In Mergers & Acquisitions, the minimum condition, or minimum tender condition, is the threshold level required for a tender offer to be considered successful. If this percentage level of stock is validly tendered by shareholders by the close of the offer and not withdrawn, the merger can proceed. If the tendered stock is close to the level required, a top up option may be initiated which may lead to the enactment of a short form merger.
Minimum Condition Example
An example of a tender offer is the Wright Medical (WMGI) deal. Stryker have proposed a tender offer to acquire the outstanding stock of Wright Medical for $30.75 per share. The stock is currently trading at $30.23. Immediately prior to the deal the stock was trading below $21. This is a significant acquisition premium and should help guarantee a successful offer. The full offer document can be viewed on the SEC website. Of EXTREMELY important note is the minimum condition on page vii,
What is the Minimum Condition?
The “Minimum Condition” requires that there have been validly tendered pursuant to the Offer, and not properly withdrawn, a number of Shares (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee prior to the Expiration Time) that, together with the Shares then owned by Stryker or its wholly owned subsidiaries, represents at least ninety-five percent (95%) of Wright’s issued and outstanding share capital (geplaatst en uitstaand kapitaal) immediately prior to the Expiration Time
