Target's Response: Schedule 14D-9 and Stop-Look-Listen

Schedule 14D-9 is the target board's voice in the tender-offer process. The 10-business-day clock is one of the most-tested timing facts in the unit, and the four permissible positions are tested in their own right.

What Must the Target's Position Statement Say Within 10 Business Days?

The required position statement is the target board's substantive response to the tender offer.

• The subject company must publish, send, or give to security holders a statement disclosing the company's position with respect to the tender offer
• The deadline is no later than 10 business days from the date the tender offer is first published, sent, or given to security holders
• If a material change occurs in the disclosed position, the subject company must promptly publish, send, or give shareholders a statement disclosing the change

The position must be one of four:

Whichever of the four positions the board takes, the statement must include the reason(s) for that position. A board cannot simply punt on a neutral or unable-to-take-a-position response without explaining why, and a recommend-accept or recommend-reject position also carries its own stated reasons in the fuller Schedule 14D-9 filing.

Exam Tip: Gotchas

• The 10-business-day clock for the target's response runs from COMMENCEMENT of the tender offer, NOT from the filing of Schedule TO with the SEC. Commencement is the date the offer is first published, sent, or given to security holders.
• A target board can be NEUTRAL or UNABLE TO TAKE A POSITION without violating the position-statement rule, but it CANNOT stay silent. The position statement on Schedule 14D-9 must go out within 10 business days even if the board has not yet decided whether to recommend or oppose.
• The 10-business-day deadline is not the only clock. If the board's disclosed position materially changes afterward (for example, moving from neutral to recommend rejection), the board must promptly disclose that change; it is not free to leave a stale position statement on file.

What Must Schedule 14D-9 Disclose?

The position statement is filed on Schedule 14D-9 ("Solicitation/Recommendation Statement"). The schedule pulls disclosure content from Regulation M-A.

Required content:

• Reasons for the position (whichever of the four positions the board took)
• Financial advisor fairness opinions if any (typically referenced and attached as an exhibit when the board recommends rejection or acceptance)
• Conflicts of interest of the board, financial advisor, or management
• Intent of executive officers and directors to tender (or not tender) their own shares
• Material events leading up to the offer (negotiations, contacts, alternatives explored)

The Schedule 14D-9 is what a target board uses to make its case against (or for) the offer. In a hostile tender, the rejection rationale, the projected stand-alone value, and the alternative paths the board considered all go into Schedule 14D-9.

What Is the Stop-Look-Listen Notice?

Sometimes the target board needs time to evaluate the offer before issuing a full position. The "stop-look-listen" notice is the bridge.

• A brief notice issued by the target between commencement of the tender offer and the full Schedule 14D-9 filing
• Tells shareholders not to act on the tender offer until the board's full Schedule 14D-9 is filed
• The stop-look-listen does NOT replace the Schedule 14D-9 obligation; it only buys time within the 10-business-day window

Tender-offer rules require that any solicitation or recommendation by the target be made via Schedule 14D-9 in any event. A board that has actively decided "we recommend rejection" cannot quietly walk that recommendation through an investor-relations email; it must file Schedule 14D-9.

Think of it this way: The stop-look-listen is the equivalent of "hold the phone." The board is telling shareholders "we hear the offer, we are evaluating it, please do not tender yet." The board's actual position still has to come out on Schedule 14D-9 inside the 10-business-day window.

Exam Tip: Gotchas

• Any board recommendation must go on Schedule 14D-9. A back-channel "the board likes this offer" message to a strategic shareholder violates the rule. The recommendation has to be a public, filed document.
• The stop-look-listen does NOT extend the 10-business-day position-statement deadline. It is a holding notice WITHIN the 10-business-day window, not a substitute for filing Schedule 14D-9.

How Do Bidder and Target Filings Compare Side by Side?

What Should You Check on Exam Day?

• Confirm the 10-business-day clock runs from commencement of the tender offer (first published, sent, or given), not from the Schedule TO filing date.
• Remember all four positions require stated reasons; neutral and unable-to-take-a-position responses are permitted but silence is never permitted.
• Do not let a stop-look-listen notice substitute for the Schedule 14D-9 filing; it only buys time within the same 10-business-day window.
• Any actual board recommendation, however communicated, must appear on Schedule 14D-9.
• Remember a material change to an already-disclosed position triggers a separate prompt-disclosure obligation, not just the original 10-business-day deadline.