August 10, 2017

“Single-Bidder” Strategies: Practical Considerations

This recent article by King & Spalding’s Rob Leclerc & John Anderson and Morris Nichols’ Eric Klinger-Wilensky & Nathan Emertiz addresses practical considerations for boards considering a “single-bidder” deal process.  Here’s the intro:

Whether a public company should engage in a “single-bidder” process is one of the most difficult questions a target public company’s board of directors must consider during the early stages of a transaction. In the right circumstances, a single-bidder process can result in an expedient transaction that maximizes stockholder value while minimizing the risks associated with putting a corporation “in play.”

In other circumstances, a single-bidder process can be a high risk proposition that exposes the deal to uncertainty and the directors and officers to possible monetary liability. Although there are no“bright line” rules under Delaware law regarding the appropriateness of a single-bidder process, there are certain circumstances in which, we believe, a Delaware court likely would view a single-bidder process more favorably than in other situations.

The article reviews the factors that support a board’s decision to engage in a single-bidder process, as well as practical considerations associated with such a process – including negotiating exclusivity agreements, deal protections, and “go shops” or other market checks.

John Jenkins