Exclusivity Agreements filed with Third Party Tender Offers

In addition to the merger agreement, most negotiated or friendly tender offer filings will include as exhibits any confidentiality agreement or exclusivity agreement that had been entered into between the parties.  Once the parties have commenced preliminary discussions regarding a possible strategic transaction, it is common for the issuer to grant a period of exclusivity to the bidder for detailed due diligence and the negotiation of definitive agreements. 

Hewlett-Packard Co. filed the initial Schedule TO in connection with its $1.52 billion all-cash tender offer for ArcSight, Inc. on September 22 (SEC file no. 005-83836).  The formal exclusivity agreement, which provided for an exclusive negotiation period of at least two weeks, was filed as Exhibit 99(d)(7).  Hewlett-Packard was represented by Gibson, Dunn & Crutcher during merger negotiations and ArcSight by Fenwick & West.


Dell Inc. and 3PAR Inc. entered into a confidentiality agreement on July 17 to facilitate the further contemplation of a possible transaction.  On August 1, Dell submitted an indication of interest for a combination whereby 3PAR stockholders would receive cash consideration of $18 per share.  The indication of interest stated that 3PAR would be required to negotiate exclusively with Dell for two weeks, and the parties entered into an exclusivity agreement on the same day.  Dell initially filed its Schedule TO on August 23 (file no. 005-83579), with the confidentiality and exclusivity agreements filed as Exhibits 99(d)(3) and 99(d)(31), respectively. 

The exclusive negotiation period will vary among exclusivity agreements, as appropriate for the parties involved.  A 3-day period was agreed to for the deal between issuer ADC Telecommunications, Inc. and bidder Tyco Electronics, Inc.  The letter agreement is Exhibit 99(d)(4) to the Schedule TO filed July 26 (005-19057).  By contrast, American Italian Pasta Co. agreed to an exclusivity period that lasted from May 24 until a termination date of June 30.  The subject letter agreement was filed as Exhibit 99(d)(3) to the Schedule TO filed by Ralcorp Holdings, Inc. on June 24 (005-53419).