On February 3, 2026, the U.S. Court of Appeals for the Third Circuit issued a decision in Abramowski v. Nuvei Corp addressing the question of whether the Best Price Rule requires a tender offeror to purchase all tendered shares in a tender offer, including those subject to pre-existing transfer restrictions or forfeiture provisions. The decision provides important guidance on the scope of the Best Price Rule and the interaction between federal tender offer regulations and private agreements governed by state law.
Rules 14d-10 and 13e-4(f)(8) under the Securities Exchange Act of 1934, as amended, referred to as the “All Holders/Best Price Rule,” impose restrictions that are intended to prevent differential treatment among similarly situated shareholders in tender offers. The All Holders Rule requires that a tender offer be open to all holders of the class of securities that is the subject of the offer, while the Best Price Rule requires that the consideration paid to any security holder for securities purchased pursuant to the tender offer be at least equal to the highest consideration paid to any other security holder for securities purchased in the tender offer.
Background. The plaintiffs were holders of earnout shares in Paya Holdings, Inc., which became public through a de-SPAC transaction with Fintech Acquisition Corp. III, a special purpose acquisition company founded by the plaintiffs. As part of the de-SPAC transaction, the plaintiffs had entered into a sponsor support agreement, pursuant to which certain of their shares in the SPAC were converted to earnout shares in Paya. Under the terms of the sponsor support agreement, in the event of a change of control where the price per share paid was below the $15.00 threshold, the earnout shares would be automatically forfeited “immediately prior to” the change of control.
In January 2023, Nuvei Corporation entered into a merger agreement to acquire Paya for $9.75 per share in a transaction structured as a two-step merger under Section 251(h) of the Delaware General Corporation Law, which permits a corporation to effectuate a merger without requiring a shareholder vote to authorize the merger where the corporation first consummates a tender offer for all of the outstanding stock of the target corporation. The tender offer required that shares tendered be freely transferable and outstanding at the time of acceptance. Nevertheless, the plaintiffs attempted to tender their earnout shares in the first-step tender offer, which were not accepted by Nuvei pursuant to the terms of the sponsor support agreement.
The plaintiffs filed suit in the U.S. District Court for the District of Delaware, asserting several claims, including for violations of the Best Price Rule. On October 17, 2024, the District Court granted the motion to dismiss in its entirety and denied the plaintiffs’ motion for summary judgment as moot. The plaintiffs appealed the dismissal of their Best Price Rule claim.
Decision of the Third Circuit. The Third Circuit affirmed the District Court’s dismissal, holding that the Best Price Rule applies only to shares that are actually “taken up and paid for” in a tender offer. The Rule does not require an offeror to purchase shares that it cannot lawfully acquire, including shares that are non-transferable or forfeited pursuant to pre-existing contractual arrangements.
Judge Porter noted that the Best Price Rule is “silent as to when, if ever, an offeror must purchase tendered shares” and permits offerors to impose reasonable conditions on acceptance, such as requiring that tendered shares be freely transferable and outstanding at the consummation of a change of control. The court rejected the plaintiffs’ interpretation as inconsistent with the text of the Rule, observing that construing it to require the purchase of every tendered share would “contort the Best Price Rule beyond recognition.”
Because federal securities law does not address whether or when particular tendered shares must be purchased, the court held that the issue is governed by the parties’ private agreements under state law—the sponsor support agreement provided for forfeiture of the earnout shares prior to the change of control, and federal law did not override that contractual arrangement.
The decision of the Third Circuit is available here. We would be happy to discuss the implications of this decision for pending or future transactions.
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