Definition
The board recommendation statement is the substantive heart of the target board’s Schedule 14D-9 filing. It must take one of four positions:
- Recommend acceptance
- Recommend rejection
- Express no opinion (must explain why)
- Unable to take a position at this time (must explain why)
Why it matters
Shareholders rely heavily on the board’s recommendation, especially in widely-held companies. A “recommend acceptance” turns a contested deal into a friendly one and substantially raises the odds of closing. A “recommend rejection” can sink a hostile bid.
Process
The board typically:
- Engages a financial advisor for a fairness opinion
- Consults outside legal counsel on fiduciary duties
- Forms a special committee if conflicts exist
- Documents the deliberation thoroughly to support a Revlon-duty defense if challenged
Update obligations
If new information materially changes the analysis, the board must amend the 14D-9.