On February 27, 2020, the Federal Trade Commission (FTC) issued an administrative complaint seeking to block the proposed merger of Jefferson Health (Jefferson) and Albert Einstein Healthcare Network (Einstein). The FTC argues that the merger will reduce competition for inpatient acute rehabilitation services in the greater Philadelphia area. (more…)
When prospective buyers conduct legal due diligence in merger and acquisition transactions the main focus is typically on the traditional items, such as financials, debt instruments, major contracts and other key metrics customarily analyzed. These items, among others, remain critical to evaluating a business. However, with technology continuing to advance at an exponential rate and hackers successfully breaching company information systems more frequently, as seen with Target, Equifax and many others, it is critical that prospective buyers thoroughly consider the risks associated with the target’s cybersecurity practices or lack thereof. (more…)
Preserving privilege with respect to pre-closing communications between a selling corporation’s counsel and its management is an important negotiation point in many transactions, so that the seller can prevent the buyer from using such communications against the seller in disputes between the buyer and the seller, but the buyer can continue to assert that privilege in disputes with third parties. The default rule under Delaware law is that the privilege passes to the buyer post-closing. More specifically, section 259 of the Delaware General Corporation Law provides, in part, that “all property, rights, privileges, powers and franchises” shall pass to the surviving corporation. However, the parties may negotiate around this provision in the transaction documents according to the Delaware Court of Chancery’s decision in Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP.
By: Lori Smith
The other day I had a client ask me to review some form documents that another party wanted to use in connection with the client’s website. The basis of the request was that he thought I had prepared, or at least reviewed, these documents when they were originally created – over 10 years ago (coincidentally I had reviewed them, but had been somewhat critical, in part, at that time as off-market). This got me thinking about how many companies (and lawyers) rely on templates or precedential deal documents collected over many years, without thinking about the specific facts and circumstances of the deal they are doing or the passage of time and how that might implicate the need for updates and revisions.
In this post, we summarize some of the highlights from AIG’s recently published Mergers and Acquisitions 2018 Claims Report, and include our own observations on the role that Representations and Warranties Insurance (R&W Insurance) is increasingly playing in M&A transactions. (more…)
The #MeToo movement jumpstarted, by the sexual misconduct allegations against film producer Harvey Weinstein, has led to a sea of change in how companies address and handle inappropriate behavior in the workplace. Indeed, over the last few years, we have seen the swift removal of very high profile filmmakers, television figures, politicians, chefs and financial and public relations executives from their positions. Seeing the potentially devastating effects of a #MeToo claim – from public relations crises, to expensive lawsuits and other lasting harm, businesses are taking action to minimize the future occurrence of such behavior. This includes additional training, implementing better policies and mechanisms for addressing complaints, and increasing insurance coverage for sexual harassment. Because one #MeToo claim could substantially impair value, buyers are also now worried about acquiring a company in which sexual harassment claims have occurred or may be lurking and are increasingly focusing on understanding any potential exposure through more robust due diligence in addressing any such exposure in the definitive purchase agreement through so called “Weinstein Reps” or “MeToo Reps.”
Disclosures to stockholders can be the hobgoblin of M&A transactions. Delaware law requires that disclosures apprise stockholders of all material information and not be materially misleading. What is sufficiently material for disclosure turns on what a reasonable investor would consider important when deciding how to vote on the transaction. The information must be accurate, full, and a fair characterization of events so as not to be deemed materially misleading. (more…)
2018 Proposed Amendments to the Delaware General Corporation Law on Appraisal Rights and Ratification of Defective Acts
The Corporate Council of the Corporation Law Section of the Delaware State Bar Association recently released its proposed amendments to the Delaware General Corporation Law (DGCL) for 2018. Noticeably, the proposed amendments would amend Section 262(b) of the DGCL to eliminate an inconsistency in the availability of appraisal rights in stock-for-stock public mergers structured as two-step transactions under DGCL Section 251(h) and those structured as long form mergers. The proposed amendments intend to confirm and extend the availability of ratification of defective corporate acts in certain circumstances and streamline the use of such a potentially powerful tool for companies to address innocent mistakes. (more…)
On December 14th, the Delaware Supreme Court provided some welcome news to dealmakers by reversing the lower court decision in Dell v. Magnetar Global in which the lower court ignored the deal price in determining fair value of stock in an appraisal action brought by investors who opposed a management led buyout to Michael Dell and a large private equity firm. In doing so, the Court furthered its recognition of the deal price as indication of fair value when the transaction is the result of an arm’s length, robust process. (more…)
By: Gwenn Barney
The United Kingdom government proposed changes to its rules on mergers and acquisitions this week to give itself more oversight over deals that have national security implications.
The proposed rule will allow the government to intervene in a merger or acquisition involving a UK company with at least £1 million ($1.32 million) in revenue in the industries of military or dual use product design and manufacture, computer chip design, and quantum technology. Prior to this proposal, the turnover threshold for such an intervention was £70 million ($92.21 million) or where the effective market share of the combined business reached 25 percent or more.
- Board of Directors Guidance When Addressing Emergency Circumstances Occasioned by the COVID-19 Pandemic
- EPA to Relax Environmental Legal Enforcement During the COVID-19 Pandemic
- M&A Representation and Warranty Insurance Considerations in the Wake of the Coronavirus Pandemic
- Amid Coronavirus Pandemic and Declining Stock Prices, Public Companies Implement Poison Pills to Deter Corporate Raiders
- Delaware Supreme Court Upholds Federal Forum Selection for Securities Act Claims