Corporate Event Consideration - Equity Derivatives Provision

2002 ISDA Equity Derivatives Definitions

A Jolly Contrarian owner’s manual™

12.1(f)-(k) in a Nutshell

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12.1(f)-(k) in all its glory

12.1(f)Share-for-Share” means (i) in respect of a Merger Event or Tender Offer, that the consideration for the relevant Shares consists (or, at the option of the holder of such Shares, will consist) solely of New Shares, and (ii) a Reverse Merger.
12.1(g)Share-for-Other” means, in respect of a Merger Event or Tender Offer, that the consideration for the relevant Shares consists solely of Other Consideration.
12.1(h)Share-for-Combined” means, in respect of a Merger Event or Tender Offer, that the consideration for the relevant Shares consists of Combined Consideration.
12.1(i)New Shares” means ordinary or common shares, whether of the entity or person (other than the Issuer) involved in the Merger Event or the making of the Tender Offer or a third party, that are, or that as of the Merger Date or Tender Offer Date are promptly scheduled to be,
(i) publicly quoted, traded or listed on an exchange or quotation system located in the same country as the Exchange (or, where the Exchange is within the European Union, in any member state of the European Union) and
(ii) not subject to any currency exchange controls, trading restrictions or other trading limitations.
12.1(j)Other Consideration” means any cash or securities (other than New Shares) or assets (whether of the entity or person (other than the Issuer) involved in the Merger Event or the making of the Tender Offer or a third party).
12.1(k)Combined Consideration” means New Shares in combination with Other Consideration.

Resources and Navigation

Overview

Section 12.1. General Provisions Relating to Extraordinary Events

12.1(a). “Extraordinary Event
12.1(b). “Merger Event
12.1(c). “Merger Date
12.1(d). “Tender Offer
12.1(e). “Tender Offer Date
12.1(f). “Share-for-Share
12.1(g). “Share-for-Other
12.1(h). “Share-for-Combined
12.1(i). “New Shares
12.1(j). “Other Consideration
12.1(k). “Combined Consideration
12.1(l). “Announcement Date
12.1(m). “Implied Volatility
12.1(n). “Affected Shares

This composite page looks in a little more detail at the types of consideration that might apply in what we call a corporate event: a “Merger” — where two companies of roughly equal negotiation power team up, or a “Tender Offer” — what British establishment types used to call a “takeover” and most people these days call a “acquisition” — where a strong company consumes a weak one, by force (a “hostile takeover”), or by polite request to stop someone else doing it (a “white knight rescue”).

Summary

Here we find the mechanical ways of describing the different ways a shareholder can be persuaded to part with its existing Shares and thereby agree to a Merger or accept a Tender Offer.

Our friends in the M&A advisory business — they are better paid and more impressively heeled than we — have no shortage of imaginative ways for investors to stump up the necessary to acquire new companies, or parts of old ones the current owner no longer wants, but basically they boil down to (i) being given New Shares (usually in the acquiror, or a “newco” it has established for the purpose), (ii) being paid cash (or given something else that isn’t New Shares, or (iii) a combination of the two.

Premium content

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  • The JC’s famous Nutshell summary of this clause
  • A bit more rumination on the various ways and means of merging and acquiring, and what that might mean for synthetic types whose shares, not being real, are not really merging, acquiring or being acquired.

See also

Template:M sa Equity Derivatives 12.1(f)-(k)

References