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In Abramowski v. Nuvei Corp., No. 24-3156, 2026 WL276766 (3d Cir. Feb. 3, 2026), the United States Court of Appeals for the Third Circuit held in a case of first impression that the United States Securities and Exchange Commission's ("SEC") "Best Price Rule," 17 C.F.R. 240.14d-10(a)(2), does not require the acquiring company in a tender offer to purchase tendered shares that are subject to self-imposed transfer restrictions. This decision establishes "common sense" limits on the scope of the Best Price Rule in tender offers.
In 2023, defendant Nuvei Corporation ("Nuvei") acquired Paya Holdings, Inc. ("Paya") by way of a tender offer to purchase all shares of Paya common stock for $9.75 per share. Nuvei's tender offer required tendered shares to be freely transferrable and outstanding as of the time of consummation of the offer at midnight on February 22, 2023.
Plaintiffs held "Earnout Shares" in Paya under a Sponsor Support Agreement ("SSA") entered into in connection with a de-SPAC transaction taking Paya public in August 2020. The SSA generally made the Earnout Shares non-transferrable until October 16, 2025. The SSA provided the Earnout Shares would become transferrable if, upon "the first Change in Control to occur during the Earnout Period," the price per share paid was above $15.00; if, however, the price per share paid was below $15.00, then "none of the Earnout Shares subject to transfer restrictions shall become free of transfer restrictions . . . and all of the Earnout Shares shall be automatically forfeited immediately prior to the consummation of such Change of Control."
Plaintiffs tendered their Earnout Shares in response to Nuvei's tender offer, but Nuvei declined to purchase them. Citing the SSA, Nuvei determined the Earnout Shares "were not tendered free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims." Plaintiffs sued Nuvei in the United States District Court for the District of Delaware, asserting that Nuvei's refusal to purchase their tendered shares violated the SEC's Best Price Rule.
The Best Price Rule, promulgated pursuant to Sections 14(d) and 14(e) of the Williams Act, 15 U.S.C. § 78n(d), (e), requires tender offerors to pay "to any security holder for securities tendered in the tender offer . . . the highest-consideration paid to any other security holder for securities tendered in the tender offer." Plaintiffs argued Nuvei violated this rule requiring tender offerors to pay the same consideration for all securities tendered by paying plaintiffs $0.00 per share while paying other common stockholders $9.75 per share. The district court dismissed plaintiffs' claim under the Best Price Rule, holding the Rule was never triggered because no consideration was actually paid to plaintiffs. Plaintiffs appealed.
Agreeing with the district court, the Third Circuit held that although "[i]t is true that [plaintiffs] were common stockholders at the time the tender offer was initiated and that they tendered their shares in response to the offer[,] . . . it would contort the Best Price Rule beyond recognition to suggest that the Rule requires offerors to purchase every tendered share, even those restricted by the parties' prior agreements." The Third Circuit determined the Best Price Rule "is silent as to when, if ever, an offeror must purchase tendered shares or whether that offeror may include in the tender offer terms and conditions of acceptance." The Third Circuit reasoned that the broader Williams Act "presupposes that a tendered share might not be taken up and paid for, leaving room for terms and conditions such as those in Nuvei's offer." Because nothing in the Best Price Rule precluded Nuvei from requiring tendered shares to be freely transferrable and outstanding at the consummation of the tender offer, the Third Circuit affirmed.
Abramowski provides acquiring companies in a tender offer assurance the Best Price Rule will not require them to purchase tendered shares subject to encumbrances in the tendering shareholders' private agreements. The Third Circuit's reading of the Best Price Rule limits its reach to its plain terms: the consideration that must be paid to tendering shareholders at the completion of a proposed tender offer.
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