SEC Form S-4 - Explained
What is Form S-4?
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Table of ContentsWhat is SEC Form S-4?How is Form S-4 Used?Academic Research on Form S-4
What is SEC Form S-4?
Public or reporting companies must submit Form S-4 to the Securities and Exchange Commission (SEC) in case of mergers, acquisitions, or stock exchange offers. Mergers happen when companies want to expend, unite efforts, move into some new segments, or gain higher revenues and profits to maximize stakeholder value. Once merger is done, the new shares are distributed to current shareholders of both merging companies.An exchange offer happens usually in bankruptcy cases, when a firm or financial entity exchanges securities for similar ones at less rigid terms.
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How is Form S-4 Used?
All mergers required SEC Form S-4 filing. Five common types of mergers include:
- Conglomerate Mergers - This involves 2 companies with unrelated businesses. The company's combine to expand their current markets.
- Congeneric Mergers - This involves 2 or more companies generally in the same market. This allows efficiencies or economies of scale when the companies use the same technology, marketing, products & R&D processes. It also happens when a company wants to extend its product offerings.
- Market Extension Mergers. This involves 2 Companies with the same or similar products operating in different markets. The purpose of this type of merger is to expand into new markets.
- Horizontal Mergers - This type of merger involves 2 competitors within the same industry. The companies combine in an attempt to expand their market share.
- Vertical Mergers - This involves 2 companies, one of which is a supplies of parts and services to the other. Combining the company operations allows for certainty in the supply chain and cost reductions in producing the final value proposition.
Companies seeking a hostile takeover of another company must file form S-4 to provide public notice. Investors use this information to exploit M&A gains. Investors realize that company stock prices generally trade at a premium during a merger or takeover.
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