DealLawyers.com Blog

Late last month, I blogged about a number of new and updated M&A CDIs, a few of which relate to cross-border tender offers. This White & Case alert says the additional flexibility for offerors to make purchases of target shares outside of a tender offer that qualifies for Tier I or Tier II relief addresses an often significant concern. Here’s more:

Several exemptions from US tender offer regulatory requirements are available for cross border tender offers that meet certain conditions based on, among other things, the level of US ownership in the target. For cross border tender offers that qualify for “Tier I” relief, existing rules allow the offeror to purchase target shares outside of the tender if, among other things, the offering documents given to the US holders prominently disclose the possibility of, or intent to make, such purchases.

In new CDI 166.02, the SEC has expanded this exemption to purchases of target shares by an offeror after the public announcement of the tender offer, but before the tender offer is launched and offering documents are distributed. The new CDI indicates that, when distributed, the offering documents should disclose that purchases outside of the tender offer have already occurred and may continue during the offer. Similar relief applies to certain existing exceptions for purchases outside of a “Tier II” cross border tender offer.

In addition, in cross border tender offers that are eligible for Tier II relief, an offeror, its affiliates and affiliates of the offeror’s financial advisor may purchase target shares outside of the tender offer under certain conditions. One of these conditions is that purchases by an affiliate of an offeror’s financial advisor cannot be made to facilitate the tender offer.

New CDI 166.03 provides that this condition only applies when the affiliate of the offeror’s financial advisor is acting on its own behalf, rather than acting as an agent of the offeror. The CDI states that any purchases as an agent of the offeror are subject to the other existing conditions, including the requirement that the tender offer price be increased to match any greater price paid outside of the tender offer.

– Meredith Ervine