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Transcripts
Negotiating Acquisitions of Public
Companies in Transactions Structured as
Friendly Tender Offers^1
Panelists:
Richard E. (Rick) Climan,^2
Panel Chair & Moderator;
George R. (Gar) Bason, Jr.,^3
Counsel for the Target Company;
Frederick S. Green,^4
Counsel for the Buyer; and
Joel I. Greenberg,^5
Commentator
Other Participants:
Tom Johnson;
6
MJ Moltenbrey;^7
Rachel Posner;
8
and Lisa A. Schmidt^9
- An edited transcript of a panel presentation given in New York City on October 14, 2011, as part of the 8th^ Annual Institute on Corporate, Securities, and Related Aspects of Mergers and Acquisitions.
- Partner, Dewey & LeBoeuf LLP, Silicon Valley, California. J.D. Harvard Law School 1977; A.B. Harvard College 1974.
- Partner, Davis Polk & Wardwell LLP, New York, New York. J.D. Harvard Law School 1978; A.B. Harvard College 1975.
- Partner, Weil, Gotshal & Manges LLP, New York, New York. J.D. Fordham Law School 1979; B.S. University of Pennsylvania 1976.
- Partner, Kaye Scholer LLP, New York, New York. J.D. Yale Law School 1974; B.S. New York University 1967.
- Managing Director, The Abernathy MacGregor Group Inc., New York, New York. A.B. Towson University 1994.
- Partner, Dewey & LeBoeuf LLP, Washington, D.C. J.D. Boston College Law School 1984; B.A Boston College 1981.
616 PENN STATE LAW REVIEW [Vol. 116: INDEX I. INTRODUCTION ..................................................................................... 617 II. CHOICE OF STRUCTURE: ONE-STEP VS. TWO-STEP TRANSACTIONS ..... 620 III. STANDSTILL PROVISIONS ...................................................................... 636 IV. EXCLUSIVITY AGREEMENT ................................................................... 650 V. DEFINITIVE ACQUISITION AGREEMENT—TENDER OFFER MECHANICS .......................................................................................... 656 VI. DEFINITIVE ACQUISITION AGREEMENT—TENDER OFFER CONDITIONS ......................................................................................... 671 VII. DEFINITIVE ACQUISITION AGREEMENT—NON-RELIANCE PROVISION ............................................................................................ 677 VIII. DEFINITIVE ACQUISITION AGREEMENT—DEAL PROTECTION PROVISIONS .......................................................................................... 682 IX. ANTITRUST ISSUES ................................................................................ 692 APPENDIX A .................................................................................................. 701 APPENDIX B .................................................................................................. 703 APPENDIX C .................................................................................................. 704 APPENDIX D .................................................................................................. 708 APPENDIX E................................................................................................... 711 APPENDIX F ................................................................................................... 719 APPENDIX G .................................................................................................. 721 APPENDIX H .................................................................................................. 723 APPENDIX I.................................................................................................... 724 APPENDIX J ................................................................................................... 725 APPENDIX K .................................................................................................. 728 APPENDIX L................................................................................................... 729 APPENDIX M ................................................................................................. 734 APPENDIX N .................................................................................................. 735 APPENDIX O .................................................................................................. 736 APPENDIX P ................................................................................................... 737 APPENDIX Q .................................................................................................. 739 APPENDIX R .................................................................................................. 740
- Senior Managing Director and General Counsel, Georgeson Inc., New York, New York. J.D. Benjamin N. Cardozo School of Law 2002; B.A. Columbia College
- Director, Richards, Layton & Finger, Wilmington, Delaware. J.D. The Dickinson School of Law of the Pennsylvania State University 1991; B.A. Drew University 1988.
618 PENN STATE LAW REVIEW [Vol. 116: have the distinct privilege of chairing this session. As the title of this segment suggests, we’re going to be confining our discussions this morning to acquisitions of publicly traded companies. More specifically, we’re going to limit our focus to acquisitions of U.S.-based Delaware corporations with shares listed on a U.S. securities exchange. We will not be addressing acquisitions of privately held companies, which will be covered in a separate panel this afternoon.^10 With cash remaining the acquisition currency of choice in today’s M&A marketplace, we’re going to further limit our discussions this morning to deals in which the acquisition currency used to pay the purchase price consists exclusively of cold, hard cash on the barrelhead, as distinct from, say, shares of the buyer’s stock or some other form of non-cash consideration. A quick note on terminology: for ease and consistency of reference throughout the presentation this morning, we’re going to be using the term “target company,” or simply “target,” to refer to the public company that is being acquired by the buyer. In this realm of cash acquisitions of U.S.-based publicly traded companies, we’re going to emphasize a particular deal structure that has become quite popular in today’s M&A marketplace, at least for strategic acquirers. This is the so-called “two-step” acquisition structure, comprising a first-step, friendly cash tender offer made by the buyer for the
- Byron Egan et al., Private Company Acquisitions: A Mock Negotiation , 116 PENN ST. L. REV. 743 (2012).
2012] NEGOTIATING ACQUISITIONS OF PUBLIC COMPANIES 619 outstanding shares of the target company, followed by a second-step, back-end, clean-up cash merger in which the price per share payable to the target company’s stockholders is exactly the same as the price per share paid for shares tendered in the first-step tender offer.^11 Please turn to the materials for our presentation, as I think you’re going to want to follow along.^12 They include a series of excerpts both from the preliminary deal documentation and from the definitive acquisition agreement for a hypothetical two- step cash acquisition of a publicly traded Delaware corporation. You may want to turn to the index to the materials to get a general sense of what we’re going to be covering this morning. Our format today, as advertised, is going to be a modified mock negotiation. Fred Green will generally play the role of outside counsel for the buyer, which we’re going to assume for most purposes today is a strategic buyer and not a private equity fund or so-called “financial” buyer. Gar Bason will generally play the role of the lawyer for the publicly traded target company. I will act as the not- necessarily-neutral moderator, referee, and peacekeeper all rolled into one, reserving to myself the right to take sides and flip-flop as I see fit.
- See infra Appendix P for an illustration of a two-step acquisition transaction. For a discussion of acquisitions of public companies structured as one-step, stock-for- stock mergers, see Richard E. Climan, Joel I. Greenberg, Lou R. Kling & Norman Veasey, Negotiating Acquisitions of Public Companies , 10 U. MIAMI BUS. L. REV. 219 (2002). See also MERGERS AND ACQUISITIONS COMMITTEE, ABA SECTION OF BUSINESS LAW, MODEL MERGER AGREEMENT FOR THE ACQUISITION OF A PUBLIC COMPANY (2011) [hereinafter MODEL MERGER AGREEMENT].
- The presentation materials can be found in the appendices to this article.
2012] NEGOTIATING ACQUISITIONS OF PUBLIC COMPANIES 621 one-step deal, you sign the merger agreement and announce it, and then the target company prepares a proxy statement and clears it with the SEC, mails the proxy statement to its stockholders and holds a meeting of its stockholders to vote on the merger. In a two-step structure, you again begin by signing and announcing the acquisition agreement, but the buyer promptly begins a tender offer for the target company’s shares. The tender offer will lead, if it is successful, to a back-end merger, perhaps without the need for a vote of the target’s stockholders at the end of the process.^14 The main advantage of a two-step structure in an all-cash deal is the potential time savings you can achieve in executing the transaction compared to a one-step deal. As we will discuss later in the presentation,^15 the parties hope to avoid the need for a meeting of the target’s stockholders after the front-end tender offer. They want to get right to a short-form back-end merger, and they can do this if they’ve had a highly successful tender offer in which the buyer has acquired at least 90% of the target’s outstanding shares. But a two-step structure has another timing- related advantage even where the tender offer attracts a majority, but less than 90%, of the target’s outstanding shares and the parties have to do the back-end merger as a long-form merger. The advantage is that the buyer will have cut off the interloper risk once the tender offer is completed, and that alone can be a very important benefit.
- See infra Part V; see also infra Appendix P (providing an illustration of a two- step acquisition transaction).
- See infra note 62 and accompanying text.
622 PENN STATE LAW REVIEW [Vol. 116: RICK CLIMAN: (Moderator) What, exactly, do you mean when you refer to “interloper risk”? FRED GREEN (Counsel for Buyer): From the buyer’s standpoint, once you have committed to go forward with the acquisition, you don’t want to lose. And you lose if an interloper—and by that I mean a competing bidder—shows up with a higher offer before the buyer has acquired control of the target company. So in the right circumstances, the two-step structure can help the buyer protect the transaction by shortening the period in which an interloper can come in, even where the buyer cannot close the back-end merger transaction concurrently with the closing of the tender offer. RICK CLIMAN: (Moderator) You save time by utilizing a two-step structure rather than a one-step structure because in a two-step structure you can begin the tender offer very soon after you sign the acquisition agreement, and the tender offer has to stay open for only 20 business days—about a month.^16 You can get a two-step deal done in about a month, or a little longer given the time it may take to prepare the tender offer materials before you commence the tender offer. FRED GREEN (Counsel for Buyer): That’s absolutely right. If you have the time, then you will begin preparing the tender offer materials while you’re negotiating the acquisition agreement, and literally within a day or two after the acquisition agreement is signed, you file your tender offer materials with the SEC^17 and commence the tender offer.
- See infra note 54.
- The buyer is required to file a Schedule TO, which includes the buyer’s Offer to Purchase, with the SEC “as soon as practicable on the date of the commencement of the tender offer.” 17 C.F.R. § 240.14d-3(a)(1) (2011). In a negotiated transaction, the parties will typically include the recommendation of the target company’s board of directors in the tender offer materials, which requires the target company to file a Schedule 14D-9 with the SEC at the same time. 17 C.F.R. § 240.14d-9(b)(1) (2011).
624 PENN STATE LAW REVIEW [Vol. 116: RICK CLIMAN: (Moderator) In contrast, if you’re doing a single-step deal and you get SEC comments, the applicable clock hasn’t even begun to run. Fred, what is the “clock” that applies in a single-step deal? And when does that “clock” actually start running? Please walk us through the timing considerations. FRED GREEN (Counsel for Buyer): In a one-step deal, if you have adequate time, you can begin to prepare your proxy statement before the merger agreement is signed and announced. You might have a separate team of lawyers working on the proxy statement while you’re negotiating the merger agreement. When you have that luxury, you should be able to file a preliminary proxy statement within a week or so after the merger agreement is signed. More typically, however, even though you may have started work on the proxy statement before the merger agreement is signed, much work remains to be done after the merger agreement is signed. And, of course, input from both parties is needed, as is input from the target’s investment banker. So normally the target will not be ready to file its proxy statement until about two or three weeks after the merger agreement is signed. Roughly 30 days after filing the proxy statement, you would expect to receive SEC comments. Of course, it always is possible that the SEC staff will choose not to review the proxy statement, which you should know by the end of the 10-day waiting period.^21 If the additional materials are required because disclosure disseminated to security holders is found to be materially deficient. Similarly, a particular form of dissemination may be required. For example, amended disclosure material designed to correct materially deficient material previously delivered to security holders would have to be delivered rather than disseminated by publication.”).
- See 17 C.F.R. § 240.14a-6 (2011) (requiring five copies of the proxy statement and form of proxy to “be filed with the [SEC] at least 10 calendar days prior to the date definitive copies of such material are first sent or given to security holders... .”).
2012] NEGOTIATING ACQUISITIONS OF PUBLIC COMPANIES 625 proxy statement is reviewed by the SEC, and assuming the parties know what they’re doing and there aren’t any special wrinkles, you should be able to resolve the SEC comments in a week to ten days, and then mail the final proxy statement to the target’s stockholders. So you’re already out close to 60 days after the announcement of the deal when you’re first ready to mail the proxy statement. Compare that to a two-step deal where the parties could conceivably already have closed on the tender offer by that time. And in a one-step deal, the “clock” doesn’t even start ticking until you’ve mailed the proxy statement to stockholders. Once you’ve mailed out the proxy statement, you have a minimum of another 20 days^22 to solicit proxies. Then the target would have its stockholder meeting and the merger would close on the day of the meeting. So, assuming SEC review, call it a period of three to four months from announcement to closing in a typical one-step transaction, with the buyer
- In a one-step merger transaction, after the proxy statement is cleared by the SEC, the target company sets a shareholder meeting date that complies with the laws of its state of incorporation as well as the requirements of its organizational documents. For example, Section 251(c) of the Delaware General Corporation Law requires that shareholders receive notice at least 20 calendar days prior to the stockholder meeting at which the merger is to be voted upon. 8 DEL. CODE ANN. tit. 8, § 251(c) (West 2012). Under the federal securities laws, if a buyer is registering securities that are to be issued as part of the merger consideration on Form S-4 (which would serve as both a proxy statement and a prospectus) and is incorporating into the Form S-4 certain information by reference, the SEC requires that the prospectus/proxy statement be distributed to shareholders at least 20 business days prior to the shareholder meeting date. See General Instructions, Note A to Form S-4. The time it actually takes to solicit a sufficient number of proxies to ensure obtaining the requisite stockholder vote in the context of a one-step merger transaction varies. The needed time is determined primarily by (1) how many shares the buyer already owns, (2) how closely the remaining shares are held and the breakdown between institutional and retail shareholders, and (3) what percentage of the target’s outstanding shares is required to approve the merger under the law of the target’s state of incorporation and under the target’s charter documents.
2012] NEGOTIATING ACQUISITIONS OF PUBLIC COMPANIES 627 about doing the dealcould give Fred’s client, the buyer, the right to walk away. So I’m interested in getting to the closing quickly, and 20 business days nowadays is plenty of time for the investment banking community to find other potential suitors for the target. As Chancellor Strine has said, the banking industry is not shy and retiring.^24 A month is plenty of time. RICK CLIMAN: (Moderator) So, bottom line, our parties are in violent agreement, perhaps for the only time today: two steps are generally better than one. But let’s talk about the circumstances in which the parties might actually prefer a one-step deal over a two-step deal. Fred, as deal lawyers we used to complain about SEC Rule 14d-10,^25 the so-called “best- price” rule, and its potential application in the friendly tender offer context. What was the problem and how did the SEC fix it? FRED GREEN: (Counsel for Buyer) Rule 14d- 10 under the ‘34 Act is known as the “all-holders, best-price” rule. That rule provides that all stockholders who are
- See, e.g. , In re Toys “R” Us, Inc. S’holder Litig_._ , 877 A.2d 975, 1006-07 (Del. Ch. 2005) (noting disagreement with the characterization by plaintiffs that the M&A market is “comprised of buyers of exceedingly modest and retiring personality, too genteel to make even the politest of uninvited overtures”). Rather than shy suitors waiting to be asked to dance, “[t]hey are not like some of us were in high school. They have no problem with rejection.... [S]trategic buyers have not felt shy about ‘jumping’ friendly deals crafted between their industry rivals.” Id. at 1008. Indeed, “capitalists are not typically timid, and any buyer who seriously [wants to buy a company could send] a bear hug letter at any time, if it wanted to be genteel about expressing an interest.” Id. at
Of course, there may be situations, such as if the company was not shopped at all pre-signing, where the board needs some room for a post-signing market check. Even then, a month from announcement to closing of the tender offer could be more than enough time depending on the circumstances. But where the company was adequately shopped over an extended period, “the decision to time limit the final auction process cannot be deemed unreasonable given the length of the process... and the risk of losing one of the finalists.” Id. at 1009.
- 17 C.F.R. § 240.14d-10 (2006).
628 PENN STATE LAW REVIEW [Vol. 116: tendering shares have to be paid the same per- share consideration.^26 The purpose of the rule is to prevent unfair treatment and coercive tender offerslike the old “early bird special,” where those who tendered quickly would receive a higher price for their shares.^27 Ten or 15 years ago, a split arose in the interpretation of Rule 14d-10 by the federal courts, with some courts interpreting the rule more broadly to encompass payments and other benefits received by tendering stockholders outside the tender offer, including, for example, in their capacities as employees of the target. These courts took the position that Rule 14d- 10 was implicated because stockholders who were also employees were being treated differently from non- employee stockholders.^28 That set off all sorts
- Id. (“(a) No Bidder shall make a tender offer unless: (1) The tender offer is open to all security holders of the class of securities subject to the tender offer; and (2) The consideration paid to any security holder for securities tendered in the tender offer is the highest consideration paid to any other security holder for securities tendered in the tender offer.”).
- Amendments to Tender Offer Rules—All-Holders and Best-Price, Investment Company Act Release No. 15199, Exchange Act Release No. 34-23421, Securities Act Release No. 33-6653, 36 SEC Docket 96-01 (July 11, 1986) (“Without the all-holders and best-price requirements, the investor protection purposes of the Williams Act would not be fully achieved because tender offers could be extended to some security holders but not to others. Such discriminatory tender offers could result in the abuses inherent in ‘Saturday Night Specials,’ ‘First-Come First Served’ offers and unconventional tender offers since security holders who are excluded from the offer may be pressured to sell to those in the included class in order to participate, at all, in the premium offered.”). Id.
- See, e.g. , Gerber v. Computer Assocs. Int’l, 303 F.3d 126, 128 (2d Cir. 2002) (“Gerber alleged that, in acquiring On-Line, CA paid more money per share to Jack Berdy, On-Line’s chairman and chief executive officer, than it paid to other On-Line shareholders, in violation of various provisions of the Williams Act, 15 U.S.C. §§ 78l(i), 78m(d)-(e), and 78n(d)-(f), and regulations promulgated thereunder, 17 C.F.R. § 240.14d-10.”); Mark Khmelnitskiy, Note, Structuring Transactions Outside All Holders/Best Price Rule , 9 FORDHAM J. CORP. & FIN. L. 501, 502-503 (2004) (“While the provisions of Rule 14d-10 addressed the original purpose of protecting security holders from coercive tender offers, within the past decade, Rule 14d-10 has been invoked as a sword to invalidate agreements made in conjunction with tender offers, or make the agreements a part of the tender offers. These agreements, although frequently conferring various benefits upon key employees and management, who are usually large security holders, nevertheless do not constitute a greater consideration for the tendered securities. The courts, however, have entertained allegations that such agreements violate Rule 14d-
630 PENN STATE LAW REVIEW [Vol. 116: JOEL GREENBERG: (Commentator) It definitely would, because a private equity firm or other financial buyer will generally be using debt financing to fund a significant portion of the purchase price. A two-step deal presents the very real possibility that, if the buyer is unable to reach the 90% ownership threshold that would enable it to do the back- end merger as a short-form merger, it could be required to take down and pay for somewhere between 50% and 90% of the target’s outstanding shares at the closing of the tender offer. Then, given the need to go through the SEC proxy or information statement process for the second step, it could be another two months or more before the buyer could effect a long-form merger and acquire the remainder of the outstanding shares.^32 That interim period is very uncomfortable for financing sources, because the only available collateral is a majority stock position in a target that still has a public stub; the direct security in the target’s assets that lenders prefer is not available until the buyer acquires 100% ownership of the target through the second-step merger. The lenders also have to be concerned about the margin rules in this scenario.^33 While it’s not impossible to finance a deal on this basis, it is certainly more challenging and costly.
- See infra notes 62 - 63 and accompanying text.
- Acting under Section 7 of the Securities Exchange Act of 1934, 15 U.S.C. § 78g (2006), which requires the adoption of “rules and regulations with respect to the amount of credit that may be initially extended and subsequently maintained on any security.. .”), the Board of Governors of the Federal Reserve System has adopted the margin rules: Regulation T (“Credit by Brokers and Dealers”), 12 C.F.R. Part 220; Regulation U (“Credit by Banks and Persons Other Than Brokers or Dealers for the Purpose of Purchasing or Carrying Margin Stock”), 12 C.F.R. Part 221; and Regulation X (“Borrowers of Securities Credit”), 12 C.F.R. Part 224. The general effect of these requirements is to limit the amount of secured (or indirectly secured) debt financing for the purchase of such a majority stock position to 50% of its value.
2012] NEGOTIATING ACQUISITIONS OF PUBLIC COMPANIES 631 Of course, a buyer could set a 90% minimum condition for its tender offer, which would eliminate the problem because with 90% ownership it could do a short-form merger and eliminate the time gap between the completion of the front end and the back end. But a buyer really wouldn’t want to do that because it could have a very successful bid and still not meet the 90% condition, and then there’s no deal. RICK CLIMAN: (Moderator) And of course it’s not just the buyer that wouldn’t want the 90% minimum condition... GAR BASON: (Counsel for Target) That’s right. As target counsel, I get a vote here too, and I would be getting red in the face pointing out that in a sample size of thousands of U.S. acquisitions, there were maybe two that had 90% minimum tender conditions.^34 FRED GREEN (Counsel for Buyer): You certainly could see a scenario where the buyer would be fine having a 90% minimum tender condition because it adds optionality and addresses the financing condition that Joel described. The buyer can always waive the condition and close with fewer shares tendered as long as there are tenders for a majority of the outstanding shares. But a 90% condition is never used in practice. The target would never agree to that high a minimum condition. JOEL GREENBERG: (Commentator) Both parties share that same concern. We have seen a couple of examples of a hybrid structure which was pioneered in the Burger King transaction,^35 where the bidder went out concurrently with a tender offer and a merger proxy statement and, if it couldn’t reach the 90% short-form ownership threshold in the tender offer, it could immediately switch to the one-step mode and conclude the transaction
- See infra note 66 and accompanying text.
- See Burger King Corp., Current Report (Form 8-K) (Sept. 3, 2010).
2012] NEGOTIATING ACQUISITIONS OF PUBLIC COMPANIES 633 beyond... RICK CLIMAN: (Moderator) Rachel, let me turn to you, because you work at a firm that solicits proxies in one-step deals and that also gets involved in helping buyers solicit tenders in two-step deals. Might the parties prefer a two-step tender offer deal over a one-step merger on the theory that it’s somehow easier for a buyer to solicit tenders than it is for a target company to solicit proxies? RACHEL POSNER: (Information Agent) Yes. We all would think it’s probably easier to solicit tenders than it is to solicit votes. That being said, we have seen situations where index funds have to abide by a firm mandate not to tender, and that can actually hold up a two-step deal. Index funds generally prefer to get squeezed out in the back-end merger.^39 So where a large number of target shares are held by index funds, it may actually be preferable to structure the acquisition as a one-step merger rather than as a tender offer. RICK CLIMAN: (Moderator) Rachel, let me ask you another question. ISS^40 scrutiny is a hot issue now in many large and even not-so-large M&A transactions, and it’s certainly of great concern to some of your firm’s clients. Does structuring a deal as a tender offer rather than a one-step merger
- See, e.g. , David Fox, Daniel E. Wolf & Susan J. Zachman, Some Tender Offer Quirks , Kirkland & Ellis LLP Client Memorandum (Oct. 9, 2009) (describing generally understood index fund policies and practices). For example, index funds typically will not tender into an offer where the market price is above the offer price. “Moreover, many will not tender into an offer at all, regardless of the relationship of the market price to the offer price, so long as the stock is still included in the relevant index the fund is mirroring or tracking.” Id.
- “ISS is the leading provider of corporate governance solutions to the global financial community. More than 1,700 clients rely on ISS’ expertise to help them make more informed investment decisions on behalf of the owners of companies. ISS’ services include objective governance research and analysis, end-to-end proxy voting and distribution solutions, turnkey securities class-action claims management, and reliable governance data and modeling tools_._ ” About ISS , ISS AN MSCI BRAND, http://www.issgovernance.com/about (last visited Jan. 13, 2012).
634 PENN STATE LAW REVIEW [Vol. 116: actually avoid ISS scrutiny? RACHEL POSNER: (Information Agent) Once upon a time people would prefer to structure a deal as a tender offer to avoid ISS scrutiny. But today, ISS scrutiny reaches far and wide and structuring your deal as a tender offer does not always avoid ISS scrutiny.^41 RICK CLIMAN: (Moderator) Joel, are there any other reasons why a buyer might not prefer a two-step structure in an all cash acquisition? JOEL GREENBERG: (Commentator) Yes, Rick. Regulatory reasons, such as a perceived antitrust issue that might lead to a “second request” 42 or a regulatory approval
- According to ISS, its “US research team generally provides proxy analyses and voting recommendations for common shareholder meetings of publicly-traded U.S. companies that are held in [its] institutional investor clients’ portfolios.” ISS, FREQUENTLY ASKED QUESTIONS ON US POLICY INTERPRETATION AND RESEARCH, http://www.issgovernance.com/policy/USResearchFAQ (last visited Feb. 17, 2012). While ISS’s policies do not require ISS to provide recommendations with respect to acquisition transactionssuch as friendly tender offersthat do not initially entail a meeting of stockholders, in practice ISS does provide recommendations with respect to certain such transactions. See, e.g. , Press Release, Agrium urges CF stockholders to tender shares into Agrium offer of $40.00 in cash plus one Agrium share per CF share, which expires June 22 (June 16, 2009), available at http://www.agrium.com/news/ 05784_9328.jsp (“ISS... the leading independent proxy voting and corporate governance advisory firm, has recommended that stockholders of CF Industries Holdings, Inc... tender their shares into Agrium’s exchange offer of $40.00 in cash plus one Agrium share per CF share.”); see also Interview: Chris Young of ISS/RiskMetrics , THE PROXY FILES (Morrow & Co, LLC, Stamford, Conn.) April 2010, at 7, available at http://www.morrowco.com/knowledge_base/PDF/theProxyFilesAPR10.pdf (explaining that ISS does not “promise systematic 100% coverage of tender offers as... for merger proxies,” but generally covers tender offers that are contentious and where a recommendation may make a difference in the outcome).
- The Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. § 18(a) (the “HSR Act”), requires parties to provide notice of mergers and acquisitions that meet certain size thresholds to the Federal Trade Commission and U.S. Department of Justice. An HSR Act filing triggers an initial 30-day waiting period during which the transaction cannot be consummated, although transactions that do not raise substantive antitrust concerns routinely receive early termination of the waiting period. Id. at § 18(b)(1). If a transaction raises antitrust issues, the regulators can issue a “second request” for information, which extends the waiting period during which the transaction cannot close until 30 days after the parties have substantially complied with the second request, a process that can take several months. Id. at § 18(e). In the case of an all-cash tender offer (including a “friendly,” negotiated cash tender offer of the type discussed in this article), the HSR Act waiting period is only 15 days, or 10 days after substantial compliance with any second request. Id. at § 18(b)(1).
