Summary Asset lockups are infrequently used as deal protection Were sometimes used during the hostile takeover wave of the 1980s Rarely used since See Precedent Examples (below) Following critical decisions in Revlon , Hanson Trust and Mills Acquisition See Cases (immediately below) Developments Lexar Media / Micron [more...]
Summary Unsolicited letter from a prospective buyer to a target company's management Intended to pressure target management by triggering their fiduciary duties Letter can invite negotiations or make a detailed proposal May or may not be publicly disclosed by bidder: If public, first step in a hostile takeover If private, target can make [more...]
Summary Securities issued in M&A transactions to separate value of contingent events Referred to as: Contingent valuation rights CVRs Contingent payment rights CPRs No-Action Letters Celina Financial 1993 First Boston 12.02.88 3M 10.13.88 Slater Development 5.09.88 Lorimar 11.04.85 Lifemark 11.17.81 Tax Issues IRS revenue ruling [more...]
Summary Can enable buyers and sellers to compromise on valuation differences Earnout allows ultimate price to be determined over a period of time as certain financial and/or operational targets are met Can be difficult to negotiate and are fraught with litigation risk As earnouts may distort incentives for seller-managers and buyer-owners in [more...]
Summary Used in most public company M&A transactions to help establish that the board's decision was properly informed, thus fulfilling the board's fiduciary duties Became a standard practice following Smith v Van Gorkom decision 1985 For selling companies For buying companies when transaction is significant See DGCL [more...]
BMO Nesbitt Burns 2004 Adolph Coors / Molson 7.22.04 Proxy statement disclosure Opinion Bear Stearns 2005 Hibernia / Capital One 3.06.05 Proxy statement disclosure Opinion Chestnut Securities 2005 Saucony / Stride Rite 6.01.05 Proxy statement disclosure Opinion Citigroup 2004 Adolph Coors / Molson 7.22.04 Proxy [more...]
In re Instinet Group Del Ch 2005 Opinion - Vice Chancellor Lamb Suit over Instinet-NASDAQ merger Plaintiffs' lawyers sought $1.45 million in fees $173K in expenses Court awarded total of $450K Settlement provided for $1 million more for Instinet minority shareholders Reduction in break-up fee from 3.5% to 3.0% Enhanced proxy disclosures [more...]
Summary Lists LawyerLinks SM compiled deals Largest-Ever US Deals 2005 Big Deals 2005 Deals 2004 Deals Links go to deal package on relevant Topic Page Largest-Ever US M&A Deals AOL / Time Warner $155B Media Warner-Lambert / Pfizer $83B Drugs Exxon / Mobil $77B Energy Travelers / [more...]
a/k/a Poison Pills Summary The most effective tool to thwart an unsolicited takeover proposal No hostile tender offer has ever been completed where the rights plan has stayed in place Provides target's board with bargaining leverage / ability to manage takeover process Can be adopted by board action, without need for shareholder [more...]
Developments Variance continues in use of M&A voting agreements Compare Pixar-Disney with Burlington Coat Factory LBO Pixar-Disney 2006 53% stockholder limited his voting agreement to only 40% Target is a California company Burlington Coat Factory 2006 Controlling family committed to vote all its shares (61%) Target is a Delaware company See [more...]