The form of TCCC acquiring Monster is a stock acquisition using a combination of stock and cash for Monster stock. In determining how ownership will be conveyed from acquirer to target shareholders, TCCC can either: (1) make a tender offer to Monster’s shareholders; or (2) complete a merger with Monster. The first option is appealing because it eliminates the need for a Monster shareholder meeting. It also minimizes the number of third-party consents and other transfer approvals because the target’s contracts, licenses and assets are not being transferred to a new entity. However, it is unlikely that 100% will tender their shares and TCCC will likely end up with Monster as a partially owned subsidiary, as opposed to a wholly owned subsidiary. In contrast, in a merger, the buyer acquires 100% of the target, assuming the requisite vote of target shareholders is obtained. Because TCCC wants to own 100%, a tender offer is too risky and a merger structure is the preferred method of conveying ownership.
More specifically, a reverse triangular merger shall be employed in which the acquisition subsidiary will merge into Monster, with Monster being the surviving organization. This structure minimizes the need to obtain new contracts or assign Monster’s rights under existing agreements. By choosing this option, TCCC will not have to deal with dissident minority shareholders. With respect to timing considerations, TCCC does not anticipate any other offers from other bidders so it has sufficient time to complete a merger.