CHAPTER 03 Pre-bid Considerations
Selecting Transaction Structure: Plan of Arrangement vs. Takeover Bid vs. Amalgamation
Plan of Arrangement
Takeover Bid
Amalgamation
– Merger effected by securityholder vote and court approval – Acquirer and target enter into arrangement agreement – Acquirer may enter into voting support agreements with significant securityholders – Target mails proxy circular to securityholders (no regulatory review) – Securityholders approve at meeting (locked-up shares can be voted) – Obtain court approval as to “fairness” – Cash and/or securities – Discrimination among securityholders permitted, subject to “fairness” and majority-of-the-minority approval
– Purchase of shares effected by offer directly to securityholders – Acquirer and target enter into support agreement (if friendly) – Acquirer may enter into lock-up agreements with significant securityholders – Acquirer mails takeover bid circular to securityholders of target (no regulatory review) – Target mails directors’ circular to securityholders of target (no regulatory review) – Securityholders tender to offer – Cash and/or securities – Discrimination among securityholders prohibited, except for certain employment arrangements or with securities commission approval (time requirement: approximately four weeks) – Approximately 60 days from announcement of transaction to consummation of transaction, assuming target board waives minimum bid period of 105 days down to 35 days
– Merger effected by securityholder vote
What is it?
– Acquirer and target enter into merger agreement – Acquirer may enter into voting support agreements with significant securityholders – Target mails proxy materials to securityholders (no regulatory review) – Securityholders approve
How is it accomplished?
at meeting (locked-up shares can be voted)
– Cash and/or securities – Discrimination among
securityholders permitted, subject to majority-of-the- minority approval
Consideration
– Approximately 68 days from announcement
– Approximately 55 days from announcement
of transaction to consummation of
of transaction to consummation of transaction
Timing (See Appendix)
transaction (but faster than takeover bid if bid requires second-step transaction)
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