Release No. 33-5927

Release No. 34-14699

April 24, 1978

INTERPRETATIONS CONCERNING THE APPLICATION OF REGISTRATION REQUIREMENTS TO CERTAIN TENDER OFFERS AND THE APPLICATION OF TENDER OFFER PROVISIONS TO CERTAIN CASH-OPTION MERGERS

ACTION: Publication of staff interpretations.

SUMMARY: The Securities and Exchange Commission today authorized the issuance of this release reflecting the views of the Division of Corporation Finance with respect to two issues arising under the Williams Act: 1) whether disclosure by a bidder in certain cash tender offers about previous negotiations or agreements for a merger with and/or future intentions to merge with the subject company involves "gun jumping" and thus violates Section 5 of the Securities Act of 1933; and 2) whether the cash option features of certain statutory mergers involve a tender offer by the acquiring company. With respect to the first issue, the Division of Corporation Finance has withdrawn a position taken in a previous letter and has expressed its view in this release that disclosure by a bidder in a tender offer required by the Williams Act about previous negotiations or agreements with the subject company regarding a merger or future intentions to merge with the subject company does not involve "gun jumping." With respect to the second issue, the Division has expressed the view in this release that, while the issue is not free from doubt, the Division will not suggest a Williams Act filing on Schedule 14D-1 in connection with certain statutory mergers involving a cash option feature.

FOR FURTHER INFORMATION CONTACT: John Huber, Office of Disclosure Policy and Proceedings, Division of Corporate Finance, Securities and Exchange Commission, 500 North Capitol Street, Washington, D.C. 20549, 202/755-1750.

SUPPLEMENTARY INFORMATION: This release presents the views of the Division of Corporation Finance (the "Division") with respect to two issues which concern tender offers and statutory mergers. The first relates to the application of certain provisions of the Securities Act of 1933 (the "1933 Act") (17 U.S.C. 77a et seq.) ¹ and rules promulgated thereunder ² to certain disclosures required to be made by bidders in cash tender offers. The second concerns the application of the tender offer provisions of the Securities Exchange Act of 1934 (the "1934 Act") (15 U.S.C. 78a et seq., as amended by P.L. No. 94-29 (June 24, 1975)), commonly known as the Williams Act, ³ and Rule 14d-1, 17 CFR §240.14d-1 and Schedule 14D-1, 17 CFR §240.14d-100, promulgated thereunder ⁴ to certain statutory mergers.

In order to inform the public of the Divisions views on these matters, this release contains a general discussion of the issues, describes the fact situations involved and with respect to the first issue publishes a "no-action" letter recently issued by the Division which withdraws a much criticized position taken in a previous letter.

"GUN JUMPING" IN THE CONTEXT OF A CASH TENDER OFFER

The first issue is whether compliance with the Williams Act may involve "gun jumping" in violation of the 1933 Act in the context of a cash tender offer. This issue arises in the following fact pattern ("Situation A"):

The acquiring company and the acquired company discuss or agree in principle to a merger or enter into a plan of merger. After these discussions or after the negotiations of the material terms of the agreement of merger have been concluded, the acquiring company makes a cash tender offer for less than all of the equity securities of the acquired company. This tender offer may either have been the subject of discussions between the parties or may constitute a condition to the merger agreement. The shareholder vote on the merger agreement occurs subsequent to the tender offer. If the tender offer did not result in the purchase by the acquiring company of the requisite percentage of the outstanding shares of the acquired company, the merger agreement which is voted upon by the shareholders may include a provision for cash election rights. Under this provision, shareholders of the acquired company may elect to receive cash in lieu of the securities of the acquiring company, provided that the total number of shares for which cash is paid (including those shares acquired pursuant to the tender offer) does not exceed a specified percentage of the outstanding shares of the acquired company. In the event the cash option is exercised with respect to more than the specified percentage, cash is paid on a pro rata basis. The cash election option may be exercised by the shareholders during the time between the notice for the meeting and the vote on the merger. Shareholders who elect to receive cash are typically required to submit a Form of Election to the acquiring companys agent. The stock certificates accompany the Form of Election. As with the proxy on the merger, the election to receive cash in lieu of the acquiring companys securities may be withdrawn by an electing shareholder until shortly before the shareholders meeting. If the acquiring company is able to purchase the requisite percentage of the outstanding shares of the acquired company pursuant to the tender offer, the cash election rights alternative is normally not included in the merger.

The issue here is whether the acquiring companys disclosure in its tender offer materials of the negotiations with the acquired company and/or the merger agreement, including the material terms of the statutory merger contemplated subsequent to the tender offer, constitutes an "offer to sell" the securities of the acquiring company to be received by the acquired companys shareholders pursuant to the merger within the meaning of Section 2(3) of the 1933 Act and Rule 145(a) promulgated thereunder. A finding that such disclosure constitutes an "offer to sell" leads to the conclusion that the bidders tender offer violates Section 5(c) of the 1933 Act if at the time of the tender offer a registration statement for the acquiring companys securities to be exchanged in the merger has not been filed with the Commission.

This issue was addressed in a letter to the Bendix Corporation ("Bendix") from the Division (available November 30, 1976). That letter concerned a proposed merger of Ex-Cell-O Corporation ("Ex-Cell-O") into Bendix. After the agreement in principle was signed but before the distribution of proxy statements and the vote by shareholders on the merger, Bendix proposed to make a tender offer for up to 40% of the outstanding shares of Ex-Cell-O common stock at $30 per share. The tender offer materials to be delivered to the Ex-Cell-O shareholders would contain a brief description of the principal terms of the merger, ⁵ including the basis of exchange and a statement that after Bendix and Ex-Cell-O entered into a definitive merger agreement proxy statements concerning the merger would be distributed to the shareholders of both companies. In its letter to Bendix, the Division took the position that the Ex-Cell-O shareholders when confronted with the Bendix tender offer would be making an investment decision to accept either the cash offered in the tender offer or to take the Bendix stock later. On this basis, the Division was unable to conclude that the tender offer did not constitute an "offer to sell" the Bendix common stock to be exchanged in the subsequent merger within the meaning of Section 2(3) of the 1933 Act and Rule 145 thereunder. The implication from the Bendix letter is that, unless the bidder/acquiring company has filed a registration statement at the time the cash tender offer commences, the disclosure in the cash tender offer of the material terms of the subsequent merger violates Section 5(c) of the 1933 Act.

On August 31, 1977, Schedule 14D-1 and the amendments to Rule 14d-1 implementing the filing and disclosure requirements of that Schedule became effective. The various items of Schedule 14D-1 ⁶ highlighted the disclosure required to be made by a bidder with respect to Situation A in a tender offer subject to Section 14(d)(1) of the 1934 Act and Rule 14d-1 thereunder.

One of the new disclosure requirements is Item 3(b) which requires a bidder to describe any contacts, negotiations or transactions which have occurred since the commencement of the subject companys third full fiscal year preceding the filing date of the Schedule between the bidder and the subject company concerning: a merger, consolidation or acquisition, a tender offer or other acquisition of securities; an election of directors; or a sale or other transfer of a material amount of assets. This requirement is intended to provide security holders with more meaningful disclosure concerning certain events occurring prior to the tender offer which can have a material effect on a shareholders investment decision concerning the tender offer.

Item 5(a) of Schedule 14D-1 parallels the former requirement of Item 4 in Schedule 13D by requiring a bidder to describe any plan or proposal it has which relates to or would result in an extraordinary corporate transaction involving the subject company or any of its subsidiaries such as a merger, reorganization, or liquidation. ⁷ The disclosure required by Item 5(a) of Schedule 14D-1 is consistent with and implements the legislative history ⁸ of the Williams Act. As one commentator has observed:

Disclosure of plans and proposals was probably the most controversial part of the Williams Bill that passed, but it was diversely and severely opposed. For Congress to reject this nearly unanimous criticism, and to depart from a strong tradition _{of nondisclosure}, it must have been deeply convinced of the importance of disclosing plans. ⁹

Thus, Items 3(b) and 5(a) of Schedule 14D-1 recognize that a tender offer may not be an isolated event in the corporate affairs of the bidder and the subject company and that a shareholder should be furnished with a continuum of disclosure with respect to certain past contacts, negotiations or transactions between the bidder and the subject company as well as the bidders present intentions concerning its plans or proposals with respect to the subject company after the tender offer.

Additionally, Item 7 of Schedule 14D-1 which represents an expansion of a similar requirement in Schedule 13D requires the bidder to describe any contract, arrangement, understanding or relationship between the bidder and any person with respect to any securities of the subject company. The disclosure required by Item 7 includes a description of the material terms of any such contract, arrangement, understanding or relationship.

Not only does Rule 14d-1(a) require the information contained in Items 3(b), 5(a) and 7 to be filed with the Commission in Schedule 14D-1, but Rule 14d-1(c)(4) requires these items or a fair and adequate summary thereof to be included in the tender offer which is published, sent or given to the subject companys security holders. Accordingly, disclosure by a bidder of negotiations with the subject company, and/or an agreement in principle or plan of merger entered into with the subject company is required by Section 14(d)(1) of the Exchange Act and the rules and Schedule 14D-1 promulgated thereunder. Indeed, the omission of such disclosure in the Schedule 14D-1 filed with the Commission or the tender offer materials communicated to security holders would constitute a violation of the provisions of the Williams Act.

The disclosure philosophy of the Williams Act is juxtaposed with the "gun jumping" doctrine under the 1933 Act. That doctrine was designed to prevent an issuer from conditioning the market by arousing investor interest before a registration statement covering the securities proposed to be offered has been filed. ¹⁰

In the Divisions view, such a doctrine is inappropriate to apply to a cash tender offer subject to Section 14(d) in which the bidder is seeking to buy the securities of the subject companys security holders. The bidders concern is purchasing the subject companys securities for cash, not priming the market for a subsequent registered offering of securities. Regardless of the bidders intent, Schedule 14D-1 for compelling policy reasons reflected by the Williams Act requires such information in order to provide full disclosure to investors confronted with an investment decision in the context of a tender offer. In the Divisions opinion, to apply the "gun jumping" doctrine to Situation A would not further the policies underlying the 1933 Act and would be inconsistent with the intention of Schedule 14D-1 to require disclosure of information available to the bidder regarding its previous contacts, arrangements or agreements and future plans and proposals with respect to the subject company. ¹¹

In light of the above, the Division believes on reconsideration that the position it took in the Bendix letter was not necessary for the protection of investors and has withdrawn that letter. In the Divisions view, the disclosure required by the Williams Act to be made by a bidder in a cash tender offer concerning the subsequent statutory merger in Situation A should not be deemed to constitute an "offer to sell" the bidders securities to be exchanged in such merger and should not therefore require the filing of a registration statement pursuant to the 1933 Act with respect to such securities prior to the commencement of such tender offer. Such disclosure should be viewed under the 1933 Act as are other written communications or published statements permitted prior to the filing of a registration statement. ¹²

The Divisions position is, however, limited to the disclosure permitted by Rule 145(b) and to the disclosure required to be made by Section 14(d)(1) of the 1934 Act, Schedule 14D-1 promulgated thereunder and Section 14(e) of the 1934 Act. Depending upon the circumstances, statements which are not required by the Williams Act may constitute and "offer to sell" the securities to be exchanged in the subsequent merger and, in the absence of a registration statement filed with the Commission at the commencement of the tender offer, may constitute a violation of Section 5 of the 1933 Act. For example, a bidder should not issue press releases or grant interviews to the press which discuss a possible merger under circumstances where it appears that the decisions of security holders who will be voting on the merger may be unduly influenced without the benefit of the disclosures in a registration statement.

In order to announce the Divisions position in this matter, the Commission authorized the Division to issue the following letter. ¹³

Dear Sirs:

This is in response to your letter of March 23, 1978 as supplemented by telephone conversations with the staff and your letter of April 3, 1978. The letter concerns the applicability of certain provisions of the Securities Act of 1933 (the "1933 Act") to the tender offers proposed to be made by Company X ("X") for the common stock of Company Y ("Y") and for the ________% Convertible Bonds due 1983 (the "Y Bonds") of Company Z, a wholly-owned subsidiary of Y. Since your letter of April 3, 1978, you have advised the staff that X no longer contemplates making a tender offer for the Y Bonds.

We understand the material facts, as more fully set forth in your letters, to be as follows. On March 2, 1978, X and Y announced in a joint press release that they had agreed in principle to a merger transaction by which Y would become a wholly-owned subsidiary of X. In the merger, X will issue one share of X Preferred Stock having a liquidating value of $______________ per share (the "X Preferred") for each outstanding share of common stock of Y ("Y Common").

The parties are presently negotiating a definitive agreement of merger (the "Agreement of Merger") which will be subject, among other things, to the approval of both boards of directors and to the approval of the shareholders of Y.

X and Y contemplate that the Agreement of Merger will contain provisions pursuant to which holders of outstanding Y Common may elect to receive at the completion of the merger $______________ cash per share of Y Common, in lieu of X Preferred (the "Cash Election Rights"). It is proposed that Y shareholders will be entitled until shortly before the Y shareholders meeting to exercise their Cash Election Rights. The total number of Y Common for which cash is paid pursuant to the tender offer for Y Common, described below, and the exercise of Cash Election Rights together with any shares of Y Common subject to the rights of dissenting shareholders under applicable state law shall not exceed 49% of the outstanding shares of Y common.

If the Cash Election Rights are exercised with respect to more than 49% of the outstanding shares of Y Common (an "Oversubscription"), Xs cash purchases of such shares will be made on a pro rata basis. Because of adverse tax consequences to Y shareholders exercising Cash Election Rights in an Oversubscription, the Agreement of Merger will also provide that a Y shareholder may make the exercise of Cash Election Rights conditional upon receipt of cash payment for all shares held by such shareholder as to which Cash Election Rights are exercised rather than only part (a "Conditional Election").

In the event of an Oversubscription, all Conditional Elections will be deemed to be withdrawn and proration will be among the shares covered by the remaining Cash Election Rights. If the withdrawal of Conditional Elections reduces the number of shares as to which Cash Election reduces the number of shares as to which Cash Election Rights have been exercised unconditionally below the 49% limitation which may be acquired for cash, Xs exchange agent, to the extent feasible, may accept all, but not less than all, of the Y Common from each person making a Conditional Election up to such maximum number of shares, by selecting by lot from among all persons making such Conditional Elections until such number is reached.

After negotiations on the material terms of the Agreement of Merger but before the meeting of X shareholders for the purpose of voting on the merger, X contemplates making a tender offer, either directly or through a wholly-owned subsidiary for approximately 45% of the outstanding shares of Y Common at $________________ per share net to the selling shareholder in cash (the "Tender Offer"). If the Tender Offer results in Xs acquisition of the number of shares of Y Common sought therein, the Cash Election Rights alternative will not be included in the merger. If X is unable to purchase the number of shares of Y Common sought pursuant to the Tender Offer, the Cash Election rights alternative might be included in the merger.

The Schedule 14D-1, 17 CFR §240.14d-100, filed with the Commission and the Offer to Purchase published, sent or given to X shareholders pursuant to Rule 14d-1, 17 CFR §240.14d-1, promulgated under Section 14(d)(1) of the Securities Exchange Act of 1934 (the "1934 Act") would contain disclosure designed to permit Y Common shareholders to make an informed investment decision regarding Xs tender offer for Y Common. The Schedule 14D-1 and the Offer to Purchase would include only the information required by Schedule 14D-1 and such other material information concerning X, Y or the merger which would be necessary to permit an informed decision by a shareholder to accept or reject the invitation to tender.

You represent that Xs purpose in making the Tender Offer is not to arouse investor interest in the X Preferred prior to the filing of a registration statement pertaining thereto or to induce Y Common shareholders to await the offer and sale of such securities; but rather, Xs purpose would be to solicit Y Common shareholders to accept the offer of cash pursuant to the Tender Offer and not to await the possible offer of X Preferred in the future.

It is your belief that should X make the Tender Offer, Y Common shareholders would be faced with the same considerations facing any shareholder contemplating a tender offer, viz. whether to tender, sell in the marketplace or await future developments.

After consideration of the facts presented, as more fully set forth in your letters, but without necessarily agreeing with all the reasoning contained therein, the Division concurs in your view that the proposed Tender Offer would not constitute an "offer to sell" X Preferred within the meaning of Sections 2(3) and 5 of the 1933 Act; provided, however, that information disclosed in the Schedule 14D-1, the Offer to Purchase and any amendments or changes thereto in connection with the Tender Offer complies with the disclosure requirements of Sections 14(d) of the 1934 Act, Rule 14d-1 and Schedule 14D-1 promulgated thereunder, and Section 14(e) of the 1934 Act. Consequently, the Division will not recommend enforcement action with respect to Section 5 of the 1934 Act or Rule 145, 17 CFR §240.145, promulgated thereunder in connection with the Tender Offer if at the time the Tender Offer is first published, sent or given to security holders by X, a registration statement has not been filed with the Commission by X with respect to the X Preferred.

Because this position is based upon representations made to the Division in your letters, it should be noted that any different facts or conditions might require a different conclusion. Furthermore, this letter only expresses the Divisions position on enforcement action and does not purport to express any legal conclusion on the questions presented.

Sincerely,

TENDER OFFERS IN THE CONTEXT OF

CERTAIN CASH OPTION MERGERS

The second issue involves the relationship between tender offers and statutory mergers which contain a cash option election. The issue arises in the following pattern ("Situation B"):

The acquiring company and the acquired company enter into an agreement of merger or a plan of merger which is approved by the respective boards of directors and submitted to the acquired companys shareholders for a vote. One of the provisions of the merger agreement is a cash election rights alternative under which a shareholder may elect to receive cash in lieu of the securities of the acquiring company. This alternative is conditioned upon a specified percentage of the outstanding securities of the acquired company. If the cash option is exercised with respect to a greater percentage than that specified, cash is paid on a pro rata basis. The cash election option may be exercised by the shareholders during the time between the notice for the meeting and the vote on the merger. As with the proxy on the merger, the election to receive cash in lieu of the acquiring companys securities may be withdrawn by the electing shareholder until shortly before the shareholders meeting. Shareholders who elect to receive cash are typically required to submit a Form of Election to the acquiring companys agent. The stock certificates or a guarantee of delivery of such certificates accompany the Form of Election.

The specific issue is whether the cash option feature which is provided to a shareholder of the acquired company during the time provided for the vote on the merger agreement constitutes a tender offer within the meaning of Sections 14(d) and 14(e) of the 1934 Act. ¹⁴ While the matter is not free from doubt, when a statutory merger contains a cash option feature as described in Situation B, the Division will not take the position that a tender offer is involved and will not suggest that a Williams Act filing on Schedule 14D-1 be made. This position is predicated, in part, on the Divisions view that the shareholders election to receive cash or securities of the acquiring company as consideration for the shares to be surrendered is part of the shareholders investment decision whether to vote for or against the merger proposal, since the election occurs during the same time period that the shareholder votes on the merger proposal. It should be noted that the Divisions position is limited to Situation B and to the cash option feature of Situation A to the extent it comports with Situation B. The Division has expressed no view with respect to the application of the Williams Act to cash option statutory mergers consisting of different facts including those in which the timing of the cash election feature varies in any degree to that set forth in Situation B.

By the Commission.

George A. Fitzsimmons

Secretary

¹ Section 2(3) of the 1933 Act provides in pertinent part:

The term "offer to sell," "offer of sale," or "offer" shall include every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.

Section 5(c) of the 1933 Act provides in pertinent part:

It should be unlawful for any person... to offer to sell or offer to buy through the use or medium of any prospectus or otherwise any security, unless a registration statement has been filed as to such security....

It is clear from Sections 2(3) and 5 of the 1933 Act that no offer or sale of a security to be registered can be made before the filing of a registration statement. The issue arising prior to the filing of a registration statement is determining what constitutes an offer.

² Rule 135, 17 CFR §230.135, sets forth communications to investors which shall not be deemed offerings of securities. Rule 145(a)(2), 17 CFR §240.145(a)(2), promulgated under the 1933 Act provides in pertinent part:

An "offer," "offer to sell," offer for sale or "sale" shall be deemed to be involved within the meaning of section 2(3) of the Act, so far as the security holders of a corporation... are concerned where, pursuant to statutory provisions of the jurisdiction under which such corporation... is organized, or pursuant to provisions contained in its certificate of incorporation or similar controlling instruments, or otherwise there is submitted for the vote or consent of such security holders a plan or agreement for... _A statutory merger of consolidation... in which securities of such corporation... held by such security holders will become or be exchanged for securities of any other person,...;

The effect of Rule 145(a) is to require registration for the securities to be issued in connection with the transaction specified unless an exemption from registration is available. See Release No. 33-5316, 37 FR 23631 (November 7, 1972).
This Division is of the view that whether the grant of the Cash Election Rights should be considered a discrete transaction, separate from the related merger, and therefore a tender offer within the contemplation of Rule 10b-13, is not free from doubt.

However, because it has been of the view that the consummation of such cash option mergers does not appear to result in the type of abuses at which Rule 10b-13 is directed, the Division of Market Regulation has stated in these letters that it would not recommend that the Commission take enforcement action under Rule 10b-13 with respect to the consummation of such mergers. See, e.g., Letter to Thomas A. Burton, Esq. from the Division of Market Regulation, re: National Distillers Corporation (January 3, 1978).

³ The Williams Act Amendments to the 1934 Act enacted in 1968. P.L. 90-439, 82 Stat. 454 (July 29, 1968), and amended in 1970, P.L. 91-567, 84 Stat. 1497 (December 22, 1970), provided, as among other things, for federal regulation of tender offers. Section 14(d) of the 1934 Act is applicable to a class of equity securities which is registered pursuant to Section 12 of the 1934 Act or which would have been required to be registered pursuant to that Section except for a specific statutory exemption for insurance companies or which has been issued by closed-end investment company registered under the Investment Company Act of 1940. Generally, Section 14(d) makes it unlawful for any person (or group of persons) to make a tender offer for or request or invitation for tenders of such securities which, upon consummation, would result in that person being the direct or indirect beneficial owner of more than 5 percent of such class of securities unless at the time the tender offer is first published, sent or given to security holders that person has filed with the Commission a statement containing such of the information specified in Section 13(d) of the 1934 Act and such additional information as the Commission may by rules and regulations prescribe as necessary or appropriate in the public interest or for the protection of investors. Among other things, Section 14(d) also contains regulatory provisions relating to shareholders withdrawal rights and their pro rata acceptance rights, as well as the bidders obligation to treat all tendering shareholders equally with respect to the consideration offered. Section 14(d)(4) requires that any solicitation or recommendation to security holders to accept or reject the tender offer be made in accordance with rules adopted by the Commission. Section 14(e), which is applicable to all tender offers and to any solicitation or recommendation related thereto, makes it unlawful for any person to make any untrue statement of a material fact or to omit any material fact necessary to make the statements made not misleading or to engage in any fraudulent, deceptive, or manipulative acts or practices in connection with any tender offer or any solicitation or recommendation related thereto.

⁴ Release No. 34-13787, 42 FR 38341 (July 21, 1977).

⁵ The terms of the proposed merger contemplated: the conversion of each share of Ex-Cell-O common stock into 3/4 of a share of Bendix common stock; and a cash option to the Ex-Cell-O shareholders. The cash option would be included in the merger agreement only if Bendix acquired less than 40% of the outstanding common stock of Ex-Cell-O pursuant to its tender offer and would be limited to the acquisition for cash of 40% (including those shares acquired in the tender offer) of the outstanding common stock of Ex-Cell-O.

⁶ Although Schedule 14D-1 retained much of the substance of Schedule 13D, 17 CFR §240.13d-100, which had previously been required for filing pursuant to Section 14(d)(1) of the 1934 Act, certain items were significantly modified and new items were included. See Release no. 34-13787, 42 FR 38341 (July 21, 1977).

⁷ The examples contained in Item 5(a) are not intended to be exclusive but rather are intended to furnish guidance as to the type of extraordinary corporate transaction which requires disclosure. Id. at 38345.

⁸See generally Hearings on S.510 before the Sub-comm. on Securities of the Senate Comm. on Banking and Currency, 90th Cong. 1st Sess. 126-50 (1967).

⁹ Bromberg, The Securities Law of Tender Offers, 15 N.Y.L.F. 462, 501 (1969) (footnote omitted).

¹⁰See Diskin v. Lomasney & Co., 452 F 2d 871 (2d Cir. 1971); SEC v. Commercial Investment & Development Corp. 373 F. Supp. 1153 (S.D. Fla. 1974); and SEC v. Arvida Corp., 169 F. Supp. 211 (S.D.N.Y. 1958).

¹¹ This position is consistent with a recent judicial opinion and the views expressed by the Commission in a letter amicus curiae concerning that litigation. Humana Inc. v. American Medicorp, Inc. Trans World Airlines, Inc. and Hilton International Co., 77 Civ. 4809 (S.D.N.Y. January 7, 1978) (Transcript of bench opinion at 162 et seq.) and Letter to Judge Lasker from the Commission, dated January 6, 1978, re: Humana Inc. v. American Medicorp, Inc., Trans World Airlines, Inc. and Hilton International Co. 77 Civ. 4809 (M.E.L.).

¹² In the context of reclassifications, mergers, consolidations and transfers of assets, these statements are governed by Rule 145(b), 17 CFR §230.145(b), and in other situations by Rule 135. Rule 145(b) provides that written communications or other published statements which contain no more than the information specified in Rule 145(b) shall not be deemed a prospectus for purposes of Section 2(10) of the 1933 Act and shall not be deemed an "offer for sale" of the security involved for purposes of Section 5 of the 1933 Act. Specifically, statements made with respect to Situation A by or on behalf of the acquiring company prior to the filing of the Schedule 14D-1 and the time the tender offer is first published, sent or given to security holders must be limited to the provisions of Rule 145(b).

¹³ The text of the letter has been edited to delete identifying data and other information not germane to the publication of the Divisions position.

¹⁴ A related issue arises under Rule 10b-13 (17 CFR §240.10b-13) under the 1934 Act. In a number of letters concerning cash option mergers of the type presented in Situation B, the Division of Market Regulation has stated: