Failure to Comply with the HSR Act: The Price is Going Up

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 […]

Dell Decision and Recent Amendments to Delaware’s Appraisal Statute

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 […]

From Aeroflex to Trulia: A Seismic Shift

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 […]

CDX Holdings Decision Spotlights the Treatment of Stock Options in a Merger

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 […]

DE Court Comments on Block-Holder Rights in OptimisCorp

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, […]

Private Market Trends Snapshot 2016

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.

Options to Acquire: How these Creative Acquisition Strategies Differ from a Traditional Purchase

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 […]

Newly-Released Data Reveal 50% Increase in CFIUS Filings Over Prior Year

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 […]

IFLR Asia M&A Forum 2016

Cooley is a sponsor of the IFLR Asia M&A Forum. This comprehensive two-day forum will provide attendees with key developments, best practices and tips for navigating unique deal-making environments in the region and bring together leading industry experts and counsel to debate top trends and the future of M&A in Asia. […]

Top 10 M&A Developments and Trends for 2016

Here is a look back at the top M&A developments that affected deal-making last year and a look forward to our expectations for 2016.

Revised 2016 Hart-Scott-Rodino Antitrust Thresholds

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.

What US GCs Should Know About Drafting International Arbitration Clauses

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.

Agreements to Agree can be Broken: Negotiating Letters of Intent

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 […]

Top 10 Antitrust Developments and Trends to Watch in 2016

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 […]

UK Supreme Court Confirms Merger Control Threshold for Business Acquisitions

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. 

No Harm, but Foul: Process Considerations for “Interested” Transactions

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 […]

Mind the Gap (or Lack Thereof)

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 […]

Court Upholds Banker Liability for Inducing Faulty Process in Rural/Metro Sale

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 […]

Proposing a Fix? Ready to Litigate the Fix? Recent Cases Should Guide Strategy

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.

High-tech Mergers: Flying “High” on the Antitrust Enforcement Radar

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.

Rep and Warranty Insurance: Trends and Key Considerations

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.

Abandon Ship! Don’t Let Antitrust Risk Sink your Deal

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.

Utilizing Drag-Along Rights in Private Company Merger Agreements

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 […]

Delaware Chancery Court Weighs in on Fair Value in an Appraisal action

In the last few years, there have been numerous developments in the law and practice surrounding appraisal rights under Delaware law.

Do Merger Efficiencies Matter in Antitrust Review? Ninth Circuit Says “Yes”

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 […]

Books and Records – An Assist to Forum Selection

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 Latest in “Appraisal Arbitrage”

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.

What Revlon Doesn’t Require

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.

Learning the Hard Way HSR Gun Jumping – Lessons from Flakeboard/SierraPine

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 […]

M&A Releases and Post-Closing Indemnity Obligations in Private Company Merger Agreements

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 […]

Can we Talk? New York Court Broadens Common-Interest Privilege for Pre-Closing Communications

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.

Is My Non-Binding Letter of Intent Actually Binding?

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.

A Reminder on Adequate Process

The Delaware Chancery Court analyzes a dilutive recapitalization transaction under the entire fairness standard of review and finds flawed process, despite a fair price in the deal.

Exploring the Scope of Recovery for Fraud Claims in Private Company Transactions

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 1H 2014 Deal Activity

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

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 […]

High-Tech Mergers: Top of the Antitrust Enforcement Agenda

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 […]

Understanding Attorney-Client Privilege in Internal Business Investigations

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 […]

Amendment to Delaware Statute of Limitations Rules – Drafting Tips

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 […]

SEC Issues Guidance on Tweets and Similar Social Media Communications

Recognizing the growing interest in using technologies such as social media to communicate with security holders and potential investors, the Securities and Exchange Commission released a new Compliance and Disclosure Interpretation addressing the use of hyperlinks in Tweets and other social media communications to satisfy the SEC’s legending requirements. Historically, […]

“Good Faith” Covenants for Earnouts

The Delaware Chancery Court recently reviewed the application of the implied covenant of good faith and fair dealing in connection with “earnout” provisions in an acquisition agreement. In American Capital Acquisition Partners, LLC v. LPL Holdings, Inc., the court allowed a claim for a breach of the implied covenant to […]

A Series of Proposed Amendments to Delaware Corporate Law

Summarized below are the currently proposed changes to the Delaware General Corporation Law (the “DGCL”) that, if enacted, would become effective on August 1, 2014.

Activists and the Poison Pill

In re Third Point LLC v. Ruprecht, et al. (Del. Ch. May 2, 2014). In the much anticipated review of Sotheby’s two-tiered stockholder rights plan adopted in response to Third Point’s activist campaign and proxy contest, the Delaware Court of Chancery held that the Sotheby’s board did not breach its […]

United States v. Bazaarvoice: A Cautionary Antitrust Tale for High-Tech Mergers

The recently concluded Department of Justice enforcement action against Bazaarvoice, Inc.’s 2012 acquisition of rival PowerReviews, Inc. is a reminder of important principles for antitrust enforcement in high-tech industries.

Recent Trends in Antitrust and Regulatory Risk – Shifting in M&A Agreements

The recent drumbeat of aggressive antitrust and regulatory merger enforcement has put a spotlight on the importance of understanding the antitrust and regulatory risks raised by a potential deal, and efficiently allocating that risk in the transaction agreement. While transactions in dynamic technology, healthcare/life sciences, new media and telecom industries […]

Appraisal Arbitrage – A Rising Star in the Activist Playbook

Shareholder activism gains momentum and publicity with each passing proxy season. Activist-focused funds increase capital and investor expectations, proxy contest tactics become more practiced and skillful, nominees for board positions are industry tailored and more sophisticated and social media increases the reach (and entertainment value) of activist communications. What comes […]

Kahn v. M&F Worldwide

In a much anticipated judicial development, the Delaware Supreme Court affirmed the holding of In re MFW Shareholders Litigation (Del. Ch. 2013) that if certain procedural protections are in place from the outset of a transaction, a controlling stockholder buyout otherwise subject to the entire fairness standard could be subject […]

In re Rural Metro Corporation Stockholders Litigation

In Rural Metro, the Delaware Chancery Court held that RBC Capital Markets, LLC, as financial advisor to the Rural Metro (Target), had aided and abetted Target’s directors in breach of their fiduciary duties in connection with its sale to Warburg Pincus (Buyer). This is the latest in a string of […]