Q: If a subsequent offering period (SOP) is added during the tender offer must the offer be extended to disseminate the new terms to security holders?

A: Section II.G.1 of the Regulation M-A release (No. 33-7760, Oct. 22, 1999) stated that the addition of the SOP once an offer has commenced would constitute a material change to the terms of the offer. A material change generally would require that notice of the change be disseminated to security holders five business days before the expiration of the initial offering period. The release went on to say that "[a]fter the Division of Corporation Finance gains practical experience with the operation of the subsequent offering period, the Division may decide, through staff interpretation, to shorten or possibly eliminate the requirement for advance notice." Based upon our experience, we believe that adding a SOP does not require advance notice, so long as:

1) The initial offering material discloses that the bidder may include a SOP (or reserves the right to include a SOP) and describes what a SOP is. If this information is not in the initial material it may be provided during the course of the offer, so long as at least five business days remain before the expiration of the offer (not counting the SOP);

2) In the notice announcing the results of the initial offering period required by Rule 14d-11(d), the bidder announces and begins the subsequent offering period; and

3) If the bidder has definitively decided to provide a SOP or is contractually obligated to provide a SOP (e.g., this is a term of the merger agreement), it is not sufficient to merely reserve the right to provide a SOP. The initial offer to purchase must disclose this information.