CME-1 Takeovers & Tender Offers 3

Question 1

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

Accepted Answer

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

Answer

Persons who simultaneously buy shares in the open market without any coordination

Answer

Institutional investors who attend the same shareholder general meeting

Answer

Persons who hold shares in the same industry sector of the market

Question 2

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

Accepted Answer

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

Answer

Only shareholders who accept after the revision is announced

Answer

Only shareholders who reject the original price and then re-tender their shares

Answer

Only institutional shareholders holding more than 1% of the target

Question 3

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

Accepted Answer

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

Answer

Payment of a penalty to the CMA equal to 1% of the announced offer value

Answer

Compensation to the target company for advisory expenses only

Answer

A simple announcement of withdrawal with no further regulatory obligations

Question 4

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

Accepted Answer

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

Answer

The offer automatically extends for another 28-day period

Answer

The CMA requires the offeror to complete the purchase regardless

Answer

The offer converts into a partial offer for the shares that were tendered

Question 5

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

Accepted Answer

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

Answer

Acquiring 30% of voting rights through open market purchases on Tadawul

Answer

Acquiring 30% of voting rights through a private placement of new shares

Answer

Buying shares from a major shareholder that bring the total to 35% of voting rights

Question 6

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

Accepted Answer

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

Answer

The offeror's right to compulsorily acquire minority shares after reaching 90%

Answer

The CMA's power to force a full merger between two listed companies

Answer

The target board's right to reject any offer below independently assessed fair value

Question 7

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

Accepted Answer

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

Answer

The target board may take any defensive measure provided it discloses this to CMA within 48 hours

Answer

The target company must recommend acceptance of any offer above the 12-month average share price

Answer

The target board is prohibited from communicating with shareholders during the offer period