SEC Amends Tender Offer "Best Price" Rule

January 11, 2007

On October 18, 2006, the Securities and Exchange Commission adopted amendments to its “best price” rule which are expected to revive the functionality of tender offers as an alternative to structuring a friendly acquisition as a merger.  The best price rule requires that all shareholders be paid the same price in third-party and issuer tender offers.  The amendments clarify that the best price rule applies only to the consideration paid for tendered securities, and does not apply to amounts paid pursuant to employment compensation, severance or other employee benefit arrangements.  Because private equity funds have become leading buyers of public companies, one likely consequence of the amendments will be an increase in the use of consensual tender offers by private equity funds.

The amendments are set forth in SEC Release No. 34-54684 and became effective on December 8, 2006.  They are available at http://www.sec.gov/rules/final/2006/34-54684.pdf.

This alert is designed to provide an overview of the scope of the amendments.  If you would like more information concerning the amendments please contact any of the attorneys listed below:

Click here to read the full e-Alert.

These materials should not be considered as, or as a substitute for, legal advice and they are not intended to nor do they create an attorney-client relationship. Because the materials included here are general, they may not apply to your individual legal or factual circumstances. You should not take (or refrain from taking) any action based on the information you obtain from this document without first obtaining professional counsel and you should not send us confidential information without first speaking to one of our attorneys and receiving explicit authorization to do so.

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