Tender Offer Mechanics

Filing - Dissemination - Closing

Summary

Covers rules and other requirements for:

Filings
Dissemination
Disclosure
Closing

Filing on Commencement

Rule 14d-3(a)

On date of commencement, bidder must:

File Schedule TO with the SEC
Deliver copies to the subject company
and any other bidder
Give telephonic notices to exchanges / NASD

Dissemination on Commencement

Cash tender offers and exempt exchange offers

Rule 14d-4(a)

Can use summary publication and mailing
Can also use long-form publication

Registered exchange offers

Rule 14d-4(b)

File registration statement with pricing information
Deliver preliminary prospectus to security holders

Going private transactions

For going private transactions, additional requirements apply

For cash tender offers and exempt exchange offers

Long-form publication must be used
Per Rule 14d-4(a)

For registered exchange offers

Registration statement must first be effective
Only a §10(a) prospectus may be delivered
Per Rule 14d-4(b)

Roll-up Transactions

For roll-up transactions, additional requirements apply

Registration statement must first be effective
Only a §10(a) prospectus may be delivered
Per Rule 14d-4(b)

Means of Dissemination

Rule 14d-5

Bidder can request subject company assistance in disseminating materials

Bidder sends request per Rule 14d-5(e)
Also required to comply with Rule 14d-5(f)
Must deliver sufficient copies per Rule 14d-5(g)(1)
Pay costs per Rule 14d-5(g)(2)

Subject company must comply per Rule 14d-5(a)

Subject company can elect to either:

Mail the materials - Rule 14d-5(b)
Provide a shareholder list - Rule 14d-5(c)
Election cannot be changed
See Rule 14d-5(a)(3) and (a)(4)

Alternative methods can be used instead of mailing

Instruction

Subject company is excluded from liability

Rule 14d-5(d)

Bidder, at time of initial request, must elect whether to have subject company disseminate amendments

Election cannot be changed
Covers all material amendments
If bidder doesn't have target mail amendments it must have an alternative means to disseminate
E.g. DGCL §220(b)(1) - Books and Records
Note Rule 14e-5 in this context - Bidder needs to become a recordholder before commencement

Disclosure on Commencement

Rule 14d-6(a)

For cash tender offers and exempt exchange offers
generally satisfied by publication in a newspaper with national circulation

Proration

Rule 14d-8

Applies if a partial tender offer is oversubscribed

Tender offer is partial if for only a specified maximum

As compared to an offer for any and all or
all of the subject securities
e.g., a Dutch Auction tender offer

Subsequent Offering Period

Rule 14d-11

Follow-on period following completion of a tender offer

During which bidder may accept additional tenders of securities
Allows "holdouts" to still participate without having to wait until a back-end second-step merger
Can aid bidders that desire to acquire sufficient shares
to effect a short-form merger
Can create a "holdout" problem by encouraging security holders to postpone their tenders

Details

Must be for all outstanding securities
Bidder must offer same form and amount of consideration
as initial offer

No withdrawal rights are available

Rule 14d-7(a)(2)

If added to initial offer after commencement,
it's a material change

Thus can't be added later than five business days before expiration
Else an extension is required

Tombstone ad must disclose whether there will be a subsequent offering period

Rule 14d-6(a)(2)(i)

SEC release commentary

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