The last several posts have been devoted to exploring the differences between an "exchange reorganization" and a "share exchange tender offer" under the California General Corporation Law. Below is a chart that summarizes the differences between these two types of transactions:
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Exchange Reorganization
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Share Exchange Tender Offer
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Definition
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Corp. Code § 181(b)
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Corp. Code § 183.5l
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Acquiring entity
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Domestic corporation (Corp. Code § 167), foreign corporation (Corp. Code § 171), or other business entity (Corp. Code § 174.5)
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Corporation (Corp. Code § 162)
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What acquiring entity exchanges
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Its equity securities (Corp. Code § 168) or the equity securities of a domestic corporation, a foreign corporation, or other business entity that is control of the acquiring entity
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Its equity securities (Corp. Code § 168) or the equity securities of a corporation that is control of the acquiring corporation
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Acquired entity
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Domestic corporation, foreign corporation or other business entity
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Corporation
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What is the acquiring entity acquires
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Equity securities
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Shares
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Effect of exchange
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Acquiring entity immediately after the acquisition has control of the other entity
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Acquiring entity immediately after the acquisition does not have control
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Understanding these differences requires a thorough understanding of the various defined terms. For example, a "domestic corporation" is not necessarily a "corporation" under the GCL. Some of these differences are inexplicable to me. Why for example can an exchange reorganization involve the acquisition of the acquired entity's "equity securities" but a share exchange tender offer is limited to an acquisition of the "shares" of the acquired entity?
Perhaps even more baffling is the fact that a share exchange tender offer does not necessarily involve a "tender offer" as understood under the Williams Act.
