Mergers & Acquisitions

The current COVID-19 pandemic is causing an unprecedented negative impact on businesses around the globe in nearly every sector of the economy.  Both the US Government as well as Foreign Governments have and will continue to provide short- and long-term financial support to these businesses.  However, this financial assistance will not be available to every business, nor will it be adequate in all instances to offset decreased revenue resulting directly and indirectly from the pandemic.  As a result, many businesses will be unable to accurately forecast and will not have the necessary liquidity to ride out the pandemic, and will seek solutions to preserve value for their stakeholders, including through the pursuit of a sale.  Both strategic purchasers and institutional investors will have opportunities to purchase these businesses (or certain related assets) either through a regular sale process or under the supervision of a bankruptcy court.  Due to the nature of these sales, a number of additional issues arise that potential purchasers should bear in mind.
Continue Reading Distressed Acquisitions – Key Considerations

The World Health Organization declared the outbreak of the novel coronavirus disease (COVID-19) a pandemic, prompting numerous public and private organizations and agencies to accelerate their contingency plans so as to mitigate continued transmission. The responses to this public health concern have also introduced additional uncertainty and complexities into the process and administration of merger and acquisition transactions. Below is a list of considerations for pending and prospective acquisitions during this time of uncertainty that could help mitigate potential adverse effects.
Continue Reading Impacts of Covid-19 on Closing M&A Transactions

Higher Thresholds For HSR Filings

On January 28, 2020, the Federal Trade Commission announced revised, higher thresholds for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The filing thresholds are revised annually, based on the change in Gross National Product (GNP).

The new thresholds will become effective on February 27, 2020. Acquisitions that have not closed by the effective date will be subject to the new thresholds.
Continue Reading Higher Filing Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced

Sinatra may have found success in the city that never sleeps, but a California court has just made it more difficult for any party doing business with a California resident to do the same.  At least, when it comes to resolving disputes without a jury in a New York courtroom, or in the courtroom of any other jurisdiction that enforces pre-dispute jury trial waivers.  This case will be of major interest to commercial lenders, and other businesses, who prefer to use states like New York and Delaware as their jurisdiction of choice for governing law and adjudicating disputes.

While it is well-settled law in California that pre-dispute contractual jury waivers are unenforceable (see, e.g., Grafton Partners L.P. v. Superior Court (2005) 36 Cal. 4th 944 (“Grafton”)), in most instances forum selection and choice-of-law provisions have been respected by California courts. However, the Court of Appeal for the First Appellate District recently expanded upon Grafton in Handoush v. Lease Financing Group, LLC. The Court dealt a commercial equipment lessor a significant blow by holding that the equipment lessee who signed a lease agreement with the lessor that was governed by New York law, identified New York as the appropriate forum for resolving disputes and included a pre-dispute jury waiver (which is enforceable under New York law), was nevertheless entitled to a trial by jury in California.
Continue Reading Start Spreadin’ the News: California Court Says No to New York, New York; Rejects Forum Selection Clause

In Neurvana Med., LLC v. Balt USA, LLC, No. 2019-0034-KSJM, 2019 Del. Ch. LEXIS 995 (Ch. Sep. 18, 2019), the Court of Chancery declined to exercise personal jurisdiction over Balt International, S.A.S. (“Balt International”), a company headquartered in France and a non-signatory entity to a purchase agreement that included a forum selection clause, on the grounds that Balt International was not ‘closely related’ to a purchase agreement entered into by Balt International’s wholly owned U.S. subsidiary, Balt USA, LLC (“Balt USA”). A key takeaway for practitioners is that the court sets a fairly high bar for plaintiffs to overcome when trying to enforce a forum selection clause against a non-signatory, and further provides a helpful guidepost for foreign organizations when conducting operations through a domestic subsidiary in the United States and the likelihood of a Delaware court exercising personal jurisdiction as a result thereof.    
Continue Reading Delaware Update: Court of Chancery Declines to Bind a Non-signatory Parent Corporation to Forum Selection Clause

This post was originally published on FoodDive.com.

When considering an acquisition of a food and beverage company, potential buyers of a company or its assets should pay particular attention to U.S. Food and Drug Administration requirements and their implications on the target’s business.

Buyers should be cognizant of the regulatory issues at the beginning of the process so that their risk can be assessed in the context of the transaction, and in turn, be addressed by specific representations, covenants and indemnification provisions in the transaction documents. The following considerations should be top of mind throughout the course of due diligence and negotiations. 
Continue Reading How FDA Considerations Impact Food and Beverage Acquisitions

In Shareholder Representative Services LLC v. RSI Holdco, LLC, No. 2018-0517-KSJM, 2019 WL 2290916 (Del. Ch. May 29, 2019), the Delaware Court of Chancery reaffirmed that a target company may protect its pre-merger privileged communications in a post-closing dispute with the acquirer by including clear and unambiguous language in the merger agreement that seeks to protect the privilege. This decision provides additional guidance to sellers intent upon protecting their rights in potential post-closing litigation with buyers.
Continue Reading Delaware Chancery Court Provides Useful Guidance for Protecting Pre-Merger Privileges in Post-Closing Litigation Between Buyers and Sellers

Last month, the U.S. Securities and Exchange Commission (“SEC”) announced it had adopted final rules to amend certain parts of Regulation A[1] promulgated under the Securities Act of 1933 (“Securities Act”).

These new rules implement changes as directed by the Economic Growth, Regulatory Relief, and Consumer Protection Act[2] signed into law on May 24, 2018 by President Donald J. Trump. There are two conceptual changes, both affecting Regulation A as it applies to reporting companies.
Continue Reading Regulation A May Prove Useful Alternative to Form S-4 Registration for Public Companies Doing Smaller M&A Deals

In Flood v. Synutra Int’l, Inc., No. 101, 2018, 2018 Del. LEXIS 460 (Del. Oct. 9, 2018), the Delaware Supreme Court (Strine, C.J.) held that a controlling stockholder who pursues a merger with the controlled company will have the benefit of business judgment review pursuant to Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”), as long as the requisite procedural protections under MFW are put in place prior to the commencement of economic negotiations. In MFW, the Delaware Supreme Court created a framework through which a controlling stockholder could enter into a strategic transaction with the controlled company and still avail itself of the deferential business judgment standard of review. To have the business judgment standard apply, the transaction must be conditioned “ab initio” upon both (1) the approval of an independent, adequately-empowered Special Committee of the board of directors that fulfills its duty of care, and (2) the uncoerced, informed vote of a majority of the minority stockholders (the “MFW Procedural Protections”). Synutra arose from an issue left open in MFW regarding when the MFW Procedural Protections will be deemed to have been in place “ab initio.
Continue Reading Getting to Business Judgment in an Interested Transaction: Controlling Stockholder Must Put Procedural Protections in Place Prior to the Commencement of Economic Negotiations

In Weingarten v. Monster Worldwide, Inc., C.A. No. 12931-VCG, 2017 WL 752179 (Del. Ch. Feb. 27, 2017), the Delaware Court of Chancery (Glasscock, V.C.) clarified when a plaintiff has standing to vitiate inspection rights under Delaware General Corporation Law Section 220, 8  Del. C. § 220.  In a case of first impression, the Court decided that the language of Section 220(c) does not confer standing to a former stockholder bringing an action to exercise his or her inspection rights after the former stockholder’s shares were canceled in a merger.  To reach this conclusion, the Court relied upon the plain meaning of the statute, eschewing policy arguments from both parties.
Continue Reading Delaware Court of Chancery Holds that Cancellation of Shares Through Merger Deprives Stockholder of Standing in Section 220 Action