Comment Letter on M & A Release
1875 I Street NW, Suite 600
Washington, DC 20006
April 9, 1999
Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
Mail Stop 6-9
450 Fifth Street, NW
Washington, DC 20549-6009
Re: File Number S7-28-98; Regulation of Takeovers and Security Holder Communications
Dear Mr. Katz:
The National Association of Real Estate Investment Trusts®, (NAREIT®), welcomes this opportunity to respond to the request for comments from the Securities and Exchange Commission (SEC) on various proposals contained in Release No. 33-7607 (Release). NAREIT is the national trade association for real estate companies. Members are real estate investment trusts (REITs) and other businesses that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study and service those businesses. NAREIT's Government Relations Committee is pleased to provide its comments.
NAREIT commends the SEC on its efforts to streamline and modernize the rules regarding mergers, acquisitions, tender offers, and other extraordinary transactions. NAREIT believes that the proposals contained in the Release are positive steps toward reaching a common goal of both NAREIT and the SEC: a fair and efficient public securities marketplace.
NAREIT believes that the proposals for increased communications in tender offer and merger situations could enhance investor protection by giving all investors access to reliable information in a timely manner. Such information is critical to making an informed investment decision. The information needed for the investment decision, in our opinion, remains the same whether the transaction occurs among large or small issuers. Therefore, we believe, any provisions to allow expanded communications, as well as any safe harbor provisions, should apply to all issuers regardless of size. We agree with the SEC's reasoning that, in business combination transactions, the market needs information about the new combined entity in a timely manner.
NAREIT shares the SEC's belief that there is a strong need to protect both investors and the integrity of the securities markets. Especially, we agree that there should be strong directives to prohibit fraudulent conduct under any new safe harbors, including any new tender offer rules. We agree with the goals of Proposed Rule 14e-8, which would prohibit a person from announcing a tender offer without either the intent to commence and complete the offer or a reasonable belief that the person would have the means to purchase the securities sought, or with the intent to manipulate the price of either the bidder's or the target's securities.
NAREIT agrees that compliance with multiple regulatory schemes significantly increases the costs of a transaction, sometimes with no added benefit in terms of investor protection. NAREIT believes that the proposals in new Regulation M-A will streamline disclosure and filing requirements and lower the cost of extraordinary transactions without compromising investor protection or marketplace integrity.
NAREIT also agrees with the goals equalizing the rules regarding cash and stock tender offers. Given that many of today's takeovers involve offers of securities, proposals addressing the possible competitive disadvantage of stock tender offers are welcomed.
NAREIT thanks the SEC for this opportunity to comment on the proposed regulations concerning mergers, acquisitions, tender offers, and other extraordinary transactions. NAREIT will submit comments regarding the Release's companion release, the Securities Act Reform Release, under separate cover. NAREIT believes, however, that this Release, along with the Securities Act Reform Release, will assist in streamlining the securities regulation process. Please contact me or Anna Chason, NAREIT's Public Affairs Counsel, at (202) 739-9400 if you have any questions regarding this letter.
Tony M. Edwards
Senior Vice President and General Counsel
National Association of Real Estate Investment Trusts