it could not as such be used as the basis for determining the redemption price
How are other valuation methods and expert opinions assessed?
Once the reliability of the market price had been undermined, other valuation methods could also be applied in the valuation. According to the Supreme Court's decision, the applicability of different valuation methods takes into account how extensively and consistently the method is used in a corresponding situation, i.e. in a situation involving the redemption of minority shares.
In its decision, the Supreme Court held that of the valuation methods, firstly the DCF analysis and, alongside this, the results obtained by the method based on the EBITDA multiple as well as peer group analysis and the method of previous corporate transactions were applicable. In contrast, the significance of the LBO analysis was, according to the Supreme Court's decision, clearly lesser, inter alia, because the method is typically used for other purposes.
Extensive valuation opinions prepared by several experts were presented in the matter. The Supreme Court stated that when assessing the reliability of the opinions, the expert's expertise and the justifiability of the method used and the input values can be taken into account. In addition, the Supreme Court took a position on, inter alia, the following factors affecting the valuation of the target company:
Valuation material: When determining the redemption price, factors prevailing at the valuation date can be taken into account, even if the reporting concerning them is completed after the commencement of the redemption proceedings. Information concerning the EBITDA at the valuation date could be taken into account regardless of the date of its publication, and it was not significant that the earnings data were based to a minor extent on the period following the commencement of the arbitration proceedings. Decisions made and measures implemented in the target company before the commencement of the arbitration proceedings as well as their future effects could in principle also be taken into account. The figures communicated by the redeemer to its potential financiers could thus also be taken into account as assessments corresponding to the redeemer's view at the time.
Factoring arrangement: It was not established in the matter that there was any established practice for treating factoring arrangements in yield-based valuation. The significant amount of sold receivables within the scope of the target company's factoring arrangement should not in this case be taken into account in the amount of net debt, because the amount within the scope of the arrangement could not materialise as the target company's liability and the target company had not recorded or reported the amount as debt or disclosed other liabilities relating thereto in the notes to the financial statements.
WACC percentage: A key parameter of the DCF analysis is the weighted average cost of capital (WACC), the increase of which leads to a lower valuation level and vice versa. It was considered to support the reliability of the calculation if the justifications for determining the WACC had been presented openly and in detail and could not be justifiably called into question. On the other hand, the calculation was deemed less reliable if the starting points leading to the selection of the data used in determining the WACC had not been disclosed in more detail.
The Supreme Court assessed the weight of the expert opinions presented on the basis of, inter alia, the factors described above and stated that the redemption price for shares in Ahlstrom-Munksjö Oyj is to be confirmed at EUR 21.
Significance of the decision for the Finnish tender offer market
The market price formed in public trading remains the starting point for valuation even in the case where the redemption price is not determined on the basis of the price presumption. Any party seeking to challenge the reliability of the market price must prove its claim. However, the standard of proof for undermining the reliability of the market price is not particularly high, especially when the price presumption has already been deviated from for a specific reason. This is a significant guideline from the perspective of minority protection.
The decision significantly strengthens the protection of minority shareholders and clarifies both the rules for tender offer proceedings and the principles of valuation of the redemption price of shares. Furthermore, the decision confirms the decision-making path for determining fair value in situations where there is reason to deviate from the price assumption.
