Tender Offer Regulations

The whole unit on one sheet: the framework, the schedules, the timing numbers, equal treatment, insider trading, and mini-tenders.

Which One-Liners Win Points?

• The Williams Act (1968 amendment to the Securities Exchange Act) is neutral by design: disclosure and procedural neutrality, not a takeover limit.
• Two buckets: the third-party tender offer rules (narrow: third-party bidder, Exchange Act-registered equity, over 5% after consummation) and the universal tender offer rules (broad: every tender offer, debt or equity, issuer or third-party, registered or not). The statute never defines "tender offer"; courts apply the Wellman 8-factor totality-of-circumstances test (not all eight need be present).
• Schedule TO is the bidder's disclosure; Schedule 14D-9 is the target's response. TO-I = issuer self-tender; 13E-3 = going-private.
• Target board picks one of four positions: recommend, reject, remain neutral, or unable to take a position. It cannot stay silent; whichever position it takes, the statement must include the reason(s). The stop-look-listen notice buys time WITHIN the 10-business-day window, not replacing the 14D-9 obligation.
• The insider trading prohibition needs NO fiduciary breach (parity-of-information), unlike the anti-fraud regime.

Which Numbers Matter Most?

How Does the Framework and Bidder/Target Disclosure Work?

• Third-party offers get BOTH rule sets; pre-existing ownership counts toward the 5% trigger. Going-private uses a consequence-based trigger (purpose OR likely drop below 300 holders, terminating/suspending reporting, or delisting); file Schedule 13E-3 with fairness disclosure ON TOP of the underlying form.
• Issuer self-tender: issuer or an affiliate buys back via tender procedure. File Schedule TO-I: same 20-day period, withdrawal, payment, proration, equal-treatment rules, but a DIFFERENT 40-business-day (not 60-calendar-day) revival. Must file communications from first announcement; no outside purchases until 10 days after termination.
• A self-tender dropping below 300 holders or off-exchange is BOTH Schedule TO-I and 13E-3. Schedule TO is the bidder's Tender Offer Statement, filed at commencement, copied to the target and principal exchange (or FINRA, OTC). Content: Regulation M-A items (identity, terms, funds, purpose/plans, past contacts, persons retained); via newspaper publication, summary ad, or stockholder lists.
• A material change requires an amendment (no quiet amendments); a final amendment reports results. Schedule 14D-9 is due within 10 business days of commencement (not the SEC filing date): position reasons, fairness opinion, conflicts, director/officer tender intent, material events.
• Any board recommendation must go ON the Schedule (a back-channel tip violates the rule); a material change must be promptly disclosed, not held for the next filing.

How Do Timing, Equal Treatment, and Insider Trading Work?

• The 20-business-day minimum is business days, not calendar. A price, percentage, or dealer-fee change triggers a 10-business-day extension from notice; other changes need prompt dissemination. Withdrawal rights revive after 60 calendar (third-party) or 40 business days (self-tender), NOT interchangeable, never during a subsequent period; the offer can't terminate without notice.
• All-holders is per-class (common-only tenders are fine; no exclusion by block size, holder type, or state absent a state-law bar). Best-price covers only tendered-security consideration: a mid-offer raise flows to EVERY tenderer, including earlier ones. Carve-out: independent-committee-approved employment/severance deals are presumptively NOT tender consideration.
• Insider trading triggers on substantial steps toward commencing, reaching anyone with material nonpublic information from bidder, target, insiders, NO fiduciary breach needed (closing the Chiarella financial-printer gap). Net-long rule: tender only up to net long position (long minus short; e.g. 10,000 long / 4,000 short = 6,000 max), broker-dealers AND customers.
• Outside-purchase prohibition: bidder and covered persons can't buy outside the offer, announcement through expiration (a same-terms subsequent-period purchase excepted); self-tenders add a 10-business-day post-termination tail. Proration applies only to oversubscribed offers, across the WHOLE period (day-1 = day-20 percentage).
• A subsequent offering period (min 3 business days) is NOT an extension: same terms, no withdrawal/guaranteed-delivery, ALL-outstanding offers only. A mini-tender (under 5%) skips Schedule TO, 14D-9, all-holders/best-price, but anti-fraud, the 20-day minimum, position-statement, insider trading, outside-purchase still bind.

What Is the WAGS Bids Memory Aid?

WAGS Bids: Williams Act creates the regime, All-holders prevents discrimination, Going-private covers the issuer freeze-out, Schedule TO is the master disclosure document.

One-Breath Recap

The Williams Act built a neutral disclosure regime, splitting tender offers into the third-party rules (registered equity, bidder over 5% after consummation) and the universal rules (every offer), with courts filling the "tender offer" gap via the Wellman 8-factor test. The bidder files Schedule TO at commencement, the target answers on Schedule 14D-9 within 10 business days (recommend, oppose, neutral, or unable, never silence), and the offer stays open at least 20 business days. Withdrawal rights revive after 60 calendar (third-party) or 40 business days (self-tender). Equal treatment (all-holders, best-price) blocks side deals; insider trading is banned with no fiduciary breach required. Add proration and the under-5% mini-tender still owing anti-fraud: framework, timing, document.

Need more than the recap? Read the full Tender Offer Regulations unit.