SEC Form S-4 Defined

What Is SEC Form S-4?

SEC Form S-4 is filed by a publicly traded company with the Securities and Exchange Commission (SEC). It is required to register any material information related to a merger or acquisition. In addition, the form is also filed by companies undergoing an exchange offer, where securities are offered in place of cash.

Understanding SEC Form S-4

SEC Form S-4 is also known as the Registration Statement under the Securities Exchange Act of 1933. (The Securities Exchange Act of 1933, often referred to as the "truth in securities" law, requires that these registration forms provide essential facts and are filed to disclose important information upon registration of a company's securities.)

Public or reporting companies must submit Form S-4 to the Securities and Exchange Commission (SEC) in the case of mergers, acquisitions, or stock exchange offers. Mergers happen when companies want to expend, unite efforts, move into some new segments, or gain higher revenues and profits to maximize stakeholder value. Once a merger is completed, the new shares are distributed to current shareholders of both merging companies. An exchange offer usually happens in bankruptcy cases, when a firm or financial entity exchanges securities for similar ones at less rigid terms.

Types of Merger that Require Form S-4

All mergers require SEC Form S-4 filing. For example, here are five typical types of merger.

Congeneric Mergers. In this type of merger, the companies occupy the same market. The merger creates efficiencies or economies of scale because the companies may use the same raw materials, technology, & R&D processes.

Vertical Mergers. Vertical mergers occur for supply chain reasons. One company is typically a supplier to the other, and the merger reduces the costs of the final product.

Hostile Takeovers

If a merger or takeover is hostile, investors assume that stock prices will trade at a premium. Therefore, in the interests of disclosure, companies seeking a hostile takeover of another company must file form S-4 to provide public notice.

For an M&A transaction, the SEC requires that Form S-4 contain information regarding, inter alia, the terms of the transaction, risk factors, ratio of earnings to fixed charges and other ratios, pro-forma financial information, material contracts with the company being acquired, additional information required for reoffering by persons and parties deemed to be underwriters, and interests of named experts and counsel.

Real World Example

On Dec. 22, 2015, Marriott International filed a Form S-4 describing its proposed combination with Starwood Hotel & Resorts Worldwide. The 192-page document, excluding appendices, contains complete details of the proposed transaction, which eventually closed on Sept. 23, 2016. For investors, in addition to the pro-forma figures and valuation numbers of the transaction, perhaps the most interesting sections of the filing are the reasons given by each company for the combination and the timeline of the deal and how and when the deal came together.