Takeovers & Tender Offers Flashcards

Under the 'acting in concert' concept in CMA Merger and Acquisition Regulations, which of the following best describes persons acting in concert?

Answer: Persons who cooperate pursuant to an agreement or understanding to obtain or consolidate control

Persons acting in concert are those who cooperate, pursuant to an agreement or understanding (formal or informal), to obtain or consolidate control of a target company.

If the offeror revises (increases) the offer price during the offer period, who benefits from the higher price?

Answer: All shareholders who accept the offer, including those who already tendered at the lower price

When the offer price is revised upward, all accepting shareholders—including those who tendered before the revision—receive the improved price under CMA's equal treatment principle.

Under CMA regulations, an offeror who withdraws a completed tender offer announcement faces which consequences?

Answer: Requirement to obtain CMA consent and generally being prohibited from making another offer for 12 months

An offeror who withdraws an offer must obtain CMA's consent and is typically prohibited from making another offer for the same target for a 12-month cooling-off period, discouraging frivolous announcements.

What happens to a conditional tender offer if the minimum acceptance condition is not met by the closing date?

Answer: The offer lapses and all tendered shares are returned to their owners

If a conditional tender offer fails to achieve its minimum acceptance threshold by the closing date, the offer lapses and all shares tendered by shareholders are returned to them.

Which of the following transactions generally does NOT trigger a mandatory tender offer obligation under CMA Merger and Acquisition Regulations?

Answer: Inheriting shares that bring a total holding to 30% of voting rights

Involuntary acquisitions such as inheritance, where shares are received without a deliberate purchase decision to acquire control, are generally exempt from triggering mandatory offer obligations.

Under CMA regulations, the 'sell-out right' (also called the right of minority squeeze-in) refers to:

Answer: The right of remaining minority shareholders to require the 90%+ offeror to buy their shares

The sell-out right allows minority shareholders who did not accept the offer to require the offeror (who has reached 90%+) to purchase their shares at the offer price, the mirror image of the squeeze-out right.

Which of the following best describes the 'no-frustration' principle applicable to target companies during a tender offer period under CMA regulations?

Answer: The target company must not take actions outside the ordinary course of business that could defeat the offer without shareholder approval

The no-frustration principle requires the target company to refrain from actions outside ordinary business that could defeat the offer—such as issuing shares or selling material assets—unless shareholders approve such defensive measures.