What Is Schedule 14D-9?

A Schedule 14D-9 is a filing with the Securities and Exchange Commission (SEC) when an interested party such as an issuer, a beneficial owner of securities or a representative of either, makes a solicitation or recommendation statement to the shareholders with respect to a tender offer. The company that is the subject of the takeover must file its response to the tender offer on a Schedule 14D-9.

Schedule 14D-9 Explained

A tender offer is a public offer to buy some or all of the shares in a corporation from the existing shareholders. The SEC's definition: "a broad solicitation by a company or third party to purchase a substantial percentage of a company's Section 12 registered equity shares or units for a limited period of time. The offer is at a fixed price, usually at a premium over the current market price, and is customarily contingent on shareholders tendering a fixed number of shares or units."

Example of a Schedule 14D-9 Filing

On December 6, 2011, Pharmasset, Inc., a biotechnology firm, filed a Schedule 14D-9 in response to a tender offer by Royal Merger Sub Inc., a wholly-owned subsidiary of Gilead Sciences, Inc., to purchase all of the issued and outstanding shares at a price of $137 per share. The filing contained important details regarding past contacts, transactions, agreements and negotiations between the parties. It also contained solicitation timeline and recommendation of the board of the directors and the reasons for the recommendation, fairness opinion of Pharmasset's financial advisor, Gilead's list of board designees, corporate governance including executive compensation information, a list of major shareholders, and other salient information for shareholders to make decision whether or not to tender their shares. Pharmasset's Schedule 14D-9 demonstrates that it is functionally equivalent to a SEC Form S-4 filing in terms of disclosure details of an offer.