I have a publicly traded company with about 60% of the stock that is privately held by one shareholder. The company's goal is to become a closely held company. The company just went through the expense of issuing a tender offer to purchase the shares that is currently being traded on the open market. The tender offer was unsuccessful. Could using an ESOP produce a different result? If we used the ESOP to purchase company stock as it became available would the ESOP have to report to the SEC?

For an example of a tender offer involving an ESOP, you may want to look at August 2000 securities filings of Hooker Furniture Corp. The company made a tender offer through its ESOP to acquire in excess of 30 percent of its outstanding stock while offering the selling shareholders the opportunity to elect tax-deferred sales under Section 1042 of the Code. As a result, the $12.50 tender office price was the equivalent of approximately $15 on a taxable basis. Hooker Furniture Corp. remains a publicly-traded company. There are additional issues to consider if the purpose of the tender offer is to become a closely-held company.

1042 exchange treatment really isn't going to help induce a sell because most of the shareholders have a very high basis in the stock. Is there any other benefits?