Public offering

In Finance, a public offering is an operation

launched by a company, a financial group or another institution,
in the form of a proposal made with the public buy to him, exchange or sell a certain number of titles of a company,
within the framework of precise procedures, regulated and controlled in France by MFA or in the United States by the SEC, in particular with regard to the financial informations required to the public.

The categories of public offerings are following the

tender offer: public offering of purchase (out of money)
APERTURE: public offering of exchange (in titles)
OPR: public offering of withdrawal (often making following a tender offer or with an APERTURE)
OPV: public offering of sale (generally followed Going public)
OPO: public offering at open price
OPF: offer at fixed price
CPM: offer to minimum price or mixed public offering (combined tender offers and APERTURE, offering at the same time titles and an amount of money, even the choice between the two)

Goal of these operations

One sees that

the purpose of the tender offers, APERTURE and OPR are the takeover of a “target” company (operations of Fusion-acquisition),
the OPV on the contrary aim at reducing the participation of the principal shareholders by putting part of their titles on the market.

It will be noted that certain tender offers and APERTURE are related to a LMBO (begun again of a Entreprise by some of its employees)

Types

Tender offer

A public offering of purchase on shares quoted in purse, is launched by a company or a group of Investisseur S, at a determined purchase price, with a view to takeover of one (other) undertaken.

In certain cases, the launching of a tender offer is imposed by the regulation, in particular when the purchaser controls already directly or indirectly his target (passage of the threshold of the 50% of the rights for example). This obligation was instituted in order to protect the other shareholders in their offering a solution from exit.

The price is naturally almost always higher during purse before the launching of the operation, but it is not obligatory (in particular for the imposed tender offers).

Certain investors (or speculators) are with the research of the titles being able to be the subject of a tender offer, because it is often the occasion to make an appreciation.

APERTURE

A public offering of exchange on quoted on the stock exchange actions is launched by a company, according to a proportion of exchange determined between actions of the “target” company and that which wants to take control of it.

For example, 5 actions of the target company will give right 3 actions of the offreuse company in the event of acceptance of the offer (this example supposes that 3 actions of offreuse are worth more out of purse 5 actions of the target).

OPR

A public offering of withdrawal makes following a tender offer or APERTURE having made it possible its launcher to become owner of the quasi totality of the target company. So there remains only one tiny number of actions of the latter still held by the public.

The OPR is a proposal with the owners of the remaining actions to buy them to them, in general at handsome price, before those are not erased quotation out of purse. This withdrawal will allow the principal shareholder or has his group to avoid the expenses and various constraints related on quotation out of purse and the coexistence of other shareholders in the capital.

If there remain still actions not presented to the OPR, the offreuse company can make it follow of an obligatory offer of withdrawal (OPR-RO).

OPV

The public offering of sale is an public offering made by shareholders (for example, the State in the event of Privatization or of opening of the capital of a state enterprise) with any saver who wishes it, sell actions of a company to them according to precise conditions of quantity and price.

The once concluded operation (what supposes a procedure of distribution of the titles if the request is higher than the offer, or is like one says “sursouscrite”), is generally followed Going public of the aforesaid actions.

OPO

The public offering at open price is a procedure which consists in collecting the requests for subscription then to fix the final price after the offer closure.

OPF

the offer at fixed price is a procedure of going public fixing the quantity and the flat price of the titles to be sold.

CPM

The offers at minimum price is a procedure of introduction in Bourse which consists in fixing the quantity. The price depends on the request and the requirements of the salesman.

Circumstances of the tender offers and APERTURE

The companies

whose capital is not largely controlled by a financial group or principal shareholder,
and who are considered underestimated by the stock-brokers,

are often estimated by those like “opéables”. That wants to say that they could be the subject of tender offer or APERTURE by another group or a concurrent company. This anticipation, sometimes accompanied by rumors, can involve episodical speculations on these titles.

The tender offers and APERTURE are considered “friendly” or “hostile” according to whether there is agreement or not between the acquiring group and the company concerned. These operations can evolve/move in financial Bataille so of the against-tender offers/against-APERTURE are launched by rival groups.

Strategies

In the European Union

The opening of the European market created favorable conditions with the public offerings of non-European companies on european companies, like showed it the public offering of Mittal on Arcelor.

The rules of competition in the European Union are such as the European commission is not opposed to fusions which do not create a dominant position on the Single European market. The non-European groups can thus acquire European groups without creating dominant position in Europe, therefore without the Commission not opposing it. On the other hand, the fusion of two European groups which creates a dominant position in Europe is prevented by the Commission.

Tactics against hostile tender offer S

Anglophone Wikipedia is very documented on this subject:

Pacman : The principle is to make the tender offer more expensive for the attacker while absorbing of another company or subscribing to a capital growth. The target will be thus more expensive, more difficult to repurchase because of the new emitted actions and sometimes this strategy gives place to a pill poisoned in the event of repurchase by the target of other firms by debt which the attacker will have to refund.
White knight : Consist in making launch against concurrent tender offer by a combined third to the company, in this case, it is appropriate to pay attention because the knight will find in significant possession on the one hand hjt the operation of purchase under various pretexts. Or to include in the statutes of the target a clause of the kind: " if an individual shareholder has more than 25% of the firm, then its rights to vote will be divided of moitié". These clauses are however difficult to implement because they can go against the principle of " freedom of movement of the capital" or to call into question the principle according to which the shareholders must have the best price in the event of repurchase of their company. This particular defense is not possible that in certain states of the United States like Delaware, Nevada or Arizona.
Crown jewels : Consist in yielding the strategic credits (patents for example) during the operation of purchase. The purchaser thus finds himself with a “empty shell”.
Separation of the capital and the capacity : The use of a legal form of the type SCA makes it possible to separate detention from the capital of the capacity of management. The interest of the tender offer is thus strongly decreased.
Organization of the renewal of the administrators : The Statuts of the company organize the renewal of the board of directors per quarter or third. The entry of the purchaser to the head of the company is thus delayed.

Example of tender offer

the business Phelps Dodge/Inco/Falconbridge/Xstrata is documented in an article of the Owe

Transposition of the directive on the public offerings of acquisition

For France, to see Relative bill with the public offerings of acquisition, February 21st 2006.

See too

Fusion-acquisition
Gone of actions

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