Definition
A back-end merger (or second-step merger) is the follow-on transaction after a successful tender offer that cashes out the remaining untendered shares so the target becomes a wholly-owned subsidiary.
Forms
- Short-form merger (Delaware §253) — available when bidder owns ≥90%; no shareholder vote required
- Long-form merger — required if bidder owns less than the short-form threshold; involves shareholder vote and proxy statement
- Medium-form merger (Delaware §251(h)) — added in 2013; permits squeeze-out of remaining shares immediately after a successful tender (≥50% threshold) without a separate shareholder vote, if the merger agreement provides
Why it matters
The back-end merger is what gets the bidder from “majority” to “100%.” Without it, the bidder is stuck with public-minority overhead, ongoing minority-shareholder rights, and complicated post-close governance.