In late 2011, I had the privilege of chairing a panel presentation in New York City on negotiating acquisitions of public companies in transactions structured as friendly tender offers. In September 2012, I chaired a follow-up panel presentation on the same topic. Both presentations took place at the annual Institute on Corporate, Securities, and Related Aspects of Mergers & Acquisitions, sponsored jointly by the Penn State Center for the Study of Mergers and Acquisitions and the New York City Bar Association. Several of the other panelists – including Gar Bason of Davis Polk, Joel Greenberg of Kaye Scholer, and Fred Green of Weil – are widely considered among the top M&A practitioners in the nation. For much of our presentations, we utilized the format of an interactive, “mock” negotiation of key issues, with various panelists playing the roles of outside counsel for the buyer, outside counsel for the target company, and special Delaware counsel.
The other panelists and I edited the transcripts of both presentations and added comprehensive footnotes. Our goal was to create a teaching tool that would be useful to students, practitioners, and others seeking to learn about the negotiating dynamics in friendly acquisitions structured as tender offers.
Both edited transcripts have been published in the Penn State Law Review. The edited transcript of the 2011 presentation is part of the Symposium Issue of the Penn State Law Review titled “The Deal Lawyers’ Guide to Public and Private Company Acquisitions.” The edited transcripts can be accessed here (Climan et al., Negotiating Acquisitions of Public Companies in Transactions Structured as Friendly Tender Offers, 116 Penn St. L. Rev. 615 (2012)) and here (Climan et al., Negotiating Acquisitions of Public Companies—A Follow-Up, 117 Penn St. L. Rev. 647 (2013)).
Among the interesting subtopics we addressed are:
- the pros and cons of using a friendly tender offer structure rather than a one-step merger structure;
- negotiating “use” restrictions, disclosure restrictions, and liability disclaimers in confidentiality agreements after the Vulcan and RAA decisions;
- negotiating standstill provisions;
- “don’t-ask-don’t-waive” provisions;
- using “top-up” options to reach the 90% ownership threshold necessary to effect a back-end merger as a short-form merger;
- the SEC Staff’s clarified stance on the viability of “dual track” structures in leveraged acquisitions;
- the effect of “non-reliance” clauses (both in confidentiality agreements and definitive acquisition agreements) on a buyer’s fraud-related remedies;
- negotiating “walk rights” in public company acquisitions;
- negotiating deal protections (specifically, break-up fees and board recommendation covenants); and
- addressing and allocating antitrust risks in the acquisition context.