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Mergers & Acquisitions. Mark Siciliano. Definitions. Merger – A joining of two companies to form a new single company. Executives and board may reflect equality upon consummation of the transaction. (Sears/Kmart)
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Mergers & Acquisitions Mark Siciliano
Definitions • Merger – A joining of two companies to form a new single company. Executives and board may reflect equality upon consummation of the transaction. (Sears/Kmart) • Acquisition – Taking over of nearly all of one company by another entity. The result will usually be the target becoming the subsidiary of the acquiring company (Progress Energy/Duke Energy)
Common Types • Tender Offer – Acquiror offers cash or a combination of cash/stock directly to target shareholders. Offer must remain open for 20 business days and a minimum number of target shares must be tendered • Stock Swap – Shares of acquiring company are offered for each share outstanding of target company. Upon completion target shareholders will have some ownership of larger entity.
Filing Types • Tender offer – Acquiror must file an SC TO-T. Target must respond with an SC 14D9. • Stock Swap – Either acquiror (or newco) must file an S-4; the issuance of new securities. • In both instances a Merger Agreement (usually in the form of an 8-K) and a proxy must be filed. Proxies may accompany the aforementioned documents or may be issued via a DEFM14A/DEFM14C.
Hostile – Acquiror makes offer to board of target company and is rejected. Acquiror continues without support of target • Buyout – An investor group (that may include current management) and makes the acquisition • Bear Hug – Letter is sent to target ‘threatening’ a takeover if the board doesn’t agree to terms of acquiror (usually board representation)
