Tender Offers and the New Delaware Section 251(h) Provision
New York - March 7, 2014
The tender offer structure has generally been relied on for speed in closing a deal compared with a
one-step merger1. Over the years, different provisions have been introduced and employed to expedite tender offer completions even more - Top-Up Options, Dual-Tracks, and more recently, the Delaware Section 251(h) Provision, or simply Section 251(h).
Section 251(h) is an opt-in provision that allows the completion of a tender offer deal, immediately following the consummation of a tender or exchange offer, without any shareholder approval. Unlike Short-Form Merger, which may only be effected if the acquirer already owns at least 90% of the target after the tender offer period and ensuing exercise of subsequent offering period or Top-Up Option or Dual-Track, Section 251(h) only primarily requires that a merger agreement include a stipulation expressly electing Section 251(h) to apply if certain conditions2 are met.
Since Section 251(h)'s inception last August, MergerMetrics has recorded a total of 31 agreed tender offers3, of which 22 have closed pursuant to Section 251(h), while five other transactions have been consummated via Section 253.
Total Agreed Tender Offers
August 2013 to February 2014