Judges, it seems, have a way of turning the common to the convoluted, the intuitive to the indistinct, and the obvious to the obscure. So it has been with the SEC’s tender offer best price rule, which is supposed to ensure all shareholders responding to a tender offer receive the same price for their shares.
By all appearances, the best price rule represents an axiomatic or at least a quasi-axiomatic proposition. But since a 1995 federal court decision that required judges to examine virtually any collateral benefits paid by acquirers to shareholders, plaintiffs’ attorneys have been holding tender offers hostage, claiming that such things as employment compensation and benefits, severance arrangements and commercial contracts between acquirers and customers or suppliers who are also shareholders offend the best price rule.
