On March 17, 2023, the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission released over thirty questions and answers in the form of Compliance and Disclosure Interpretations (“C&DIs") addressing various tender offer issues.
These new C&DIs consolidate and memorialize a variety of the Staff's long-standing interpretative positions documented in different places over the years. Some of the more interesting C&DIs include reminders that:
- an arrangement involving target company directors becoming directors of the acquiror (without an election) would not be subject to Rule 14f-1, while an arrangement involving the acquiror directors becoming members of the target company's board (without an election) would be subject to Rule 14f-1 (see Question 181.01);
- a statutory merger (by itself) is not a tender offer, and thus not subject to Regulations 14D and 14E (see Question 101.13);
- exchange offers by an investment vehicle (such as a SPAC) for the equity securities of a public company are generally considered tender offers, unless an affirmative statement is made in the offering materials noting that the amount of equity securities to be acquired, when added to the securities already beneficially owned by the offeror, will not exceed 5% (see Question 101.13);
- an issuer conducting a tender offer subject to Rule 13e-4 may purchase some of the issuer's securities in the open market prior to commencement of the offer without violating Rule 14e-3, but consideration should be given to Rule 14e-5 (see Question 164.01); and
- a target company subject to a third-party tender offer may satisfy its Rule 14e-2 dissemination obligations by including its Schedule 14D-9 solicitation / recommendation statement with the offering materials sent by the bidder (see Question 163.01).
Given that most if not all of the C&DIs published today do not break new ground, we do not expect them to have a significant impact on tender offer practices going forward. But they do provide helpful reminders to those who operate in this area.
For additional information regarding this post, please contact a member of Gibson Dunn's Capital Markets Group or Securities Regulation and Corporate Governance Group.
We would like to thank Rodrigo Surcan in our New York office and Nicholas Whetstone in our Orange County office for their work on this article.