A Brief Discussion on Corporate Mergers and Their Evolution

The first formally established trust organization in the United States was Standard Oil, founded in 1882. Its predecessor was the Standard Oil Alliance, a consortium that eliminated competition among its members through cross-shareholding. This arrangement was devised with the assistance of Samuel C. T. Dodd, a lawyer, and implemented by John D. Rockefeller. They designed the trust—a novel organizational form aimed at reducing production costs. Attorney Dodd persuaded the owners of 40 independent oil companies to transfer their shares to a group of trustees led by Rockefeller. These 40 formerly loosely affiliated firms were thus unified into a single, integrated enterprise—the trust—while still operating as distinct units. After Standard Oil reorganized itself as a trust in 1882, internal restructuring and improved management reduced the parent company’s refining costs by two-thirds. During the 1880s, numerous trusts emerged across industries—including sugar, meatpacking, rubber, and tobacco. In the same decade, the American Tobacco Company merged several smaller firms, leading to a decline in cigarette prices nationwide. By the end of the 19th century, U.S. corporations rushed to form trusts to cut costs and prices, thereby enhancing market competitiveness. By the early 20th century, the U.S. economy had matured sufficiently to transition from free-market capitalism to monopoly capitalism. To maximize profits and expand markets, individual enterprises aggressively increased output and enlarged their operations. This inevitably intensified competition to a ruthless degree; powerful firms resorted to unscrupulous tactics to exclude or crush rivals, ultimately achieving mergers, acquisitions, and control over other companies. According to available data, within the first two decades of the 20th century, the total capital of U.S. trusts and other conglomerates exceeded $20 billion. By 1919, large monopolistic enterprises—comprising only 3.6% of all U.S. firms—employed 56% of the nation’s workforce and accounted for 67.8% of total U.S. industrial output. Monopoly capital had thus become the undisputed dominant force in the American economy. To maintain its competitive edge amid fierce industry rivalry, DuPont—the renowned U.S. explosives manufacturer—lobbied Laflin & Rand Company to exchange its shares for newly issued DuPont stock. To this end, DuPont established the Delaware Investment Company and the Delaware Securities Company. These two holding companies raised $10.5 million in equity capital, plus $4 million in bonds, successfully acquiring the entire Laflin & Rand Company—a well-established, historically prominent firm. Leveraging the newly formed Delaware Investment Company and Delaware Securities Company, DuPont subsequently acquired and merged with several other major explosives manufacturers: the Muskegon Powder Company, the International Wool Salt Powder and Chemical Company, and the California-based Vezolite High Explosives Company. To gain full control over these entities, DuPont conducted comprehensive integration efforts, ultimately bringing all of them under the DuPont corporate umbrella.

Economic Law: Chapter 5 — Corporate Acquisitions and Restructuring

(3) Classification of Tender Offers ・ Classified by Pre-determined Acquisition Ratio: ・ Full Tender Offer: An offer addressed to all shareholders of the target company to acquire all of their shares. Example: Company A issues a full tender offer to acquire all shares of listed Company B at RMB 50 per share. ・ Partial Tender Offer: An offer addressed to all shareholders of the target company to acquire only a portion of their shares. Example: Company C issues a partial tender offer to acquire 25% of the publicly traded shares of listed Company D at RMB 45 per share. ・ Classified by Whether the Acquisition Is Mandated by Law: ・ Voluntary Tender Offer: An acquisition initiated voluntarily by the acquirer. Example: Company E voluntarily issues a tender offer to acquire 30% of the shares of listed Company F at RMB 60 per share. ・ Mandatory Tender Offer: A public tender offer required by law when the acquirer’s shareholding reaches a statutory threshold. Example: Upon reaching a 29.8% stake, Company G is legally obligated to issue a mandatory tender offer before further increasing its holdings. Note: Whether voluntary or mandatory, the pre-determined acquisition ratio must not be less than 5% of the target company’s issued shares. III. Rules Governing Tender Offers (1) Preliminary Announcement ・ Rule: The acquirer must submit a tender offer report and issue a preliminary announcement. ・ Example: Company A submits its report and publishes an announcement stating its intention to acquire no less than 20% of Company B’s shares at RMB 50 per share. (2) Tender Offer Period ・ Rule: The tender offer period must be no fewer than 30 days and no more than 60 days (except in cases of competing offers). ・ Example: Company C’s tender offer for listed Company D lasts for 40 trading days. (3) Irrevocability of the Tender Offer ・ Rule: During the acceptance period, the acquirer may not withdraw its tender offer. ・ Example: Even if Company F’s share price declines, Company E may not rescind its offer during the commitment period. (4) Amendment of the Tender Offer ・ Rule: Any amendment must be promptly announced; it may not reduce the offer price, decrease the number of shares sought, or shorten the offer period. ・ Example: When Company G increases its acquisition ratio from 25% to 30%, it immediately announces the change and notifies Company H. (5) Terms and Price of the Tender Offer ・ Rule: Terms must apply uniformly to all shareholders; the offer price must not be lower than the highest price paid by the acquirer for the same class of shares within the preceding six months. ・ Example: Company I sets its tender offer price at no less than RMB 45 per share—the highest price it paid for such shares over the past six months. (6) Exclusivity of the Tender Offer ・ Rule: During the tender offer period, neither the acquirer nor any shareholder may conduct off-market purchases or sales of the target company’s shares. ・ Example: During its acquisition campaign, Company K may neither privately negotiate with a major shareholder of Company L nor sell its existing holdings in Company L. (7) Obligations of the Target Company’s Board of Directors ・ Rule: The board must investigate the acquirer, analyze the terms of the offer, provide recommendations to shareholders, engage independent financial advisors, and publish a board report within 20 days of receiving the tender offer report. ・ Example: Within 18 days, the board of Company N issues a detailed report—including its investigation of Company M and its recommendations to shareholders. (8) Pre-acceptance of the Tender Offer and Related Rules ・ Rule: Pre-acceptance constitutes a preliminary expression of intent; it becomes irrevocable during the final three trading days of the offer period, and the number of pre-accepted shares must be disclosed daily. ・ Example: Company O updates daily the number of shares of Company P that have been pre-accepted under its tender offer. (9) Post-Offer Settlement ・ Rule: If the number of shares validly pre-accepted exceeds the pre-determined acquisition amount, shares shall be purchased on a pro-rata basis. ・ Example: Company Q purchases two-thirds of the shares pre-accepted under its tender offer for Company R.

DuPont de Nemours Shares Acquired by Farther Finance Advisors LLC

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Farther Finance Advisors LLC increased its stake in DuPont de Nemours by 839.5% in Q3, holding $5.1 million worth of shares while the company reported a 4% year-over-year revenue increase.

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