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most post-Siliconix freeze-out tender offers have been for stock,36 and also reveals that the

disclosure of the bankers’ valuation opinion, as urged in Pure Resources, is redundant for the

three-quarters of tender offer freeze-outs that are subject to the same requirement under SEC

Rule 13e-3.

On offer conditions, all but one tender offer freeze-out (97%) included a back-end guarantee

at the same price as the initial offer.37 More interestingly, Figure 1 shows that only 33% of all

one-step merger freeze-outs (18 out of 55) include a MOM condition, and Table 1 shows that

this proportion increases to only 43% of merger freeze-outs when 90% conditions in two-step

merger freeze-outs are included as well. This low incidence is consistent with the fact that

current Delaware doctrine shifts the burden on entire fairness with either a SC process or a MOM

condition. Because the vast majority of post-Siliconix merger freeze-outs went through a SC

process, there is no further inducement in these deals for the controller to provide a MOM

condition. (Subramanian 2005)

On outcomes, Table 2A shows that freeze-out tender offers close in 119 days on average,

compared to 196 days for mergers. This timing difference is consistent with conventional

wisdom among practitioners that tender offers can serve to get cash to minority shareholders

36 37 Gilson & Gordon at 785 n.172. See, e.g., RDO Equipment SC-TO-C filed by Ronald D. Offutt (Dec. 17, 2002) (“If the conditions to his offer were satisfied and the offer completed, Mr. Offutt stated that he would subsequently effect a ‘short-form’ merger of the Company with his acquisition entity. In this merger, the remaining Company stockholders would receive the same price paid in the tender offer, except for those stockholders who elected to exercise their appraisal rights under Delaware corporate law.”). One back-end guarantee in the sample was not airtight. See SBC Communications Schedule SC-TO-T (“Q: If SBC Internet consummates the tender offer, what are its plans with respect to all the shares that are not tendered in the offer? A: If we consummate the tender offer, we intend to cause a merger to occur between Prodigy and SBC Internet . . . SBC Internet presently intends that the cash consideration paid in the

merger will be the guarantee because,

same as absent a

paid in the tender offer.”) (emphasis added). change in circumstances, a lower price would

I record this deal as having a back-end have invited a fair price claim. Delaware

law seems to require “the statement of intent liability in the event that it were to obtain 90% Resources, 808 A.2d 421, 447 n.51.

to be sufficiently clear as to expose it [the controller] to potential and not consummate the short-form merger at the same price.” Pure


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