13.3.2. Two-Step Mergers
In a two-step merger, also known as a two-step tender process, a public acquisition can be made via a hybrid method involving techniques common to both tender offers and mergers. As befits its name, this process involves two steps, a tender offer and a subsequent merger attempt.
In the first step, a tender offer is made directly to the shareholders of the target company. The terms of the offer are contingent upon the buyer being successful in acquiring a majority of the target. After the tender offer closes, the acquirer purchases all of the tendered shares, thus becoming a majority shareholder in the target company. If a majority of the shares are not tendered, the offer is voided. The tender offer is completed either without SEC review or with the SEC expediting its review process. It is also completed without shareholder approval.
The second step involves acquiring the remaining shares. If the acquirer is able to purchase 90% or greater of the ta