Inconsistent application of the SEC’s “all holders‐best price” rule continues to chill tender offers

Abstract

This article addresses, in the third‐party acquisition context, how a series of U.S. Circuit Court of Appeals and District Court decisions have chilled the use of tender offers as an expedient, and often the optimum, method of business combination or sale of control. These decisions have disparately construed the applicability of the SEC’s “all holders‐best price” rule (contained in the federal tender offer regulations) to an increasing variety of compensatory and other management payment arrangements which, while often incidental and certainly related to the tender offer, may not necessarily have been intended as deal consideration paid to the recipients. Until there is resolution by the U.S. Supreme Court or definitive guidance from the SEC on the ambit of Rule 14d‐10, expedient and less costly tender offer structures are yielding to single‐step mergers. This is not always the best result for stockholders.

Citation

Neimeth, C.E. (2002), "Inconsistent application of the SEC’s “all holders‐best price” rule continues to chill tender offers", Journal of Investment Compliance, Vol. 3 No. 3, pp. 43-47. https://doi.org/10.1108/joic.2002.3.3.43