Form 14D-9

A filing did when the target company files a recommendation statement regarding the position on the tender offer within ten days following its commencement

Author: Adin Lykken
Adin Lykken
Adin Lykken
Consulting | Private Equity

Currently, Adin is an associate at Berkshire Partners, an $16B middle-market private equity fund. Prior to joining Berkshire Partners, Adin worked for just over three years at The Boston Consulting Group as an associate and consultant and previously interned for the Federal Reserve Board and the U.S. Senate.

Adin graduated from Yale University, Magna Cum Claude, with a Bachelor of Arts Degree in Economics.

Reviewed By: Patrick Curtis
Patrick Curtis
Patrick Curtis
Private Equity | Investment Banking

Prior to becoming our CEO & Founder at Wall Street Oasis, Patrick spent three years as a Private Equity Associate for Tailwind Capital in New York and two years as an Investment Banking Analyst at Rothschild.

Patrick has an MBA in Entrepreneurial Management from The Wharton School and a BA in Economics from Williams College.

Last Updated:September 26, 2023

What Is Schedule 14D-9?

Schedule 14D-9 is a filing with the Securities and Exchange Commission (SEC) when the target company, i.e., an interested seller company/the beneficial owner/issuer of securities (shares), files a recommendation statement regarding the target's position on the tender offer within ten days following its commencement.

A tender offer is a publicly available offer to buy some or all of the shares in a corporation from the existing shareholders. 

The company subject to the takeover must file its response to the tender offer on Schedule 14D-9.

This form is required in any case when shareholders have to sell a significant portion of their shareholdings in exchange for cash or other securities.

Common information included in this might be the board of directors' recommendation, the fairness of the value offered, and corporate governance.

The Schedule 14D-9 filings are available to the public via the SEC's EDGAR database or the company's website.

Understanding Schedule 14D-9

A company may want to acquire another company for various reasons, including the new company being more competitive in the marketplace, synergies resulting from the merger, or the possibility of running the target company better with the acquiring company.

When an acquiring company sees these benefits associated with the target company, they make a tender offer for all or a significant portion of its shares. 

A tender offer is a bid to purchase some or all shareholders' shares in a company. Tender offers are made publicly available to invite shareholders to sell their shares for a specified price (usually at a premium to the market price) and within a particular window. 

The SEC stipulates that a tender offer must be a purchase of a significant portion of a company's voting shares.

The target company's response is then conveyed to the acquiring company via Schedule 14D-9, which also functions as a notice by management to its shareholders. 

It contains pertinent information about the tender offer, such as the response by the target company, the fairness of the valuation, the proposed corporate structure, and any other relevant information.

It is utilized in all mergers and acquisitions, including a leveraged buyout and a management buyout

Any transaction requiring shareholders to sell their shares in exchange for cash or other securities will require an SEC Schedule 14D-9.

Sections in Schedule 14D-9

The following are the sections:

  • Item 1 - Security and the subject company 
  • Item 2 - Tender offer of the bidder 
  • Item 3 - Identity and background 
  • Item 4 - The solicitation or recommendation 
  • Item 5 - Persons retained, employed, or to be compensated 
  • Item 6 - Recent transactions and intent concerning securities 
  • Item 7 - Certain negotiations and transactions by the subject company 
  • Item 8 - Additional information 
  • Item 9 - Material to be filed as exhibits 

The acquisition process is a two-step process:

  1. The acquirer makes the "first step" tender offer directly and publicly to shareholders.

  2. The "second step" merger is required to acquire the remaining untendered shares.

  3. After the consummation of the back-end merger, the target is a wholly owned subsidiary of the acquirer.

Real-World Example of Schedule 14D-9

Audible, Inc., based in Newark, offers 80,000 audiobooks and spoken-word products from magazines, radio shows, and newspapers. 

Amazon.com acquired Audible 2008, the largest online seller of audiobooks, for a sum of $300 million in cash, or $11.50 a share, a 23 percent premium to the stock's closing price on the date of the tender offer.

Audible, Inc. filed Schedule 14D-9 with the SEC on January 30, 2008.

Summary

Schedule 14D-9 is a filing with the SEC made by a target company in response to a tender offer by an acquiring company.

This Schedule 14D-9 is required in any case when shareholders have to sell a significant portion of their shareholdings in exchange for cash or other securities.

Mergers and acquisitions, such as a management buyout or leveraged buyout, are instances in which a Schedule 14D-9 would be utilized. 

Common information in Schedule 14D-9 includes the board of directors' recommendation, the fairness of the value offered, and corporate governance.

Form 14D-9 FAQs

Researched and authored by Rohan Kumar Singh | LinkedIn

Reviewed and edited by James Fazeli-Sinaki | LinkedIn

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