The minimum tender condition, or minimum condition, is the threshold level required to be considered successful when initiating a tender offer. If this percentage level of stock is validly tendered by shareholders by the close of the offer, the merger can proceed and may consummate as intended. Following the fulfilling of the Minimun tender condition, in most cases, the deal is almost immediately completed. However, in certain instances, delays in regulatory approvals can delay the closing schedule.
If the minimum tender condition is not satisfied, often the offer is extended. The was the case with Wright Medical (WMGI) who, on April 27, 2020 filed a SC 14D9/A with the SEC notifying shareholders of a two month extension to the tender offer from Stryker Corporation (SYK). At this time, the firm also announced
Wright Medical ordinary shares (excluding Wright Medical ordinary shares tendered pursuant to guaranteed delivery procedures), representing approximately 4.2% of the outstanding Wright Medical ordinary shares
The reason for this was the delay in multiple regulatory approvals. Investors saw no need to tender their stock at this time knowing the deal could not yet close. Subsequently, the minimum tender condition was not achieved as only 4.2% was tendered. Therefore the companies extended the offer. Many investors saw this was a reasonably simple outcome to gauge and refused to tender. Some, who anticipated the Deal Extension Risk chose the liquidate their position. Tendering stock which the trader later decides to withdraw from the tender can involve delays in the transfer of the stock and prevent trading.
Minimum Tender Condition Example
Here is an example of usage. The following paragraphs were taken from the January 23, 2020 SC14D9/A filing by Synthorx (THOR) with the SEC following the successful tender offer
As of the expiration of the Offer, the number of Shares validly tendered and not validly withdrawn pursuant to the Offer satisfied the minimum tender condition set forth in the Merger Agreement, and all other conditions to the Offer were satisfied. Immediately after the expiration of the Offer, Purchaser irrevocably accepted for payment all Shares that were validly tendered and not validly withdrawn prior to the expiration of the Offer and will promptly pay for all such Shares.
As a result of its acceptance of the Shares tendered pursuant to the Offer and in accordance with Section 251(h) of the DGCL, Purchaser owns a number of Shares that is greater than the percentage of Shares that would be required to adopt the Merger Agreement by a vote of the stockholders of Synthorx. Accordingly, pursuant to the Merger Agreement, Sanofi and Purchaser will complete the acquisition of Synthorx through the Merger without a meeting of the stockholders
In other words, in this particular deal, Sanofi had initiated a tender offer whilst at the same time pursuing a traditional merger route. As the offer was successful, in effect the shareholders have voted by tendering their shares, an Extraordinary General Meeting was not necessary.
