DealLawyers.com Blog

August 8, 2007

Corp Fin No-Action Letter: Exchange Offer in Connection with an IPO

Recently, Corp Fin issued a no-action response to EMC Corporation and VMware, Inc. This no-action letter builds upon a lot of concepts (e.g., formula pricing, stock option repricing exchange offers, etc.), In short, the Staff basically is allowing a company – and its wholly-owned sub – that are going public in an IPO to approach some employees and make an exchange offer for options and restricted stock held by the employees.

The novel aspect of the exchange offer is that the offer is being made in connection with the IPO – and the final pricing will not be known until after the exchange offer expires and the IPO is priced. Very interesting, but this fact pattern will not come up often. Thanks to Jim Moloney for his thoughts on this one!