Posts Tagged ‘Mergers & acquisitions’

Treasury Department Seeks to Curb Inversion Transactions

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday October 1, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Jodi J. Schwartz, partner in the Tax Department at Wachtell, Lipton, Rosen & Katz, and is based on a Wachtell Lipton memorandum by Ms. Schwartz and Michael Sabbah.

Yesterday [September 22, 2014], the Treasury Department and the IRS announced their intention to issue regulations (the “Regulations”) to limit the economic benefits of so-called “inversion” transactions in the absence of Congressional action. The Regulations, once issued, will generally apply to transactions completed on or after September 22, 2014. (Notice 2014-52, Rules Regarding Inversions and Related Transactions.)

…continue reading: Treasury Department Seeks to Curb Inversion Transactions

Why Delaware Appraisal Awards Exceed the Merger Price

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday September 23, 2014 at 9:17 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Philip Richter, partner and co-head of the Mergers and Acquisitions Practice at Fried, Frank, Harris, Shriver & Jacobson LLP, and is based on a Fried Frank publication by Mr. Richter, Steven Epstein, David Shine, and Gail Weinstein. The complete publication, including footnotes, is available here. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

As has been widely noted, the number of post-merger appraisal petitions in Delaware has increased significantly in recent years, due primarily to the rise of appraisal arbitrage as a weapon of shareholder activists seeking alternative methods of influence and value creation in the M&A sphere. The phenomenon of appraisal arbitrage is to a great extent a product of the frequency with which the Delaware Chancery Court has appraised dissenting shares at “fair values” that are higher (often, far higher) than the merger consideration in the transactions from which the shareholders are dissenting. Our analysis of the post-trial appraisal decisions issued in Delaware since 2010 indicates that the court’s appraisal determinations have exceeded the merger price in all but two cases—with the appraisal determinations representing premiums over the merger price ranging from 8.5% to 149% (with an average of 61%).

…continue reading: Why Delaware Appraisal Awards Exceed the Merger Price

The Legal and Practical Implications of Retroactive Legislation Targeting Inversions

Posted by Yaron Nili, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday September 16, 2014 at 9:10 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Jason M. Halper, partner in the Securities Litigation & Regulatory Enforcement Practice Group at Orrick, Herrington & Sutcliffe LLP, and is based on an Orrick publication authored by Mr. Halper, Peter J. Connors, David Keenan, and Carrie H. Lebigre. The complete publication, including footnotes, is available here.

The increasing use of corporate inversions, whereby a company via merger achieves 20 percent or more new ownership, claims non-US residence, and is then permitted to adopt that country’s lower corporate tax structure and take advantage of tax base reduction techniques, has been the subject of intense media commentary and political attention. That is perhaps not surprising given the numbers: there was approximately one inversion in 2010, four in each of 2011 and 2012, six in 2013 and sixteen signed or consummated this year to date—or more than in all other years combined. And, the threat of anti-inversion legislation appears only to be hastening the pace at which companies are contemplating such transactions.

…continue reading: The Legal and Practical Implications of Retroactive Legislation Targeting Inversions

Delaware Court of Chancery Upholds Forum Selection Bylaw

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday September 15, 2014 at 9:04 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from David J. Berger, partner focusing on corporate governance at Wilson Sonsini Goodrich & Rosati, and is based on a WSGR Alert memorandum. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

On September 8, 2014, Chancellor Andre G. Bouchard issued a notable decision in City of Providence v. First Citizens BancShares, Inc., upholding—as a matter of facial validity and on an “as-applied” basis at the motion to dismiss stage—a forum selection bylaw adopted by a Delaware corporation selecting another jurisdiction (North Carolina, where the company is headquartered) as the forum for intra-corporate disputes. This decision is important not only because it reaffirms the decision last year by then-Chancellor, now Chief Justice, Leo E. Strine, Jr. in Boilermakers Local 154 Retirement Fund v. Chevron Corporation, 73 A.3d 934 (Del. Ch. 2013), upholding the facial validity of forum selection bylaws, but also because it includes notable pronouncements from the current Chancellor on the application of such provisions. [1]

…continue reading: Delaware Court of Chancery Upholds Forum Selection Bylaw

Senator Schumer’s Anti-Inversion Bill

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday September 11, 2014 at 9:05 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Neil Barr, partner and co-head of the Tax Department at Davis Polk & Wardwell LLP, and is based on a Davis Polk client memorandum by Mr. Barr, Rachel D. Kleinberg, and Michael Mollerus.

A draft of the bill that is being considered by Senator Schumer (D-NY) to reduce some of the economic incentives for corporate inversions was made publicly available yesterday. Senator Schumer has indicated that, while the proposed bill is still the subject of discussion and is subject to change, he intends to introduce the bill into the Senate this week. The following is a summary of the provisions in the proposed bill as it currently stands.

…continue reading: Senator Schumer’s Anti-Inversion Bill

2014 Amendments Affecting Delaware Alternative Entities and the Contractual Statute of Limitations

Posted by Yaron Nili, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday August 31, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Scott E. Waxman, founding partner in the Delaware office of K&L Gates LLP, and is based on a K&L Gates alert authored by Mr. Waxman, Eric N. Feldman, Nicholas I. Froio, Andrew Skouvakis, and Zachary L. Sager. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

On August 1, 2014, amendments to Delaware’s alternative business entity statutes, [1] as well as the statute of limitations applicable to Delaware contracts, [2] became effective. These amendments (the “2014 Amendments”) represent a continuing effort by Delaware to create a flexible statutory framework for alternative business organizations and transactions involving business entities generally. This post briefly summarizes the more significant 2014 Amendments.

…continue reading: 2014 Amendments Affecting Delaware Alternative Entities and the Contractual Statute of Limitations

Securities Class Action Filings—2014 Midyear Assessment

Posted by John Gould, Cornerstone Research, on Thursday August 28, 2014 at 9:09 am
  • Print
  • email
  • Twitter
Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, titled “Securities Class Action Filings—2014 Midyear Assessment,” available here.

Number and Size of Filings

  • Plaintiffs filed 78 new federal class action securities cases (filings) in the first six months of 2014—13 fewer than in the second half of 2013, but slightly higher than the 75 filings in the first half of 2013. This number was 18 percent below the historical semiannual average of 95 filings observed between 1997 and 2013.
  • The total Disclosure Dollar Loss (DDL) of filings remained at low levels. Total DDL was $30 billion in the first half of 2014, 52 percent below the historical semiannual average of $62 billion.

…continue reading: Securities Class Action Filings—2014 Midyear Assessment

The Battle Against Multiforum Stockholder Litigation

Posted by Theodore Mirvis, Wachtell, Lipton, Rosen & Katz, on Monday August 25, 2014 at 12:17 pm
  • Print
  • email
  • Twitter
Editor’s Note: Theodore N. Mirvis is a partner in the Litigation Department at Wachtell, Lipton, Rosen & Katz. The following post is based on a Wachtell Lipton memorandum by Mr. Mirvis, David A. Katz, William Savitt, and Ryan A. McLeod. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here. Additional posts discussing Roberts v. TriQuint SemiConductors, Inc. are available here

Just over a year ago, the Delaware Court of Chancery upheld the facial validity of exclusive forum bylaws adopted by corporate boards as a means of rationalizing stockholder litigation. In the time since Chancery’s landmark Chevron opinion, numerous corporations have adopted exclusive forum bylaws, and courts in New York, Texas, Illinois, Louisiana, and California have enforced such bylaws against stockholders bringing duplicative lawsuits in violation of their terms. The result, as one commentator recently noted, has been to disincentivize duplicative filings and reduce the concomitant litigation “deal tax” on merging parties. Yet, despite this progress, pernicious multijurisdictional litigation persists. A recent decision from a court in Oregon (Roberts v. TriQuint SemiConductor, Inc., No. 1402-02441 (Or. Cir. Ct. Aug. 14, 2014)) illustrates the potential harm from such litigation and the importance of continued authoritative articulation of the law to ensure the efficacy of exclusive forum bylaws.

…continue reading: The Battle Against Multiforum Stockholder Litigation

Facilitating Mergers and Acquisitions with Earnouts and Purchase Price Adjustments

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday August 12, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Albert H. Choi, Albert C. BeVier Research Professor of Law at University of Virginia Law School.

In mergers and acquisitions transactions with privately-held (or closely-held) target companies, transacting parties will often agree to make payments to the target shareholders contingent upon some post-closing measures. Two often used arrangements are purchase price adjustments (PPAs) and earnouts. With a purchase price adjustment mechanism, payment to the target shareholders will be adjusted based on an accounting metric (such as the net working capital or shareholders’ equity) calculated shortly after the deal is closed. For instance, with a purchase price adjustment based on the target’s net working capital, as the target’s post-closing net working capital goes up or down compared to a pre-closing estimate, consideration to the target shareholders increases or decreases in accordance. Similarly, with an earnout, the transacting parties will agree upon post-closing performance targets, using measures such as earnings, net income, or gross revenue, and the amount of consideration that the target shareholders are entitled to receive will depend on whether such targets are met over the earnout period.

…continue reading: Facilitating Mergers and Acquisitions with Earnouts and Purchase Price Adjustments

European Commission Imposes €20 Million Fine for Failing to Notify a Merger

Posted by Yaron Nili, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday August 10, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Sullivan & Cromwell LLP and is based on a Sullivan & Cromwell publication by Juan Rodriguez, Axel Beckmerhagen, Patrick Gorman.

On 23 July 2014, the European Commission fined Marine Harvest ASA €20 million for failing to notify its acquisition of Morpol ASA in accordance with the EU Merger Regulation and closing the transaction prior to receiving the European Commission’s approval. This is the first time the European Commission has imposed a fine in relation to a two-step transaction comprising a sale of a block of shares followed by a mandatory public bid for the remainder of the target’s shares. The level of fine is a further reminder that failure to comply with the EU Merger Regulation can have significant financial and reputational consequences.

…continue reading: European Commission Imposes €20 Million Fine for Failing to Notify a Merger

Next Page »
 
  •  » A "Web Winner" by The Philadelphia Inquirer
  •  » A "Top Blog" by LexisNexis
  •  » A "10 out of 10" by the American Association of Law Librarians Blog
  •  » A source for "insight into the latest developments" by Directorship Magazine