Public-Company M&A: Tender Offers, Proxies, 13D and Board Duties

Buying a public company adds SEC rules and Delaware fiduciary law to the private-deal toolkit. A buyer can proceed by a one-step merger with a stockholder vote solicited through a proxy statement, or by a tender offer under Regulations 14D and 14E, often followed by a second-step merger under DGCL Section 251(h) ^[1][6][7]. Boards selling for cash must seek the highest value reasonably attainable under Revlon, and defensive measures face Unocal review ^[9][10].

Two paths to a public target

Private deals are contracts with a handful of owners. Public deals must reach thousands of stockholders, so the law supplies two main routes. In a one-step merger, the target's board approves a merger agreement and stockholders vote on it. Under Delaware's merger statute, the agreement is submitted to stockholders at a meeting and is adopted if a majority of the outstanding stock entitled to vote votes for it ^[7]. To solicit those votes, the company must furnish each stockholder with a proxy statement containing the information specified in Schedule 14A ^[6].

In a two-step deal, the buyer first makes a tender offer directly to stockholders, then completes a merger to acquire the remaining shares. Delaware Section 251(h) allows that second-step merger without a stockholder vote for a listed target if the merger agreement expressly provides for it, the buyer consummates an offer for all outstanding shares, and the shares tendered plus those the buyer already owns equal at least the percentage that would otherwise be needed to adopt the merger ^[7]. Stockholders who do not vote for a merger and follow the statute's procedures may be entitled to an appraisal of the fair value of their shares by the Court of Chancery ^[7].

Tender offer rules

Rule 14e-1 requires a tender offer to stay open for at least 20 business days from when it is first published or sent, and for at least 10 business days after any change in the percentage sought or the consideration offered ^[1]. The bidder files its tender offer statement on Schedule TO, and the rule's time periods are tolled while required Schedule TO materials have not been filed electronically ^[1]. The target must respond: Rule 14e-2 requires it, within 10 business days of the offer's launch, to tell security holders whether it recommends acceptance or rejection, expresses no opinion, or cannot take a position, and to give its reasons ^[2].

The best-price rule in Rule 14d-10 requires that the consideration paid to any security holder in the tender offer be the highest consideration paid to any other holder in the offer ^[3]. Because the rule could otherwise catch employment arrangements with management stockholders, it includes a safe harbor for compensation and severance arrangements that are approved by independent directors, such as the compensation committee, and that are not calculated based on the number of securities tendered ^[3].

When the buyer offers its own stock, the shares must be registered. Form S-4 may be used for securities issued in mergers and in exchange offers for securities of another company ^[8]. Cash tender offers can often close faster than a vote because there is no stockholder meeting to schedule.

Schedule 13D and stakebuilding

Investors who accumulate shares face disclosure duties. Rule 13d-1 requires a person who becomes the beneficial owner of more than 5% of a covered class of equity securities to file Schedule 13D within five business days, with Schedule 13G available for certain passive and institutional holders ^[4]. The SEC's 2023 amendments shortened the initial Schedule 13D deadline from 10 days to five business days and required Schedule 13D amendments to be filed within two business days ^[5]. The SEC explained that an investor with control intent files Schedule 13D, while investors without control intent may file Schedule 13G ^[5].

Board duties: Revlon, Unocal and Corwin

For companies incorporated in Delaware, the courts add judicial review of how boards behave. In C&J Energy Services (2014), the Delaware Supreme Court explained that Revlon made clear that when a board engages in a change-of-control transaction, it must not take actions inconsistent with achieving the highest immediate value reasonably attainable ^[9]. The court added that Revlon does not require a board to run an auction whenever it approves a change of control, that there is no single blueprint a board must follow, and that a court applying Revlon's enhanced scrutiny asks whether the directors made a reasonable decision, not a perfect one ^[9].

Defensive measures face a related test. An ABA Business Law Today article summarizes that Delaware applies enhanced scrutiny to defensive measures under the Unocal Corp. v. Mesa Petroleum framework, requiring directors to reasonably identify a threat and adopt a proportionate response, and that under Unitrin coercive or preclusive defenses fail enhanced review ^[10]. Stockholder approval can also change the standard of review: Richards, Layton & Finger explains that in Corwin v. KKR Financial Holdings (2015) the Delaware Supreme Court clarified that a fully informed, uncoerced vote of the disinterested stockholders invokes the business judgment rule, even when the vote is required by statute ^[11].

Fairness opinions

Boards usually obtain a fairness opinion from a financial adviser before approving a deal. When a FINRA member issues one knowing it will be provided or described to public shareholders, FINRA Rule 5150 requires disclosures including whether the firm acted as financial adviser and will receive compensation contingent on completion, any material relationships with the parties in the past two years, whether information was independently verified and whether a fairness committee approved the opinion ^[12]. The regulatory lesson in this course covers the rule's procedures in more detail.

Scenario: a two-step cash deal

• Day 0: the board approves a merger agreement after a market check and a fairness opinion; the parties announce.
• Within days: the buyer launches a cash tender offer and files Schedule TO; the offer must stay open at least 20 business days ^[1].
• Within 10 business days of launch: the target files and sends its recommendation ^[2].
• If the buyer raises the price, the offer must stay open at least 10 business days after the change ^[1].
• HSR: for a cash tender offer, the FTC describes a 15-day initial waiting period ^[13].
• Expiration: if the minimum condition is met, the buyer accepts shares and completes a Section 251(h) merger without a stockholder vote ^[7].

Key terms

Tender offer

A public offer to buy shares directly from a company's stockholders, governed by Regulations 14D and 14E.

Schedule TO

The SEC filing a bidder makes to disclose the terms of a tender offer.

Best-price rule

Rule 14d-10's requirement that every tendering holder receive the highest consideration paid to any other holder in the offer.

Proxy statement

The disclosure document, containing Schedule 14A information, that must accompany a solicitation of stockholder votes.

Section 251(h) merger

A Delaware second-step merger after a tender offer that can be completed without a stockholder vote if statutory conditions are met.

Appraisal rights

The statutory right of qualifying stockholders who do not vote for a merger to have the Court of Chancery determine the fair value of their shares.

Revlon duties

In a change-of-control sale, the board's duty not to act inconsistently with obtaining the highest value reasonably attainable.

Unocal standard

Enhanced scrutiny requiring a board's defensive measures to respond reasonably and proportionately to a reasonably identified threat.

Corwin cleansing

Business judgment review applied to a transaction approved by a fully informed, uncoerced vote of disinterested stockholders.

Check your understanding

Sources

1. [1]Legal Information Institute, Cornell Law School, “17 CFR § 240.14e-1 – Unlawful tender offer practices,” Accessed November 2026.
2. [2]Legal Information Institute, Cornell Law School, “17 CFR § 240.14e-2 – Position of subject company with respect to a tender offer,” Accessed November 2026.
3. [3]Legal Information Institute, Cornell Law School, “17 CFR § 240.14d-10 – Equal treatment of security holders,” Accessed November 2026.
4. [4]Legal Information Institute, Cornell Law School, “17 CFR § 240.13d-1 – Filing of Schedules 13D and 13G,” Accessed November 2026.
5. [5]U.S. Securities and Exchange Commission, “SEC Adopts Amendments to Rules Governing Beneficial Ownership Reporting,” October 10, 2023.
6. [6]Legal Information Institute, Cornell Law School, “17 CFR § 240.14a-3 – Information to be furnished to security holders,” Accessed November 2026.
7. [7]State of Delaware, “Delaware Code Title 8, Chapter 1, Subchapter IX (Merger, Consolidation or Conversion), including §§ 251 and 262,” Accessed November 2026.
8. [8]U.S. Securities and Exchange Commission, “Form S-4 Registration Statement Under the Securities Act of 1933,” Accessed November 2026.
9. [9]Supreme Court of the State of Delaware, “C & J Energy Services, Inc. v. City of Miami General Employees' and Sanitation Employees' Retirement Trust,” December 19, 2014.
10. [10]Business Law Today (American Bar Association), “DEXIT? The Case for Maryland over Texas or Nevada,” March 16, 2026.
11. [11]Richards, Layton & Finger, “Corwin v. KKR Financial Holdings LLC: Delaware Supreme Court Clarifies that Approval by Fully Informed Vote of Disinterested Stockholders Invokes Business Judgment Rule for Review of Merger,” Accessed November 2026.
12. [12]FINRA, “5150. Fairness Opinions,” Accessed November 2026.
13. [13]Federal Trade Commission, “Premerger Notification and the Merger Review Process,” Accessed November 2026.

Educational content only — not legal, tax, or investment advice, or an offer to sell or a solicitation of an offer to buy any security. Rules and data are described as of November 2026 and may change. Securities offered through Umergence LLC, Member FINRA/SIPC.