The amendments to Delaware law streamlining the back-end merger process in transactions structured as two-step tender offers went into effect August 1. DGCL 251(h) and the related changes to the DGCL permit acquirers to complete the back-end merger after receiving 50% plus one share tendered without being required to obtain stockholder approval. These changes should eliminate the need for top-up options and 90% tender conditions in most tender offer transactions.
The first two transactions taking advantage of the new rule were signed on August 13 (the Steinway topping bid) and August 15 (the sale of Volterra—Cooley represented Volterra). Each of these agreements included the traditional top-up option structure as a fall back if 251(h) was not available. Cooley also represented Verenium in its acquisition by BASF in a 251(h) tender offer pursuant to an agreement that did not include a top-up option.
All M&A practitioners should become familiar with DGCL §251(h) and the related changes to the DGCL because we expect that, for all transactions eligible, the use of §251(h) will become the standard going forward in all transactions structured as negotiated two-step tender offers.