Definition
The depositary is the bank or trust company designated to:
- Receive tendered securities (via DTC for street-name holders, directly for record holders)
- Process letters of transmittal and notices of guaranteed delivery
- Process withdrawals during the offer period
- Apply pro-rata acceptance if oversubscribed
- Receive payment from the bidder and disburse to tendering holders
Why it matters
The depositary is the operational chokepoint of the offer. Its receipt timestamps determine whether tenders are valid; its allocation calculations determine who gets paid for which shares.
Often combined with
The depositary frequently also serves as the paying agent in the same transaction. A separate paying agent is sometimes used for back-end merger payments after the tender closes.