Friday, June 8, 2007
The use of a tender offer also removes from the equation proxy advisory firms such as Institutional Shareholders Services, which criticized the earlier offer. The recommendations of such firms hold great sway over institutional investors. An I.S.S. spokeswoman told DealBook that the firm generally did not issue recommendations in tender offers, though it would provide an analysis for its clients.
Private equity buyers making controversially low offers take note.
The New York Times also makes the point that tenders offers are now a more palatable structure for private equity buyers since the SEC adopted a safe-harbor for employee compensation from the all-holders best price rule. Tender offers permit quicker deal consummation; a tender offer can be completed in twenty business days as opposed to two-three months for a merger. The Times is right, but you haven't seen, and likely won't see, more tender offers in private equity deals because of the pervasive use of go-shops in these transactions and the extra time they require anyway, making a merger a preferred option.
Also, Biomet has filed its revised agreement for the transaction. In the agreement, the minimum condition for the offer is set at 75% of the outstanding shares or that:
number of Shares that is not less than the number of such Shares . . . . that, when added to the number of Shares beneficially owned . . . . by Parent, any of its equity owners or any of their respective Affiliates, and any Person that is party to a voting agreement with Parent or Purchaser obligating such Person to vote in favor of Merger . . . . represents at least 75% of the total number of Shares outstanding immediately prior to the expiration of the Offer.
So, it appears that Biomet did not effectively lower the minimum condition to approve the transaction by changing its structure. Good for them.