July 6, 2021

Take-Privates: An Overview of the Process

Latham & Watkins just published this guide to take-private transactions. The guide an overview of various legal and financing issues associated with taking a public company private.  Here’s an excerpt from the guide’s discussion of deal structures:

A take-private typically is structured in one of two ways: (1) a statutory merger governed by the law of the state in which the target company is organized; or (2) a tender or exchange offer followed by a “back end” statutory merger. Transactions involving only a statutory merger often are referred to as “one-step” transactions, while transactions involving a tender or exchange offer followed by a back-end merger often are referred to as “two-step” transactions.

The principal difference between the two structures is the ability, in certain circumstances, to complete a two-step transaction more quickly than a one-step transaction. However, as discussed below, there are a number of factors relevant to determining the appropriate structure in any given situation.

Regardless of whether an acquirer uses a one‑step or two‑step transaction structure, the acquirer in an acquisition of a US public company may pay in cash, stock of the acquirer, or other forms of consideration, or a combination of the foregoing.

In addition to issues relating to deal structure, topics covered by the guide include considerations for sponsor take-privates, target fiduciary duties & standards of review, friendly & hostile approaches, disclosure considerations and shareholder litigation.

John Jenkins