Tender Offers and the Sale of Control: an Analogue to Determine the Validity of Target Management Defensive Measures
Total Page:16
File Type:pdf, Size:1020Kb
Load more
Recommended publications
-
Initial Public Offerings
November 2017 Initial Public Offerings An Issuer’s Guide (US Edition) Contents INTRODUCTION 1 What Are the Potential Benefits of Conducting an IPO? 1 What Are the Potential Costs and Other Potential Downsides of Conducting an IPO? 1 Is Your Company Ready for an IPO? 2 GETTING READY 3 Are Changes Needed in the Company’s Capital Structure or Relationships with Its Key Stockholders or Other Related Parties? 3 What Is the Right Corporate Governance Structure for the Company Post-IPO? 5 Are the Company’s Existing Financial Statements Suitable? 6 Are the Company’s Pre-IPO Equity Awards Problematic? 6 How Should Investor Relations Be Handled? 7 Which Securities Exchange to List On? 8 OFFER STRUCTURE 9 Offer Size 9 Primary vs. Secondary Shares 9 Allocation—Institutional vs. Retail 9 KEY DOCUMENTS 11 Registration Statement 11 Form 8-A – Exchange Act Registration Statement 19 Underwriting Agreement 20 Lock-Up Agreements 21 Legal Opinions and Negative Assurance Letters 22 Comfort Letters 22 Engagement Letter with the Underwriters 23 KEY PARTIES 24 Issuer 24 Selling Stockholders 24 Management of the Issuer 24 Auditors 24 Underwriters 24 Legal Advisers 25 Other Parties 25 i Initial Public Offerings THE IPO PROCESS 26 Organizational or “Kick-Off” Meeting 26 The Due Diligence Review 26 Drafting Responsibility and Drafting Sessions 27 Filing with the SEC, FINRA, a Securities Exchange and the State Securities Commissions 27 SEC Review 29 Book-Building and Roadshow 30 Price Determination 30 Allocation and Settlement or Closing 31 Publicity Considerations -
The New Law of Squeeze-Out Mergers
Washington University Law Review Volume 62 Issue 3 1984 The New Law of Squeeze-Out Mergers Marc I. Steinberg University of Maryland Evalyn N. Lindahl Emory University School of Law Follow this and additional works at: https://openscholarship.wustl.edu/law_lawreview Part of the Law Commons Recommended Citation Marc I. Steinberg and Evalyn N. Lindahl, The New Law of Squeeze-Out Mergers, 62 WASH. U. L. Q. 351 (1984). Available at: https://openscholarship.wustl.edu/law_lawreview/vol62/iss3/2 This Article is brought to you for free and open access by the Law School at Washington University Open Scholarship. It has been accepted for inclusion in Washington University Law Review by an authorized administrator of Washington University Open Scholarship. For more information, please contact [email protected]. Washington University Law Quarterly VOLUME 62 NUMBER 3 FALL 1984 THE NEW LAW OF SQUEEZE-OUT MERGERS MARC I. STEINBERG* & EVALYN N. LINDAHL** CONTENTS Page I. INTRODUCTION .......................................... 352 II. PRIOR DELAWARE CASE LAW ............................ 355 A. Singer and Its Progeny.............................. 357 B. Reaction of Other States ............................ 360 III. WEINBERGER V UOP, INc.-AN OVERVIEW ............ 361 4. Background ......................................... 362 B. The Delaware Supreme Court's Decision ............. 364 IV. FAIR DEALING UNDER WEINBERGER .................... 366 A. Presence of Independent Negotiating Committee ..... 367 B. Use of Majority of Minority Vote .................... 371 C Relation of Procedural Safeguards to Substantive Fairness ............................................. 373 V. FAIR VALUE UNDER THE APPRAISAL STATUTE .......... 376 A. Elements of Future Value ............................ 379 B. Availability of Injunctive Relief ...................... 381 C. Two-Tier Offers ..................................... 384 © 1984 by Marc I. Steinberg and Evalyn N. Lindahl. All rights reserved. -
Frozen Charters
Frozen Charters Scott Hirst* In 2012, the New York Stock Exchange changed its policies to prevent brokersfrom voting shares on corporate governance proposals when they have not received instructions from beneficial owners. Although the change was intended to protect investors and improve corporate governance, it has had the opposite effect: a significant number of U.S. public companies are no longer able to amend important parts of their corporate charters, despite the support of their boards of directors and overwhelming majorities of shareholders.Their charters arefrozen. This Article provides the first empirical and policy analysis of the broker voting change and its significant unintended consequences. I provide empirical evidence that the broker voting change has resulted in the failure of more than fifty charter amendments at U.S. public companies, despite board approvaland overwhelming shareholder support, and that hundreds more companies have frozen charters as a result of the change. The rule change has also made it more difficult to amend corporate bylaws and given some insiders a de-facto veto in proxy voting contests. These costs substantially outweigh the negligible benefits of the broker voting change. I compare a number of solutions to address these problems and identify several that would be preferable to the current approach. Introduction ............................................................................................ 93 I. Charter Amendments and Broker Voting ............................................. 99 A. Amending Corporate Charters................................................. 99 B . B roker Voting .............................................................................. 102 t Lecturer on Law, Harvard Law School; Associate Director, Harvard Law School Program on Corporate Governance and Harvard Law School Program on Institutional Investors. An earlier version of this article was part of a dissertation submitted in partial fulfillment for the degree of Doctor of Juridical Science at Harvard Law School. -
Information to Users
INFORMATION TO USERS The most advanced technology has been used to photograph and reproduce this manuscript from the microfilm master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in typewriter face, while others may be from any type of computer printer. The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleedthrough, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand corner and continuing from left to right in equal sections with small overlaps. Each original is also photographed in one exposure and is included in reduced form at the back of the book. Photographs included in the original manuscript have been reproduced xerographically in this copy. Higher quality 6" x 9" black and white photographic prints are available for any photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. University Microfilms International A Bell & Howell Information Company 300 North Zeeb Road, Ann Arbor, Ml 48106-1346 USA 313/761-4700 800/521-0600 Order Number 910S075 Antitakeover amendments as alternatives to costly signalling Borokhovich, Kenneth Aubrey, Ph.D. The Ohio State University, 1990 UMI 300 N. -
Tender Offers in Italy
May 2007 JONES DAY COMMENTARY Tender Offers iN ItalY Italy has not yet implemented the Directive on target company’s shareholders—hence the provi- Takeover Bids (Directive 2004/25/EC, the “Directive”) sion, in addition to the rules governing voluntary ten- in its internal legal system.1 However, Italian tender der offers, of a set of rules governing the so-called offer rules currently in force, as set forth in Legislative “mandatory tender offers.” Decree no. 58 of February 24, 1998, and CONSOB2 Regulation no. 11971 of May 14, 1999, already provide for In a nutshell, the concept of a mandatory tender offer many of the concepts set forth in the Directive, since is such that whoever comes to hold a controlling the Italian legislation, when enacted, was based on a stake in an Italian listed company shall be required to previous draft of the Directive. We will provide here an launch a tender offer for all of the remaining shares of overview of the main concepts and rules that apply to such company at an equitable price to be determined tender offers in Italy, noting where they differ from the in accordance with Italian law, thus allowing the minor- principles set forth in the Directive. ity shareholders to tender their shares to the bidder at a price that is the same as or comparable to that paid by the bidder to acquire the controlling stake in the ThE ConcepT Of Mandatory Tender target company. Offers Italian law provides for three main types of mandatory Both the Directive and Italian law aim to ensure equal tender offers: treatment of, and prevent discrimination against, the _______________ 1. -
A New Era in Private Equity Deal Making
Implications Of The Amended Best Price Rule: A New Era In Private Equity Deal Making Summary After many years of lobbying, the SEC has finally amended its Best Price Rule to revive the functionality of tender offers as a practical structural alternative to the conventional merger for the acquisition of public companies. While many will see the SEC rule revision as a modest, but long needed, correction of a dysfunctional misuse of the old rule by the plaintiffs’ bar, the consequences of the amended rule have the potential to be farther reaching. • Ironically, revitalization of the tender offer should not have much impact on hostile deal making, notwithstanding that hostile bids are often thought to be the principal function of tender offers. • Rather, the rule revision’s greatest impact will be on consensual deal making because the tender offer provides speed of execution which reduces exposure of buyers to topping bids and sellers to material adverse change and similar risks. • Speed of execution will be most telling in deals lacking regulatory issues, such as corporate diversifications and, more important in today’s market, leveraged buy-outs. • For corporate buyers, the practical availability of the tender offer structure will allow for the first real test of the SEC’s early commencement rule for offers involving the issuance of securities. If the implicit commitment of the SEC to process exchange offers on a 20 business day timetable is honored, the exchange offer will become competitive with the cash tender offer and will provide public company buyers greater structuring flexibility. • The critical issue for cash buyers, particularly private equity sponsors, will be financing the tender offer in compliance with the Federal Reserve Board’s Margin Rules. -
CORPORATE ACQUISITION by TENDER OFFER * ARTRUBR Fimsore1m, JR.T &
University of Pennsylvania Law Review FOUNDED 1852 Formerly American Law Register VOL. 115 JANUARY 1967 No. 3 CORPORATE ACQUISITION BY TENDER OFFER * ARTRUBR FimsoRE1m, JR.t & ROBEIT H. MtN~imxum tt The technique of acquiring control of a corporation by making a public offer to purchase a part of the corporation's stock at a fixed price-usually in cash and representing a premium above market-has been widely used in the United States in recent years. In 1965 there were twenty-nine cash tender offers to acquire control involving com- panies listed on the New York Stock Exchange and fifteen involving companies listed on the American Stock Exchange. In 1960 there were only eight such offers involving companies listed on both such exchanges.' The Investment Dealer's Digest reported thirty-two cash tender offers for the first six months of 1966.2 The increasing use of tender offers coincides with a period in which combinations of American businesses have been prevalent. These combinations are accomplished through merger, consolidation or acquisition of assets for stock or cash.3 Tender offers are another technique for creating * This article bears a date of November 26, 1966. t B.A. 1953, LL.B. 1958, Yale University. Member, New York Bar. t" Professor of Law, University of Pennsylvania. B.A. 1954, LL.B. 1957, Harvard University. Member, New York Bar. I Cohen, A Note o Takeover Bids and Corporate Purchases of Stock, 22 Bus. LAW. 149 (1966). 2 Investment Dealers' Digest-Corporate Financing Directory, pp. 78-79, Aug. 15, 1966. 3 Darrell, The Use of Reorganization Techniques in Corporate Acquisitions, 70 H~Av. -
Liability Management
Liability Management March 2020 733059577 Benefits associated with repurchases or exchanges of debt securities • Perception. • Deleveraging. • Recording of accounting gain. • Potential EPS improvement. • Reducing interest expense. • Potential regulatory and ratings benefits. • Alternative to more fundamental restructuring or potential bankruptcy. 2 Why now? Why now? • Deleveraging efficiently. • Debt may be trading at a discount. • Addressing LIBOR-based exposures. • Addressing maturities in anticipation of a recession. • Tax considerations. • Investor perceptions. 4 How? Options 6 Repurchases for cash • Redemptions – purchase of outstanding debt securities for cash in accordance with their terms; • Repurchases – open market or privately negotiated purchases of outstanding debt for cash; and • Tender offers – an offer made to all holders of a series to repurchase outstanding debt securities for cash. 7 Non-cash alternatives • Exchange offers, including – Private exchange offers (4(a)(2)) – Section 3(a)(9) exempt exchange offers – Registered exchange offers • One-off exchanges – Debt for equity swaps – Equity for equity exchanges • Consent solicitations (although there may be a consent fee) 8 Choosing among the alternatives • Will depend upon the issuer’s objectives • Will depend upon the issuer’s financial condition: – Distressed exchange – “Preventive” liability management – Opportunistic transactions • Legal, accounting, ratings, regulatory capital and tax considerations should all be factored into the choice. 9 Thinking ahead • Credit/loan facility terms that contain limitations on prepayments. – May be prohibited. – May trigger repayment obligations. • Other debt security terms. • Requirement to use proceeds for a particular purpose. 10 Redemptions Redemptions • Redeem outstanding debt securities in accordance with their terms, assuming governing documents permit redemption. – Certain debt securities may have call protection (not redeemable), or limited call protection (not redeemable for a certain period of time after issuance). -
Proxy Voting Guidelines
Table of Contents INTRODUCTION � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1 About the New York State Common Retirement Fund . 1 Proxy Voting and the Bureau of Corporate Governance ������������������������������������������������������������� 1 Environmental, Social, and Governance Principles . 1 Review of Proxy Voting Guidelines . 3 Proxy Voting Procedure ���������������������������������������������������������������������������������������������������������� 3 Reporting ���������������������������������������������������������������������������������������������������������������������������� 3 PROXY VOTING GUIDELINES � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 4 Governance Issues ���������������������������������������������������������������������������������������������������������������� 4 Access to the Proxy . 4 Anti-takeover Provisions . 4 Auditors . 5 Board of Directors’ Independence, Accountability and Responsibilities . 6 Capital Structure . 13 Cumulative Voting . 14 Employee Stock Purchase, Retirement and Pension Plans . 15 Executive and Director Compensation . 15 Poison Pills ����������������������������������������������������������������������������������������������������������������� 19 Preemptive Rights . 19 Reimbursement of Proxy Expenses �������������������������������������������������������������������������������� 19 Reincorporation ����������������������������������������������������������������������������������������������������������� 19 Restructurings . 20 Voting Policies -
Spacs: Frequently Asked Questions
SPACs: Frequently Asked Questions 01.20.2021 | ATTORNEY PUBLICATIONS Among other things, 2020 will be remembered as a year that saw a boom in the use of Special Purpose Acquisition Companies (SPACs) as a robust alternative to an initial public offering (IPO). A SPAC is a company formed to raise capital in a public offering, with the offering proceeds serving as a blind pool of funds held in trust to finance the acquisition of one or several unidentified targets. As SPAC IPOs have surged in 2020, many companies and investors are evaluating transactions with SPACs--referred to as “de-SPAC” transactions—as an alternative to traditional IPO or merger & acquisition (M&A) liquidity events. A de-SPAC transaction consists of a merger between a private operating company and a publicly traded SPAC, with the shareholders of the private company receiving shares of the SPAC and/or cash as consideration. The result is that the private company becomes a public company, with a shareholder base comprised of the rollover shareholders, the SPAC sponsor, the SPAC’s public investors, and any private investors that participate in the deal through private investment in public equity (PIPE). We share here the answers to key questions about SPACs, with an emphasis on important considerations for target companies and their investors. Table of Contents Part I: Understanding the Basics of SPACs Part II: SPAC vs. Traditional IPO Part III: Overview of the De-SPAC Transaction Part IV: Owning Stock in a SPAC Post De-SPAC Transaction PART I: UNDERSTANDING THE BASICS OF SPACS 1. WHO ARE SPAC SPONSORS? Most SPACs are formed by institutional investors—such as hedge funds, private equity firms or venture capital firms—and executives with prior experience in the capital markets and industries that the SPAC has targeted. -
The Acquisition of Control of a United States Public Company
THE ACQUISITION OF CONTROL OF A UNITED STATES PUBLIC COMPANY B. JEFFERY BELL, ESQ. * Copyright © 2019. All rights reserved. Quotation with attribution is hereby permitted. * Jeff Bell is a partner in the Mergers & Acquisitions/Private Equity group in MoFo’s New York office. Special thanks are due to Erik Olson, Don Lee and Lee Nisson for their assistance in preparing these materials. TABLE OF CONTENTS Page Page I. MEANS OF ACQUIRING CONTROL ........ 1 E. Regulation of Acquisitions by Foreign A. Privately Negotiated Transaction ............ 1 Persons (Exon-Florio) ........................... 22 1. Purchase of Shares from F. Industry-Specific Regulations ............... 23 Third Parties ..................................... 1 G. Tax Issues ............................................. 23 2. Purchase of Shares from Target ....... 3 III. ISSUES RELATING TO POST- B. Transactions Involving the Public ACQUISITION CONDUCT ....................... 24 Markets ................................................... 5 A. Fiduciary Duties of Controlling 1. Tender Offer ..................................... 5 Stockholder ........................................... 24 2. Other Public Market Transactions .. 12 B. Target’s Exchange Act Reporting II. ISSUES RELATING TO ACQUISITION .. 12 Obligations ............................................ 24 A. Securities Laws ..................................... 13 C. Proxy Access by Minority 1. General Rule—Registration Stockholders .......................................... 25 Requirement .................................. -
An Overview of Tender Offers in Japan* June 2007
Advisory M&A Japan An Overview of Tender Offers in Japan* June 2007 *connectedthinking PwC Introduction Takeover bids are becoming increasingly common in Japan, and are being used or considered by foreign buyers, both strategic and financial. Despite this, specific requirements remain often vague, especially to those unfamiliar with Japanese practice and requirements, and there is a noted lack of explanatory material of tender offers in the English language. This document is intended to provide non-Japanese with initial guidance of the takeover process in Japan. It is not, however, intended to be an all inclusive reference around the subject, and further, it is emphasized that the area of tender offers is undergoing continual change. Readers should consult with their financial and legal advisors on each occasion, and we accept no responsibility for the completeness and continued accuracy of this document . For further information, to discuss your specific case, please contact: Philip P Blythe Partner Tel: +81(3)-6266-5647 Email: [email protected] PricewaterhouseCoopers 2 Tender Offers in Japan-Overview (1/3) • The Financial Instruments and Exchange Law (the FIEL) amending the Securities and Exchange Law of Japan in 2006, in principle, requires that any “off-market” acquisition of shares issued by a company which is either listed on a Japanese stock exchange or a continuously disclosing company (meaning that it is under an obligation to file securities reports in Japan) (“Offeree”) must be made by way of a tender offer. A tender offer (“Tender Offer”) is: - An offer made to a large number of unspecified persons to purchase securities, or - An invitation to such persons to make an offer to sell such securities • The purpose of the Tender Offer system is to prevent specified stock transactions taking place without ordinary shareholders being afforded the opportunity to participate • In principle, TOB regulations apply for the following transactions (see overleaf for the exceptions and refer to Article 27-2-1 of the FIEL for details ).