Market price re setting specified amount in substantial issuer bids (“SIBs) (pp. 5-6)
It is interesting to examine Canadian market practice with regards to specifying an amount under subsection 191(4), particularly in the context of a Dutch auction SIB. For the most part, the predominant approach is to state in the issuer bid that “the specified amount for purposes of subsection 191(4) is equal to the closing trading price for the shares on the expiration date of the SIB” and then the issuer will confirm such amount in a press release shortly following the expiration of the SIB. This approach would be consistent with the view outlined earlier that the “agreement” in respect of the SIB is formed at the time specified in the offer to acquire, being close of business on the expiration date of the bid. Other approaches in the Canadian marketplace include using the trading price of the shares immediately prior to the announcement of the SIB or using the clearing price under a Dutch auction less some pre-determined amount (e.g., $1). In Appendix A, we have summarized the approach employed in several recent SIBs (in both fixed price and auction In all cases, it can be surmised that the specified amount was likely just a secondary position to the initial position that 60-Day FMV Exception or Acquisition Date FMV Exception [under the STPS/TPS definitions] should apply.
Time of agreement under substantial issuer bid (p. 5)
- In a substantial issuer bid, the agreement is not formed until the expiry of the offer, so that there generally will not be much time difference between the formation of the agreement and the acquisition of the shares on their being taken up.
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