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U.S. Securities and Exchange Commission

SEC Amends Tender Offer Best-Price Rules to Benefit Investors


Washington, D.C., Oct. 18, 2006 — The U.S. Securities and Exchange Commission gave unanimous final approval today to rules changes to its “best price” rule concerning tender offers. The “best price” rule requires that all shareholders are paid the same price in a tender offer. The changes, which were made necessary by conflicting court interpretations, make clear that compensation for services that might be paid to a shareholder doesn’t count as part of the price paid for his shares.

“Confusion over whether compensation, severance, and other employee benefits are counted for the purpose of the best-price rule has injured investors by discriminating against tender offers,” SEC Chairman Christopher Cox said. “Our regulations should be absolutely neutral as between tender offers, mergers, and other forms of business combination so that market considerations can determine which structure creates more value for shareholders.”

“With the help of important public comments, the Commission has crafted constructive changes to the proposed amendments. I believe that the revisions adopted today will further the Commission’s goal of providing fair and equal treatment for all security holders in tender offers while clarifying that the best-price rule applies only with respect to the consideration offered and paid for securities tendered,” said John W. White, Director of the SEC Division of Corporation Finance.

As amended, the tender offer best-price rules clarify that the consideration paid to any security holder for securities tendered in a tender offer is the highest consideration paid to any other security holder for securities tendered in the offer. To insure that investors are protected and the fundamental purpose of the rule is upheld, it also exempts compensatory arrangements from the rule so long as specific substantive standards are satisfied, and includes a safe harbor that hinges upon approval of independent members of the board of directors.

For further information, please contact John Nester, Director of Public Affairs, at (202) 551-4120.

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The full text of the detailed release concerning these amendments will be posted to the SEC Web site as soon as possible.



Modified: 10/18/2006