the SEC website
Amends Tender Offer Best-Price Rules to Benefit Investors
U.S. Securities and Exchange Commission gave unanimous final
approval today to rules changes to its best price
rule concerning tender offers. The best price rule
requires that all shareholders are paid the same price in a
tender offer. The changes, which were made necessary by conflicting
court interpretations, make clear that compensation for services
that might be paid to a shareholder doesnt count as part
of the price paid for his shares.
over whether compensation, severance, and other employee benefits
are counted for the purpose of the best-price rule has injured
investors by discriminating against tender offers, SEC
Chairman Christopher Cox said. Our regulations should
be absolutely neutral as between tender offers, mergers, and
other forms of business combination so that market considerations
can determine which structure creates more value for shareholders.
the help of important public comments, the Commission has crafted
constructive changes to the proposed amendments. I believe that
the revisions adopted today will further the Commissions
goal of providing fair and equal treatment for all security
holders in tender offers while clarifying that the best-price
rule applies only with respect to the consideration offered
and paid for securities tendered, said John W. White,
Director of the SEC Division of Corporation Finance.
amended, the tender offer best-price rules clarify that the
consideration paid to any security holder for securities tendered
in a tender offer is the highest consideration paid to any other
security holder for securities tendered in the offer. To insure
that investors are protected and the fundamental purpose of
the rule is upheld, it also exempts compensatory arrangements
from the rule so long as specific substantive standards are
satisfied, and includes a safe harbor that hinges upon approval
of independent members of the board of directors.
further information, please contact John Nester, Director of
Public Affairs, at (202) 551-4120.