SEC Adopts Amendments to Tender Offer Best-Price Rule

On November 6, 2006, the New York office authored an Alert memorandum entitled “SEC Adopts Amendments to Tender Offer Best-Price Rule.” This three-page memo discusses the SEC’s recently adopted rules to clarify that the best-price rule applies only with respect to the consideration paid for securities tendered in a tender offer. In particular, the amendments provide a specific exemption and nonexclusive safe harbor for employment compensation, severance, non-compete or other employment-related benefit arrangements entered into with any shareholder of a company whose shares are the subject of a tender offer if certain conditions are met. The amended “best-price” rule should provide greater certainty to bidders who desire to pursue business combination transactions via tender offers which are generally quicker than statutory mergers. Accordingly, we expect there will be an increase in the use of tender offers except for acquisitions expected to involve a long regulatory or antitrust process. The alert briefly summarizes some of the key points of the newly adopted rules.