Post-Bid Integration – Securities Regulation

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You can grab notes on other topic from here.

Pre-Bid Integration: Only applies to private agreements, you can do this on the open market if you want b/c it’s random

• E.g. If I know I’ll make a takeover bid tomorrow, I own no shares of a public company. B owns 19% of shares. Ill buy all your shares at $50 a share, stock trading at $10, you buy them. Nothing to stop that, 019, early warning, insider reporting, but nothing stopping it. Tomorrow, I make bid for the rest of the company at $20 a share = … no.

o OSA 93.2(1): when you make a formal t/o bid, going to look BACK 90 days from the date of your takeover bid. If in that 90 day period, you bought shares by way of private agreement from anybody, your t/o bid has to be for the highest price and highest percentage of shares you bought in that 90 day period. (if 91 days?)

o 90 days is a stupid bright line test, no significance. Can do it at 91 and you’re a-okay.

■ E.g. 40 days before, I buy 100% of A’s shares at $10, B I buy 50% of their shares at $12 at day 30. My bid has to be for 100% of shares of company at $12

  1. Section 93.2(1): Restrictions on Acquisitions Before Formal Take-Over Bid

s.93.2(1): Restrictions on Acquisitions before Formal Take-Over Bid: If, within the period of 90 days immediately preceding a formal take-over bid, an offeror acquired beneficial ownership of securities of the class subject to the bid in a transaction not generally available on identical terms to holders of that class of securities, (private agmt ONLY)

  • (a) the offeror shall offer,

o (i) consideration for securities deposited under the bid at least equal to and in the same form as the highest consideration that was paid on a per security basis under any such prior transaction, or

o (ii) at least the cash equivalent of that consideration; and

  • (b) the offeror shall offer to acquire under the bid that percentage of the securities of the class subject to the bid that is at least equal to the highest percentage that the number of securities acquired from a seller in any such prior transaction was of the total number of securities of that class beneficially owned by that seller at the time of that prior transaction.

(2) Exception **once again, the rule in (1) ONLY APPLIES TO PRIVATE AGMTS!!: Subsection (1) does not apply to trades effected in the normal course on a published market if the trades satisfy such conditions as may be specified by regulation.

  1. Legislative Goal Met

Equality: Ensures that certain shareholders are not being paid a premium that other SHs are not getting the advantage of, just b/c it was done in a roundabout way prior to the formal bid

  1. Post-Bid Integration

Same as above in that this only applies to private agmts, not trades on market

  • E.g. If you have takeover bid outstanding, you’re a big SH. You don’t want to tender at $20 a share and I need your shares. I say don’t worry, let me buy everyone else’s at $20, then buy yours a day after I close by bid by priv agreement at $25 a share (or do a new bid)

o Obviously can’t do this

o Section 93.3(1): if you have t/o bid outstanding, you cannot enter into any agmt with anyone else to buy their shares at a different price, or make a takeover bid at a higher price for at least 20 trading days after the expiry of the bid

6.5.3.1 Section 93.3

  • s.93.3(1) Restrictions on acquisitions after formal bid: During the period beginning with the expiry of a formal bid and ending at the end of the 20th business day after that, whether or not any securities are taken up under the bid, an offeror shall not acquire or offer to acquire beneficial ownership of securities of the class that was subject to the bid except by way of a transaction that is generally available to holders of that class of securities on identical terms. **MUST BE ON IDENTICAL TERMS TO THE BID AND OPEN TO EVERYONE!!
  • (2) Exception **again only applies to PRIVATE agmts: Subsection (1) does not apply to trades effected in the normal course on a published market if the trades satisfy such conditions as may be specified by regulation.

You can grab notes on other topic from here.


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