Mini Tender Offer Rules

Mini Tender Offer Rules

3 These factors include whether the transaction: (1) involves active and widespread solicitation of securityholders; (2) includes a call for a substantial percentage of the issuer`s shares; (3) offers a premium in relation to the market price; (4) fixed and inflexible conditions; 5. is subject to the offer of a number of securities; (6) is open for a limited period; (7) exerts pressure on securityholders to react; and (8) would result in the offeror acquiring a significant amount of securities. SEC v. Carter Hawley Hale Stores, Inc., 760 F.2d 945 (9th Cir. 1985); Wellman v. Dickinson, 475 F.Supp. 783 (N.D.N.Y. 1979). See, however, Hanson Trust plc v SCM Corp., 774 F.2d 47 (2d Cir. 1985) (if sellers need protection under the takeover bid rules). If the market price of the share falls below the mini-bid price before the bid closes, the bidder may cancel the bid or reduce the bid price. While a price change allows investors to withdraw their shares, this process is not automatic.

The responsibility rests with the investor, as it is the investor (and not the bidder or broker) who is responsible for acquiring the revised offer information and withdrawing their shares in a timely manner. [4] (1) For issuer take-over bids where the consideration offered consists solely of cash and/or securities exempt from registration under Section 3 of the Securities Act of 1933 (15 U.S.C. 77c): Manulife issued a press release in February. 3 Warn investors that the Company is “in no way affiliated with Obatan and does not recommend or endorse acceptance of this unsolicited offer.” The boards of target companies such as Adobe Systems, Fastenal, MetLife, AMD, Ford and Kimberly-Clark have attempted to counter mini-tenders by making recommendations to reject such bids. [5] [6] [7] [8] [9] Brian Lawler of The Motley Fool advises investors to avoid takeover bids. [4] The offer is usually made by an external party who may not have management`s consent to make the offer. In this sense, a mini-takeover bid can be considered as a method of carrying out a hostile takeover. The tender documents for mini-tenders are often very short and contain very little information. Often, however, these mini-take-over bids are made at a price below the current market price.26 Often, however, this fact is not disclosed either in the offering documents or in any disclosure ultimately received by securityholders. This lack of disclosure can mislead securityholders, as most takeover bids, especially third-party bids, have always been made at prices that are at current market prices. Many investors could reasonably assume that a mini-tender offer also includes a premium to the market price.

However, due to the lack of disclosure to shareholders, it is often difficult for shareholders to determine the actual price paid in the offer and whether it is below the market price. I wrote down the proposal – $14.40 per share in cash – and searched online for the current price, which was nearly $20. Reading further, I saw that the offer document revealed that the price was about 27% lower than the market price of the stock. (2) An issuer or affiliate bidding for the issuer shall permit the revocation of securities deposited pursuant to the issuer`s takeover bid (1) Rule 14e-1(c) of the SEC requires offerors to pay for securities deposited without delay. Notwithstanding the granting of an exemption from one or more of the applicable Canadian regulatory provisions that impose requirements that would otherwise be required in this section, the issuer`s take-over bid may be made in accordance with the requirements of this section if the Commission determines, by decision, that the applicable Canadian regulatory requirements are adequate to protect the interests of investors. In determining whether our take-over bid rules apply to a particular takeover bid program, the preliminary question is whether the transaction constitutes a “takeover bid” within the meaning of the Williams Act.2 Although the term “takeover bid” has never been defined in any statutory provisions or rules, Courts have generally used an eight-factor test to determine whether a particular takeover bid program constitutes a takeover bid.3 It is not necessary to: that all eight factors will be present to conclude that the takeover program is a takeover bid.4 Mini-takeover bids and limited partner offers are takeover bids subject to our rules. In a mini-tender offer, the offeror makes an offer directly to the shareholders of an issuer to purchase a small number or percentage (less than five per cent of the total outstanding shares) of an issuer`s securities on a given date, often at a price below the current market price. The offer also includes a commitment to pay for the shares tendered within a certain period of time.1 If the offeror receives contributed shares, he resells the shares on the open market, pays the offering shareholder and retains the difference as a profit. Depending on the details of the proposed mini-offer, the purchaser of the shares may offer cash or a combination of cash and another security. In many cases, “exchange offers” are used, where the buyer offers to exchange other shares for the shares requested as part of the mini-offer. One of the risks that apply to this situation is that the shareholder who accepts the mini-offer may not assess whether the securities received in connection with this transaction are sufficiently liquid to be useful to him. Some mini-offers were made at a price equal to or slightly higher than the market price of the security.

The offer is then extended again and again until the market price exceeds the offer price. In principle, these offers do not have a right of withdrawal. The bidder then acquires the shares below the market price. If the bidder intended never to purchase the shares unless the market price exceeded the offer price and did not disclose that intent, we believe this would be a “fraudulent, deceptive or manipulative practice” within the meaning of section 14(e).32 As noted above, we believe securityholders need better and clearer information in mini-take-over bids. In order to avoid “fraudulent, deceptive or manipulative practices” within the meaning of Section 14(e), we recommend that bidders in mini-tender offers consider the following when preparing the information to be provided in tender offer documents made available to securityholders.31 (i) at any time during the period during which such tender offer remains open; We have seen other situations where a bidder does not clearly indicate that certain fees or expenses will be deducted from the bid price. After deducting the amount of the fee, the offer price is often lower than the market price. These fees are often disclosed only in the fine print on documents that securityholders return to the offeror to accept the offeror, but not in the disclosure document itself.29 We believe that these disclosure practices may, in certain circumstances, constitute “fraudulent, deceptive or manipulative practices” within the meaning of paragraph 14(e). Bidders generally do not characterize their bids as mini-tenders, perhaps because of their dubious reputation. L.P. recommends that you read the offer document carefully and check with the bidder, your broker or financial advisor to see if you have one. If the bidder claims less than 5% of the company`s shares, L.P. says, “You are dealing with a mini-takeover bid, and you should proceed with caution.

To avoid misleading investors,46 we believe bidders should disclose the specific risks and conflicts of interest associated with limited partnership takeover bids. Spot offers are not always covered by our stacking rules,47 and partial offers generally do not trigger the foreclosure rule.48 However, Commission services often rely on these rules to assess the appropriateness of disclosure to limited partners when reviewing and commenting. As noted in the 1991 publication on the adoption of the limited partnership disclosure rules, these provisions must be considered and applied to a transaction that is not a roll-up within the meaning of the rules, but raises the same concerns as a roll-up in order to comply with anti-fraud regulations.49 Since bidders must not violate the anti-fraud rules, We believe that all takeover bids for limited partnerships are consistent with these should consider disclosures. whether it is subject to Rule 14D or only Rule 14E, as is the case with mini-take-over bids.50 In most cases, the price offered in a limited partnership bid is significantly lower than the original purchase price. It may also be lower than recent valuations of the partnership`s assets. A take-over bid may be the only way for limited partners to sell their shares, as the markets for many limited partnership shares are generally illiquid. Even where markets exist, limited partner shares are generally traded at a significant discount to their estimated value. (C) The right of withdrawal is only suspended during the counting process and is reactivated immediately afterwards, unless it ends with the acceptance of the guarantees provided. (C) the issuer or affiliate offers a subsequent offer period after the end of the initial offer period; Rule 13e-4.17, enacted under Section 13(e) of the Exchange Act, applies to all issuer takeover bids for its equity securities if the issuer has a class of equity securities registered under section 12 or if the issuer files periodic reports in accordance with section 15(d) of the Exchange Act.18 Rule 13e-4 also applies to an affiliate`s bid for the securities of the issuer, if the takeover bid does not fall within the scope of Article 14(d).