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.

BREAKING DOWN Schedule 14D-9

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; 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; 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.