Articles and updates affecting M&A transactions
Institutional Shareholder Services (ISS) and Glass Lewis (GL), the two most influential proxy advisory firms to stockholders of public companies, recently released updates to their voting policies in 2017, including updates to their policies on “newly public” companies that have adopted anti-takeover protection measures considered “adverse to shareholder rights.” Our […]
On November 18, 2016, the Staff of the Division of Corporation Finance issued two new C&DIs that address banker fee disclosures for tender offers on Schedule 14D-9. The new C&DIs clarify that disclosure is required of “all” material terms for compensation including the types of fees payable to the financial […]
Last month, the FTC and DOJ issued a set of antitrust guidelines addressing certain employment and compensation practices that are most likely to occur in the high-tech and healthcare industries where highly-skilled employees are in demand. Specifically, the guidelines clarify that an agreement among competing employers to limit or fix […]
Recently, in the midst of an M&A transaction involving Verizon and Yahoo!, news broke of a Yahoo! cybersecurity breach that had occurred approximately two years earlier. This event raised a lot of speculation around what effect the breach may have on the deal, including by how much it might change […]
Obama Administration antitrust enforcers have faced criticism over the last year for not being sufficiently aggressive, allegedly leading to concentrated industries to the detriment of consumers. The Department of Justice and Federal Trade Commission appear to have responded by stepping up enforcement.The agencies’ efforts are bearing fruit. In just the […]
We keep a close eye on developing cases regarding earn-outs and contingent payment rights in light of the prevalent use of these arrangements in life sciences deals and their increasing use in non-life sciences deals. On September 8, 2016, a federal court in New York declined to dismiss a claim […]
Court Gives Energy Transfer the Right to Walk Based on its Counsel’s Inability to Deliver the Required Tax Opinion
In a rare decision involving unusual facts, the Delaware Court of Chancery held that a buyer (Energy Transfer Equity, L.P.) had the right to terminate a signed merger agreement with its target (The Williams Companies, Inc.) that Energy Transfer no longer wished to close due to the unexpected decline in […]
Yesterday, in In re: Walgreen Co., the 7th Circuit Court of Appeals rejected a “disclosure-only settlement” involving Walgreen Co.’s 2014 purchase of Alliance Boots and the combined company’s subsequent reorganization. In a strongly-worded but divided opinion, the Court reversed the district court’s ruling, which approved (albeit reluctantly) the disclosure settlement […]
Employee benefits and executive compensation issues rarely drive an M&A transaction. But these issues can result in unexpected delays and can make or break a successful post-closing integration of the companies. This webinar focuses on key employee benefits and executive compensation issues that should be considered by public companies in M&A […]
The Department of Justice Antitrust Division announced on July 12 that ValueAct Capital agreed to pay a record $11 million civil penalty to settle claims that ValueAct purchased over $2.5 billion in Halliburton and Baker Hughes stock with the intention of influencing their proposed $35 billion merger without complying with […]
Failure to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) is about to get a lot more expensive. Effective August 1, 2016, the maximum civil penalty for noncompliance with the premerger notification requirements of the HSR Act will increase from $16,000 to $40,000 per day – a […]
Section 262 of the DGCL provides a statutory remedy for stockholders who do not vote in favor of certain M&A transactions (generally cash mergers) to petition the corporation to buy their stock at a price equivalent to the “fair value” of the stock, subject to compliance with certain procedures. A […]
On January 22, 2016, Chancellor Bouchard rejected a proposed disclosure-only settlement in In re Trulia, Inc. Stockholder Litigation, 129 A.3d 884 (Del. Ch. 2016), marking the culmination of what has been a seismic shift over the past several months in the Delaware Chancery Court’s treatment of disclosure-only settlements in lawsuits challenging […]
The treatment of outstanding stock options and other equity compensation awards is often a key element of a sale transaction. Because stock options can represent considerable value, how they are treated can have a significant impact on the company’s management team and employees. For the parties negotiating the transaction, it can […]
The Delaware Supreme Court issued an Order this week in OptimisCorp v. Waite that could have implications for VC-backed or other companies with so-called “block-holder” directors – or directors who are appointed by a stockholder with a large block of shares – in the context of corporate turmoil where management, […]
M&A deal terms will almost always vary based on the specific context of the transaction, including the deal price, structure and each party’s negotiating leverage. Although no amount of data can replace context-specific analysis, data-driven decision-making continues to make its way into negotiations and can, under the right circumstances, provide […]
Federal Trade Commission v. Steris Corporation: High Barriers to Proving Likely Anticompetitive Effects from Loss of Future Competition
It has been more than 50 years since the Supreme Court first deliberated over the potential competition doctrine in United States v. Penn-Olin Chemical Co., where the Court recognized that Section 7 of the Clayton Act may be violated based on that theory of competitive harm.
Creative acquisition strategies are offering both buyers and targets additional opportunities to grow their businesses through M&A. One strategy that we are seeing parties use is the “option to acquire” structure, which addresses both the needs of a target company to develop a product or business on the one hand […]
Each year, the US government releases a public version of a classified report to Congress summarizing the government’s confidential review of certain foreign investments in the United States. The entity responsible for the report is an obscure committee of federal agencies and offices with national security responsibilities. Collectively, the members of the […]
Filing thresholds under the Hart-Scott-Rodino (HSR) Act will increase by about 2.5%, effective February 25, 2016, raising the level that a transaction’s value must exceed to trigger a filing from $76.3 million to $78.2 million and making adjustments to the Act’s other key dollar thresholds.
Thinking about what may go wrong with a contract, can be as important as the planning to make it go right.Key issues such as where an arbitration should take place, the level of confidentiality required and what levels of evidential discovery are you likely to require, can all put you in a much better position to deal with a dispute if one should arise in the future.
On December 23, 2015, the Delaware Supreme Court held that SIGA Technologies, Inc. cannot avoid paying $113 million in expectation damages (plus interest) to PharmAthene, Inc. for breaching an express agreement to negotiate a strategic license in good faith in accordance with terms set forth in a term sheet. The […]
Attention in the US during 2016 will be on the presidential campaign, and the election in November will bring a change in the “antitrust guard” at the top of the DOJ and FTC – even if a Democrat wins – that will drive the direction of antitrust enforcement in years […]
Shortly before Christmas, the UK Supreme Court issued a judgment that provides important guidance on the legal test for assessing the circumstances in which UK merger control rules apply to the acquisition of business assets.
After over seven years of litigation, the Delaware Supreme Court on December 11, 2015 upheld the Court of Chancery’s important decision in Nine Systems, which held that a 2002 recapitalization of a streaming media start-up unfairly diluted the minority stockholders when VC-backed directors failed to include the stockholders in an emergency round of financing […]
Two recent cases in the M&A space regarding earn-outs make one thing clear: express language in the definitive agreement prevails over any implied covenant of good faith and fair dealing. Fortis Advisors LLC v. Dialog Semiconductor PLC (Del. Ch. January 30, 2015) (granting a buyer’s motion to dismiss a claim […]
On November 30, 2015, in RBC Capital Markets, LLC v. Jervis (C.A. No. 6350-VCL) the Delaware Supreme Court upheld the principal rulings finding financial advisor RBC Capital Markets, LLC liable for approximately $76 million in damages for aiding and abetting breaches of fiduciary duties by former directors of Rural/Metro Corporation in connection […]
Companies considering transactions that raise serious antitrust issues should have a strategy for getting through the Hart-Scott-Rodino review process before finalizing the deal.
The pace of strategic deal-making has electrified corporate America over the past year and has kept antitrust enforcers on their toes in analysing the potential competitive effects of these deals.
Over the last several years, transactional insurance, or representation and warranties insurance (“R&W Insurance”), has become a more prominent part of the M&A landscape.
Recent antitrust challenges to mergers, including the FTC’s recent federal court victory, have forced parties to abandon at least three deals in the past few months.
In our January 2015 newsletter we discussed the recent decision of the Delaware Court of Chancery in the Cigna Health & Life Company v. Audax Health Solutions, Inc. case, which invalidated two purchaser-imposed requirements that are frequently found in private company mergers, specifically the conditioning of payment of merger consideration on […]
In the last few years, there have been numerous developments in the law and practice surrounding appraisal rights under Delaware law.
The Ninth Circuit U.S. Court of Appeals last month sided with the Federal Trade Commission and required divestiture to unwind a consummated acquisition between two health care providers. In doing so, however, the court broke with long-standing precedent and accepted, in principle, a role for efficiencies in analyzing mergers. The […]
A frequent precursor to public company deal litigation is the books and records request under Section 220 of the Delaware General Corporation Law. Typically employed by plaintiffs as the first step of “information gathering” for derivative litigation, a company’s right to limit the potential geographic use of requested information has been validated by the Delaware courts.
The practice of “appraisal arbitrage” has hit the radar for all public company dealmakers. Typically employed, to date, by activist investors and hedge funds, this strategic tool has recently received a shot in the arm with recent Court of Chancery opinions.
Two decisions by the Delaware courts (In re Family Dollar Stores, Inc. and C&J Energy Services Inc. v. City of Miami General Employees’ and Sanitation Employees’ Retirement Trust have more precisely defined the contours—substantive and procedural—of exactly what is (and what is not) required by a board of directors in complying with “Revlon” duties related to the sale of a controlling stake in a Delaware corporation.
Given the many opportunities and challenges that come from integrating two companies following a strategic transaction, including unlocking significant synergies and cost savings as a result of the combination, it is unsurprising that merging parties are often enthusiastic about moving forward with the process as soon as possible. Equally, it […]
In Cigna Health & Life Insurance Company v. Audax Health Solutions, Inc. (Del. Ch. November 26, 2014), the Delaware Court of Chancery invalidated two buyer-imposed requirements that are frequently found in private company mergers, specifically the conditioning of payment of merger consideration on a release and certain aspects of post-closing […]
Aware that parties to an acquisition need to share legal advice in connection with pre-closing activities, a New York appellate court permits the common-interest privilege to protect pre-closing communication, even without pending or anticipated litigation.
The Delaware Supreme Court rules that an integration clause in an acquisition agreement does not transform non-binding earnout provisions in a letter of intent into binding obligations under the definitive agreement.
Court reviews detailed allegations and potential scope of recovery for fraud alleged against pre-closing officers, directors and, notably, innocent selling stockholders in a private company acquisition.
Cooley closes 97 deals with an aggregate value of $36.9 billion Cooley continues to be a leading law firm for clients seeking to transform their businesses through strategic transactions. In the first half of 2014, we advised on 91 signed M&A deals with an aggregate value of $30.7 billion. Year to date, […]
Exclusive forum provisions (in a corporation’s bylaws or charter) designate a specific court(s) to serve as the exclusive venue(s) for intra-corporate litigation—e.g., derivative suits; actions (including class actions) asserting breach of fiduciary duty by a director, officer, or other employee to the corporation or its shareholders, and other disputes asserting […]
Antitrust enforcement in high-tech industries – those that employ the most advanced, cutting-edge technology – is a top priority for the Department of Justice (DoJ) and Federal Trade Commission (FTC).
SEC Issues Guidance on Proxy Voting and Proxy Advisory Firms – Will this Change Proxy Voting Behavior or the Role of Proxy Advisers?
The Securities and Exchange Commission (SEC) recently issued regulatory guidance (see related Q&A) regarding proxy voting responsibilities, including the role of proxy advisory firms and use of advisory firm advice. Implicit in the staff’s guidance is the expectation that firms and advisers incorporate updates to their voting policies and processes […]
In a recent DC Circuit case, In re: Kellogg Brown & Root, Inc., No. 14-5055 (June 27, 2014), the DC Court of Appeals clarified the scope of the attorney-client privilege in the context of a business’s internal investigation and described four aspects of an internal investigation that may vary while […]
A recent amendment to Delaware law clarifies certain statute of limitations rules, providing parties with increased flexibility to control survival periods for acquisition agreement indemnity provisions and related breach-of-contract claims. The amendment to the Delaware General Corporation Law (the “DGCL”) is described below, along with drafting tips for successfully incorporating […]