Practical Implications of the SEC's Amendments to the Tender Offer Best Price Rule

The recent amendments to the tender offer “best-price rule” – which addressed a significant deterrent to the structuring of transactions as tender offers – became effective on December 8, 2006, and, since that time, the number of U.S. M&A transactions structured as tender offers already appears to be on the rise. Not only have there been more tender offers during the few months following the rule’s effectiveness relative to the same period last year, but also practitioners structuring M&A transactions appear to be discussing the tender offer alternative with a renewed frequency that has not existed for quite some time.

This article reviews the background of the rule, describes the recent amendments and includes suggestions for compliance. This article then discusses certain practical implications of the rule, including some considerations for effecting transactions as tender offers or exchange offers in light of the expected increase in M&A transactions so structured.


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