Mergers - Equity Derivatives Provision

From The Jolly Contrarian
Jump to navigation Jump to search
2002 ISDA Equity Derivatives Definitions

A Jolly Contrarian owner’s manual™

12.1(b) in a Nutshell™

The JC’s Nutshell™ summaries are moving to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get them here. Sign up at Substack.

12.1(b) in all its glory

12.1(b) “Merger Event” means, in respect of any relevant Shares, any
(i) reclassification or change of such Shares that results in a transfer of or an irrevocable commitment to transfer all of such Shares outstanding to another entity or person,
(ii) consolidation, amalgamation, merger or binding share exchange of the Issuer with or into another entity or person (other than a consolidation, amalgamation, merger or binding share exchange in which such Issuer is the continuing entity and which does not result in a reclassification or change of all of such Shares outstanding),
(iii) takeover offer, tender offer, exchange offer, solicitation, proposal or other event by any entity or person to purchase or otherwise obtain 100% of the outstanding Shares of the Issuer that results in a transfer of or an irrevocable commitment to transfer all such Shares (other than such Shares owned or controlled by such other entity or person), or
(iv) consolidation, amalgamation, merger or binding share exchange of the Issuer or its subsidiaries with or into another entity in which the Issuer is the continuing entity and which does not result in a reclassification or change of all such Shares outstanding but results in the outstanding Shares (other than Shares owned or controlled by such other entity) immediately prior to such event collectively representing less than 50% of the outstanding Shares immediately following such event (a “Reverse Merger”),
in each case if the Merger Date is on or before,
(A) in the case of a Physically-settled Option Transaction the later to occur of the Expiration Date or the final Settlement Date,
(B) in the case of a Physically-settled Forward Transaction or a Physically-settled Equity Swap Transaction, the relevant Settlement Date or,
(C) in any other case, the final Valuation Date.

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”

An important place to also go, as it name suggests, it is a place of consequence, is “Consequences of Merger Events”, in Section 12.2.

edit

Summary

Section 12.1(b) Merger Event

In summary, this breaks down into:

  • Transfer: an irrevocable commitment to transfer all the Shares to another entity;
  • Merger: merger or binding share exchange of the Issuer with or into another entity where the other entity survives;
  • 100% Takeover offer: takeover or tender offer for 100% of outstanding Shares by any entity;
  • Reverse Merger: merger binding share exchange of the Issuer with or into another entity where the Issuer survives but represents less than 50% of the resulting entity;

Where the Merger Date is before the final settlement date.

Note that, by contrast, the “Tender Offer” Extraordinary Event is triggered by greater than 10% but less than 100% of the outstanding voting shares of the Issuer. So the two do not in fact overlap.

Section 12.1(c) Merger Date

For what its worth here is the definition of Merger Date, in Section 12.1(c) in all its glory ...

12.1(c) “Merger Date” means the closing date of a Merger Event or, where a closing date cannot be determined under the local law applicable to such Merger Event, such other date as determined by the Calculation Agent.

...and in Nutshell™:

12.1(c) “Merger Date” means the closing date of a Merger Event or, if one can’t be determined the date determined by the Calculation Agent.

Not really much to see here, we think you will agree.

edit

Premium content

Here the free bit runs out. Subscribers click 👉 here. New readers sign up 👉 here and, for ½ a weekly 🍺 go full ninja about all these juicy topics 👇
  • The JC’s famous Nutshell™ summary of this clause
  • A comparison of “Merger Event” in the Equity Derivatives world, and “Successor” in the Credit Derivatives world.
edit

See also

edit

References

Retrieved from "https://jollycontrarian.com/index.php?title=Mergers_-_Equity_Derivatives_Provision&oldid=74628"