December 5, 2005
Rule 14d-10 (Finally) in Play!
The SEC just announced that it will hold an open Commission meeting next Wednesday, December 14th at 10 am, to consider (among other things) proposed amendments to the “best-price rule” for issuer and third-party tender offers. According to the Sunshine Act notice, the proposals “would clarify that the best-price rule applies only with respect to the consideration offered and paid for securities tendered in a tender offer and should not apply to consideration offered and paid according to employment compensation, severance or other employee benefit arrangements entered into with employees or directors of the company that is the target of a third-party tender offer.”
The SEC Staff has wanted to bring this project to the Commission for quite some time to settle some inconsistencies in the courts – certain jurisdictions apply the best price rule too broadly to capture severance and compensation arrangements (as further explored in this John Penn interview on the evolution of the best price rule). The proposed changes are not expected to establish a bright line rule.