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Settlement Following a Merger Event or Tender Offer - Equity Derivatives Provision

2002 ISDA Equity Derivatives Definitions

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Section 12.4. Settlement Following a Merger Event or Tender Offer.

(a) If Other Consideration is required to be valued in relation to a Cash-settled Transaction that has been adjusted following a Merger Event or Tender Offer, the Other Consideration will be valued by the Calculation Agent on each Valuation Date or Averaging Date, as the case may be. For the avoidance of doubt, the provisions of these Definitions relating to Market Disruption Events will not apply to Other Consideration.
(b) If New Shares are required to be delivered in relation to a Physically-settled Transaction that has been adjusted following a Merger Event or Tender Offer, then the deliveror will deliver the relevant New Shares in accordance with the terms of settlement set out in the related Confirmation, provided that if on the relevant Settlement Date a holder of the Shares would not yet have received the New Shares to which it is entitled, the Settlement Date with respect to such New Shares will be postponed to the first Clearance System Business Day falling on or after the first day on which a holder of the relevant Shares, having received the New Shares, would be able to deliver such New Shares to the other party.
(c) If Other Consideration is required to be delivered in relation to a Physically-settled Transaction that has been adjusted following a Merger Event or Tender Offer, then the deliveror will deliver the relevant Other Consideration to the other party in a commercially reasonable manner in accordance with the reasonable directions of the other party as soon as reasonably practicable after the later of (i) the relevant Settlement Date and (ii) the first day on which a holder of the relevant Shares, having received the Other Consideration, would be able to deliver such Other Consideration to the other party.

Resources and Navigation

Overview

Section 12.2. Consequences of Merger Events

12.2(a). “Alternative Obligation (Merger Events)”
12.2(b). “Cancellation and Payment (Merger Events)”
12.2(c). “Options Exchange Adjustment (Merger Events)”
12.2(d). “Calculation Agent Adjustment (Merger Events)”
12.2(e). “Modified Calculation Agent Adjustment (Merger Events)”
12.2(f). “Partial Cancellation and Payment (Merger Events)”
12.2(g). “Component Adjustment (Merger Events)”

Section 12.3. Consequences of Tender Offers

12.3(a) Cancellation and Payment (Tender Offers)
12.3(b) Options Exchange Adjustment (Tender Offers)
12.3(c) Calculation Agent Adjustment (Tender Offers)
12.3(d) Modified Calculation Agent Adjustment (Tender Offers)
12.3(e) Partial Cancellation and Payment (Tender Offers)
12.3(f) Component Adjustment (Tender Offers)

Section 12.4. Settlement Following a Merger Event or Tender Offer

Summary

Finally the parallel paths of Merger Events and Tender Offers come together, at the point of settlement. Masterful storytelling by ISDA’s crack drafting squad™.

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See also

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References

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