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 six numbers: 20 business days, 10 business days, 5 to 10 business days, 60 business days, 3 business days, and (for the negotiated all-cash equity exemption) 10 business days. Get those numbers right and the questions become straightforward.

Minimum 20-Business-Day Offer Period

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 certain negotiated all-cash equity tender offers. For Series 79 purposes, the default minimum is still 20 business days. The 10-business-day exemption is a recent carve-out, not the general rule.

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 for negotiated all-cash equity offers. The Series 79 default minimum is still 20 business days. Don't assume 10 business days unless the question specifically describes a negotiated all-cash equity offer falling under the order.

Extensions on 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.

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 change (up OR down) automatically triggers a 10-business-day extension from the date notice is disseminated. Same rule applies to a change in the percentage of the class sought.
• Other material changes get 5 to 10 business days depending on materiality. The SEC's interpretive guidance does not give a bright line.
• A bidder cannot move price on day 19 and close on day 20. The 10-business-day extension is mandatory once notice goes out.

Withdrawal Rights

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
• If the tender offer has not been consummated within 60 business days after commencement, withdrawal rights revive thereafter
• Withdrawal rights are NOT required during a subsequent offering period (covered in the proration section)

The 60-business-day revival is a backstop for long-running offers (typically blocked by antitrust review, going-private litigation, or regulatory approvals).

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 60-business-day revival is a backstop for stuck offers. If the offer has not closed within 60 business days, withdrawal rights revive.

Prompt Payment

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.

No Termination 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.

Quick-Reference: Timing Numbers

Memory Aid: Twenty-ten-ten-three. Twenty business days minimum, ten for price/percentage changes, ten max for material changes, three for prompt pay.