Timing Mechanics: Periods, Extensions, Withdrawal, Prompt Payment

Timing is the single highest-density topic in this unit. Almost every tender-offer timing question can be answered by knowing these numbers: 20 business days, 10 business days, 60 calendar days (third-party revival), 40 business days (issuer-offer revival), 3 business days, and (for the negotiated all-cash equity exemption) 10 business days. Get those numbers right and the questions become straightforward.

How Long Must a Tender Offer Stay Open?

A tender offer must remain open for at least 20 business days from the date the offer is first published, sent, or given to security holders.

• The 20-business-day minimum sits in the minimum-period rule under the universal tender offer rules
• Same minimum applies to issuer self-tenders under the issuer tender offer rule
• Designed to give investors enough time to evaluate the offer

An SEC exemptive order created a narrow 10-business-day option for a tender offer made under a negotiated merger agreement, for all outstanding securities of the class, at a fixed cash-only price. For Series 79 purposes, the default minimum is still 20 business days. The 10-business-day exemption is a recent, narrowly conditioned carve-out, not the general rule.

A separate, narrower carve-out runs the other direction: a tender offer that involves a roll-up transaction with securities registered (or to be registered) on Form S-4 or Form F-4 must stay open at least 60 calendar days, not 20 business days.

Roll-up transactions are a specialized fact pattern; do not confuse this 60-calendar-day minimum with the unrelated 60-calendar-day withdrawal-rights revival period covered below.

Exam Tip: Gotchas

• The minimum offer period is 20 BUSINESS DAYS, not 20 calendar days. Counting weekends and holidays as part of the open period is a classic exam trap. A tender offer launched on Friday does not close until 20 business days later, with weekends and holidays excluded.
• The exemptive order is a NARROW exception with three conditions: negotiated merger agreement, all outstanding securities of the class, fixed cash-only price. The Series 79 default minimum is still 20 business days. Don't assume 10 business days unless the fact pattern satisfies all three conditions.
• A roll-up transaction offering registered securities has its OWN 60-calendar-day minimum, distinct from both the 20-business-day general minimum and the 60-calendar-day withdrawal-rights revival period.

When Must the Bidder Extend the Offer for a Change of Terms?

When the bidder changes the deal mid-flight, the offer must stay open longer to give shareholders time to react to the new terms.

The extension clock runs from the date the notice of the change is published, sent, or given to shareholders, not from the date the bidder decided to make the change. A separate 5-, 10-, or 20-business-day dissemination schedule applies only to a registered-securities offer commenced with a preliminary prospectus; it is not a general materiality-based rule for every material change.

A narrow 2% exception softens the percentage-change trigger: accepting an additional amount of securities that does not exceed 2% of the class is not treated as an "increase," so it does not by itself force a 10-business-day extension.

The bidder also cannot extend quietly. Extending a tender offer requires a public announcement of the extension (by press release or other public notice, disclosing the approximate number of securities deposited so far), issued no later than 9:00 a.m. Eastern time on the next business day after the offer's scheduled expiration.

Think of it this way: If the bidder raises the price on day 18 of a 20-business-day offer, the offer cannot close on day 20. It has to stay open at least 10 business days from the date the price change is disseminated. Shareholders need time to react to the new economics.

Exam Tip: Gotchas

• A price, percentage, or dealer's-soliciting-fee change automatically triggers a 10-business-day extension from the date notice is disseminated. All three changes share the same 10-business-day trigger.
• A generic "other material change" does not carry a fixed 5-to-10-business-day window. That numbered schedule is specific to a registered-securities offer using a preliminary prospectus; other material changes require prompt dissemination without a bright-line day count.
• A bidder cannot move price on day 19 and close on day 20. The 10-business-day extension is mandatory once notice goes out.
• Accepting up to 2% more securities than originally sought does NOT count as an "increase" that triggers the extension. Only a change larger than that 2% cushion forces the 10-business-day clock.
• An extension must be publicly announced, including the approximate number of securities deposited to date; a bidder cannot silently keep an offer open past its stated expiration.

When Can Shareholders Withdraw Tendered Shares?

The withdrawal-rights regime gives tendering shareholders an exit valve.

• A tendering shareholder may withdraw tendered securities at any time while the offer remains open
• For a third-party tender offer, if the offer has not been consummated within 60 calendar days after commencement, withdrawal rights revive thereafter
• For an issuer tender offer (self-tender), securities not yet accepted for payment become withdrawable again after 40 business days from commencement; this issuer-specific revival period is not the same 60-calendar-day figure that applies to third-party offers
• Withdrawal rights are NOT required during a subsequent offering period (covered in the proration section)

The revival rules are a backstop for long-running offers (typically blocked by antitrust review, going-private litigation, or regulatory approvals). The two revival periods use different measures (calendar vs business days) and different lengths, so do not treat them as interchangeable.

Exam Tip: Gotchas

• Withdrawal rights apply during the INITIAL offer period. They do NOT apply during a subsequent offering period. A shareholder who waits to tender until the subsequent period gets the same price but loses the option to walk away.
• The third-party revival backstop is 60 CALENDAR days; the issuer self-tender revival backstop is 40 BUSINESS days. Do not apply the third-party figure to an issuer self-tender fact pattern, or vice versa.

How Quickly Must the Bidder Pay?

The bidder cannot delay paying tendering shareholders after the offer terminates.

• The bidder must pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the offer
• SEC guidance interprets "prompt" as generally within 3 business days of the relevant transaction date
• Subject to facts and circumstances when regulatory approvals are pending

The prompt-payment rule prevents the bidder from holding tendered shares hostage while it tries to renegotiate or restructure the deal.

Can the Bidder Terminate an Offer Without Notice?

The offer cannot terminate without prior notice to security holders. A bidder who terminates an offer (because conditions were not satisfied, antitrust review failed, or the bidder simply walked away) must give shareholders notice of the termination so they can recover their tendered shares.

What Are the Key Timing Numbers at a Glance?

Memory Aid: Twenty-ten-three. Twenty business days minimum, ten for price/percentage/fee changes, three for prompt pay. The two withdrawal-revival numbers (60 calendar days third-party, 40 business days issuer) don't fit the mnemonic; memorize them separately.

What Should You Check on Exam Day?

• Count the 20-business-day minimum, the 10-business-day extension triggers, and the 3-business-day subsequent period and prompt-payment windows in business days; count the third-party 60-day withdrawal-rights revival in calendar days and the issuer self-tender revival in 40 business days.
• Do not apply the narrow 10-business-day exemptive-order minimum unless the fact pattern is specifically a negotiated, all-cash tender offer for all outstanding equity securities; the Series 79 default remains 20 business days.
• Confirm the extension clock starts when notice of the change is published, sent, or given, not when the bidder internally decides to make the change.
• Do not apply a blanket 5-to-10-business-day window to every "other material change"; that schedule is specific to a registered-securities offer using a preliminary prospectus, and the general rule for other material changes is prompt dissemination.
• Remember withdrawal rights end during a subsequent offering period even though the same-price requirement continues.