Chapter 15: Tender Offers - Multiple Choice

An issuer tender offer made under terms of Rule 13e-4 must remain open at least how many business days from commencement of the offer? A) 20 B) 30 C) 60 D) It depends on whether the offer is for cash or securities

A) 20

Tender offer bidders are not allowed to accept shares tendered without either paying the share price offered or else promptly returning the shares. This prohibited practice is called A) A reneg B) A rescission C) A revocation D) A repudiation

A) A reneg

Who makes the decision on whether a tender offer will be accepted or rejected? A) Each shareholder B) A majority of public shareholders C) A majority of all equity holders D) A majority of all security holders

A) Each shareholder

By following the provisions of SEC Rule 10b-18, an issuer is allowed a safe harbor for the purchase of its I. Common Stock II. Convertible Bonds III. Warrants A) I only B) I and II only C) II and III only D) I, II and III

A) I only

In a going-private transaction, a "short-form merger" under Delaware corporate law is not required to meet an "entire fairness test" for A) Valuing shares owned by minority shareholders B) Providing full disclosure to shareholders C) Meeting issuer tender offer requirements D) De-listing from a securities exchange

A) Valuing shares owned by minority shareholders

In which LBO scenario is a Schedule 13E-3 filing required? A) Where an "affiliate" is part of the buyout group B) Where a multi-billion dollar private equity firm is involved C) Where the target market capitalization is greater than $1 billion. D) Where a private equity buyer won an auction for the asset

A) Where an "affiliate" is part of the buyout group

SEC Rule 14a-6 refers to the filing requirements for A) proxy statements B) tender offers C) periodic filings D) prospectuses

A) proxy statements

For which type of issuer tender offer may the dissemination requirements be met if the issuer publishes an announcement in a newspaper on the date the tender offer begins? A) None B) A cash-only offer C) An offer to purchase a controlling interest D) An offer made to insiders only

B) A cash-only offer

According to SEC Rule 13e-4, an offer, request or invitation for tenders of equity securities made by the company itself is referred to as A) A good-faith offer B) An issuer tender C) A stock solicitation D) A registered secondary

B) An issuer tender

In issuer tender offers, issuers must meet different types of regulatory requirements. For example, in cash-only tenders, an issuer can meet one type of requirement by publishing an announcement in a newspaper on the date the tender begins. This is an example of meeting a A) Disclosure requirement B) Dissemination requirement C) Filing requirement D) Documentation requirement

B) Dissemination requirement

Under Rule 14e-5, a "covered person" is not allowed to purchase shares of the target company in a tender offer, except by tendering shares through the offer, during which period? A) For 10 days after the tender is announced B) From the time the tender is publicly announced until it expires C) From the time the tender is publicly announced until 20 days after it expires D) During the 30 days before and after the tender offer

B) From the time the tender is publicly announced until it expires

Following an issuer tender offer, a public company ("the issuer") wishes to continue buying its own shares through private negotiations with large shareholders. How would the issuer announce its intention to make these share purchases? A) In a quarterly 10-Q filing B) In an 8-K filing C) By amending the tender offer terms D) Post-tender open market purchases are not allowed

B) In an 8-K filing

Phil is an investment banker acting as a paid advisor to a public company involved in a tender offer ("the purchaser"). He is not affiliated with the purchaser and is not a dealer-manager working on behalf of the purchaser. Is he considered a "covered person," prohibited from purchasing affected securities during the tender offer, except as part of the tender offer? A) Yes, in all cases B) It depends on whether his compensation depends on offer completion or success C) It depends on whether he already owns shares of the tender target company D) No, not in any case

B) It depends on whether his compensation depends on offer completion or success

A tender offer is a broad solicitation made by an acquirer to purchase total or partial ownership of a A) Privately held company B) Public company C) Registered investment company D) Foreign corporation

B) Public company

A company that is the target of a tender offer must file which schedule to announce its response to the offer? A) Schedule TO B) Schedule 14D-9. C) Schedule 13E-3 D) Schedule 13D

B) Schedule 14D-9.

What is the main difference between a regular Dutch auction tender and a "modified" Dutch auction tender? A) The number of bids each bidder can submit B) The ability to change the acceptable price range during bidding. C) The number of successful bidders D) The length of time the auction continues

B) The ability to change the acceptable price range during bidding.

When must 14D-9 be filed? A)Within 30 business days of Schedule TO filing B) Within 10 business days of Schedule TO filing C) Six month prior to DEFM14A filing D) One business day following a transaction announcement

B) Within 10 business days of Schedule TO filing

Schedule 13D is commonly referred to as a A) majority owner statement B) beneficial ownership report C) Rule 144 disclosure document D) voting class certificate

B) beneficial ownership report

Grace owns 2,000 shares of ABC Corporation common stock long and she is short 800 shares of the same stock. She holds no "equivalent securities." What is the maximum number of shares she can tender, in response to a tender offer? A) None B) 800 C) 1200 D) 2000

C) 1200

Which SEC document is filed in response to Schedule TO? A) 424B B) S-4 C) 14D-9 D) DEFM14A

C) 14D-9

In a tender offer, an issuer makes written communication during the pre-commencement period, addressed to securities holders of the target company. This communication must include: A) Terms of the offer B) Dates of the offering C) A prominent legend in clear, plain-language D) Instructions on how to tender shares

C) A prominent legend in clear, plain-language

In a "going private" transaction, a minority shareholder feels that the share price offered is not fair. What rights may this shareholder have for pursuing a higher share price? A) None B) Arbitration rights, as determined by an SEC panel C) Appraisal rights granted by state law D) A right of limited negotiation, as provided by the '33 Act

C) Appraisal rights granted by state law

An issuer initiates a tender offer in which it states a range of prices in which tenders will be accepted and a number of shares it wishes to acquire. All accepted bids will receive the same share price, the "clearing bid." This type of offer is called A) An open-end tender B) Blind bidding C) Dutch auction D) Reverse auction

C) Dutch auction

What information can typically be found in a Schedule 14D-9? I. Prospectus for securities issued as purchase consideration in an M&A transaction II. Recommendation from target's Board of Directors on how to respond to a tender offer III. Fairness opinion IV. Proxy statement A) I and III B) I and IV C) II and III D) II and IV

C) II and III

The Rule 10b-18 safe harbor applies to open market purchases of an issuers I. Debt securities II. Preferred Stock III. Common stock A) I only B) II and II only C) III only D) I, II and III

C) III only

SEC Rule 14-e requires the target company in a tender offer to give security holders a statement of its position on the offer. Which of the following is TRUE about this statement? A) It must clearly state whether the target company either accepts or rejects the offer B) It must be provided within 20 days C) It may state that the target company is unable to take a position D) It may not state that the target company is neutral on the offer

C) It may state that the target company is unable to take a position

An issuer tender offer expires after the required 20-day period, with very few holders agreeing to accept the offer. The disappointed issuer chooses to keep the offer open an additional 15 days, but does not accept payment for any of the shares tendered. May the offer be withdrawn? A) No, because more than 30 days has elapsed B) No, because the offer was extended C) Yes, because payment for shares was not accepted D) Yes, but only with the consent of holders who tendered

C) Yes, because payment for shares was not accepted

A "mini-tender" offer is subject to minimum filing and disclosure requirements, provided that it seeks to acquire A) a non-controlling interest B) family-held shares C) less than 5% of the outstanding shares D) less than 15% of the outstanding shares

C) less than 5% of the outstanding shares

SEC Rule 14d-10 requires equal treatment of security holders in a tender offer. If state law prohibits a bidder from making a tender offer to holders living in that state, what must the bidder do? A) Withdraw the offer everywhere B) Apply for an exemption to state law C) Comply with federal regulation, as it takes precedence D) Adhere to state law, as equal treatment does not override it

D) Adhere to state law, as equal treatment does not override it

Under the Rules of SEC 10b-18 an issuer with an average trading volume less than $1 million per day or a public float value below $150 million is unable to A) Purchase its own securities at any time B) Sell its own securities within the first hour of the opening C) Sell stock to qualified institutional buyers D) Are discouraged from trading its own securities within 30 minutes of the end of the trading day

D) Are discouraged from trading its own securities within 30 minutes of the end of the trading day

In a tender offer, the issuer must file any written public announcements of the offer that are made A) Prior to the offer B) During the offer C) During a 10-day period commencing on the tender date D) At any time

D) At any time

Which of the following are types of requirements that issuers must meet in an "issuer tender offer" made under Rule 13e-4? I. Filing requirements II. Fairness opinion requirements III. Disclosure requirements IV. Dissemination requirements A) I and II B) I and IV C) I, II and III D) I, III and IV

D) I, III and IV

Which two of the following SEC filings are specific to tender offers? I. Definitive Agreement II. Schedule 14D-9 III. 10-K IV. Schedule TO A) I and III B) I and IV C) II and III D) II and IV

D) II and IV

In which circumstances is a Schedule 13E-3 filing required? A) For all private company M&A deals B) For all public company M&A deals C) When stock is used a portion of the purchase consideration D) In a "going private" LBO

D) In a "going private" LBO

SEC Rule 10b-18 provides a "safe harbor" from liability for market manipulation in making open market repurchases of an issuer's common stock. The issuer must meet daily requirements for A) Minimum and maximum purchases B) The entities with whom purchases can be made C) The maximum number of shares purchased D) Manner, timing, price and volume

D) Manner, timing, price and volume

What document must be filed by a person acquiring beneficial ownership of 5% of the registrant's equity securities? A) Schedule 1-A B) Form 8-K C) Form 14A D) Schedule 13D

D) Schedule 13D

Which of the following documents does a target file in response to a tender offer? A) T-10 B) Schedule 13E-3 C) 10-K D) Schedule 14D-9

D) Schedule 14D-9

Tender offer communication is sent prior to the start of the offer. This communication is very limited in scope, consisting only of the bidder's identity, a statement that the offer is being evaluated by the target, and an alert that the target company may recommend acceptance or rejection of the offer. This communication is called A) A red herring B) A blue sky notice C) Right-of-refusal advertisement D) Stop-look-and-listen

D) Stop-look-and-listen