Most shareholder decisions about a merger come with a ballot, while a tender offer comes with a deadline.
In a tender offer, a buyer goes straight to a company’s shareholders and offers to buy their shares at a set price, usually for cash. Often there’s no shareholder meeting and no vote. Each investor decides individually whether to sell, and the decision has to be made before the offer expires.
Juan E. Monteverde, founding partner of the New York shareholder rights firm Monteverde & Associates PC, has spent much of his career litigating transactions structured this way, including a case that changed how federal securities law treats tender offer disclosures in the Ninth Circuit.
How a Tender Offer Differs From a Merger Vote
In a traditional merger, the board negotiates a deal, files a proxy statement, and asks shareholders to approve it at a meeting. The vote is collective, and if a majority approves, the deal goes forward for everyone.
A tender offer puts the decision in each individual’s hands. The buyer files a tender offer statement with the Securities and Exchange Commission, and the target company’s board files its own response, known as a Schedule 14D-9, stating whether it recommends that shareholders accept the offer, reject it, or take no position. Federal rules require the offer to remain open for at least 20 business days, giving investors a window to read both documents and make up their minds.
That window is tight given how much information is involved. The 14D-9 often includes the background of the negotiations, the financial analyses the board relied on, and the interests executives and directors hold in the deal. A shareholder who has never read one may not know where to begin.
Many tender offers are also followed by a second-step merger that cashes out the shareholders who didn’t tender, often at the same price. The practical question for most investors, then, has less to do with whether the deal happens and more to do with whether they have enough information to judge the price before the deadline passes.
The Case That Changed the Standard
Section 14(e) of the Securities Exchange Act of 1934 prohibits false or misleading statements, and omissions of material facts, in connection with a tender offer. For years, most federal appeals courts read that provision to require proof of scienter, meaning the defendant acted with intent to deceive or with severe recklessness. That’s a high bar for shareholders to clear.
In Varjabedian v. Emulex Corp., 888 F.3d 399 (9th Cir. 2018), Juan E. Monteverde argued that the first clause of Section 14(e) requires only negligence. The Ninth Circuit agreed, breaking with five other federal circuits and creating a five-to-one circuit split.
Emulex asked the U.S. Supreme Court to review the decision. The Court took the case and then dismissed the writ of certiorari as improvidently granted in Emulex Corp. v. Varjabedian, 139 S. Ct. 1407 (2019), which left the Ninth Circuit’s ruling in place.
For shareholders in that circuit, a company that issues a misleading tender offer disclosure can face liability without proof that anyone meant to deceive. For boards and their advisers, the ruling raises the cost of a careless or incomplete 14D-9.
Why the Ninth Circuit Mattered
Emulex shows how appellate work in tender offer litigation can reach far past the deal that started it, since a standard set at the circuit level applies to every tender offer that comes before those courts afterward.
The case also reflects the breadth of the practice Monteverde leads. His firm litigates from trial and appellate courts through the U.S. Supreme Court, and he is admitted before the 3rd, 4th, 7th, and 9th Circuits of the U.S. Court of Appeals.
What to Read in a Schedule 14D-9
Shareholders don’t need a background in securities to get something useful out of the board’s response to a tender offer, though a few sections are worth a slower read.
The background of the offer describes how the negotiations played out, including when the buyer first approached the company, whether other parties were contacted, and how the price moved along the way. A short process with few competing bidders doesn’t prove anything went wrong, but it tells the reader how thoroughly the market was tested.
The financial advisor’s analysis lays out the projections and methods behind the board’s recommendation. Readers can compare the offer price with the valuation ranges the advisor calculated and note which set of projections the board decided to rely on.
The section on the interests of directors and executive officers lists what insiders stand to receive if the deal closes, including accelerated equity, severance, and any employment arrangements with the buyer.
Those payments may be entirely legitimate. They’re also the kind of detail Monteverde has pressed companies to disclose in full, including through proxy challenges over executive compensation in the years after Dodd-Frank.
A Practice Built on Disclosure
Monteverde’s focus on what shareholders are told started well before Emulex. As an associate at Levi & Korsinsky, he represented investors in securities and consumer fraud matters. From 2010 to 2016, he was a partner and chair of the Mergers and Acquisition Litigation Department at Faruqi & Faruqi LLP.
Today he leads a shareholder rights firm based at the Empire State Building. Over his career he has secured settlements for shareholders, including as co-lead counsel in In Re Jefferies Group, Inc. Shareholders Litigation and in In Re Envision Healthcare Corp. in 2021.
In 2025, Monteverde secured significant recoveries for shareholders in merger class actions, including a common fund settlement for Aimmune Therapeutics, Inc. stockholders in a class action under Section 14 of the Exchange Act. The firm is listed in the Top 50 of the ISS Securities Class Action Services Report.
Before the Offer Expires
A tender offer puts the same decision in front of every shareholder at once, with a fixed deadline and a thick stack of documents. Buyers sometimes announce extensions when the offer’s conditions haven’t been met yet, and tendered shares can generally be withdrawn while the offer is still open.
For a New York shareholder rights attorney reviewing the same deal, the questions begin with the 14D-9. Did the board explain how it reached its recommendation? Are the insiders’ interests fully described? Was anything material left out?
Shareholders weigh many of those same questions when they decide whether to tender. The board’s response is the clearest account they’ll get of what’s being sold and why the board considers the price fair, and Juan Monteverde has built much of his career on making sure that document gives them the full picture.
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice. Readers should consult qualified legal or financial professionals before making decisions regarding securities, shareholder rights, or tender offers. The information provided should not be relied upon as a substitute for professional advice.
