Yesterday, the SEC’s Office of Mergers and Acquisitions issued an exemptive order providing issuers and, in some cases, third party bidders with the flexibility to shorten the time period during which tender offers for equity securities must be open from 20 to 10 business days. In order to take advantage of the shorter tender offer period, the tender offer must satisfy several conditions, which vary depending on whether the target is a reporting or a non-reporting company.

Some of the more prominent conditions applicable to a tender offer for equity securities of an Exchange Act reporting company include, among others:

– The tender offer must be subject to Regulation 14D or Rule 13e-4 under the Exchange Act;

– If the tender offer is subject to Regulation 14D, (i) the offer is made pursuant to the terms of a negotiated merger agreement or similar business combination agreement between the subject company and the offeror, (ii) the offer is made for all outstanding securities of the subject class, and (iii) a Schedule 14D-9 is filed and disseminated by the subject company no later than 5:30 p.m., Eastern time, on the first business day following the date of commencement of the tender offer:

– If the tender offer is subject to Rule 13e-4, the offer is made for less than all outstanding securities of the subject class; and

– The consideration offered in the tender offer consists only of cash at a fixed price.

Certain conditions relating to the contents and dissemination of communications announcing the tender offer and any changes in its key terms must also be satisfied.

Cross-border tender offers, tender offers in connection with Rule 13e-3 transactions, and tender offers for which a competing tender offer has already been announced are ineligible to take advantage of the shortened tender period. In addition, if a competing tender offer is publicly announced, then the tender offer made in reliance on the exemptive order must be extended such that it is open for at least 20 business days from the date the initial offer commenced.

In the case of tender offers for securities of non-reporting companies, only all cash, fixed price issuer tender offers (or tender offers by wholly owned subsidiaries for the issuer’s securities) are eligible for the shortened tender offer period. Certain conditions relating to the contents and dissemination of communications announcing the tender offer and any changes in its key terms must also be satisfied.

– John Jenkins