DealLawyers.com Blog

With the ongoing tussle between Paramount and Netflix over Warner Bros and the recent fight between Novo Nordisk and Pfizer over Metsera, “deal jumping” is having a bit of a moment.  That makes this Cooley blog, which addresses the key considerations a potential topping bidder should keep in mind before jumping a deal, particularly timely.  This excerpt discusses the importance of following the roadmap laid out in the merger agreement:

The roadmap agreed between the target and the original buyer must be followed by both the target and topping bidder. Most public company merger agreements provide that a fiduciary out may not be exercised if the topping bid arose out of a breach (sometimes negotiated to be a “material breach” or “willful and material breach”) of the no-shop provisions by the target or any of its representatives.

Given this, it is essential that the topping bidder instructs all of its directors, officers, advisors and other representatives only to engage with the target and its representatives in close coordination with the advisor team, as errant interactions with the target can kill a deal jump before it ever gets off the ground. The topping bidder – if successful – becomes the successor to any claims regarding how the target ran its process, so any missteps by the target, especially with a jilted original buyer, will be scrutinized more heavily than in a plain vanilla transaction.

In addition to the risk of being on the hook post-closing for the target’s process violations, potential topping bidders should also consider the risks of tortious interference claims arising out of failing to follow the rules of the game.  That’s a topic that Cooley addresses in its blog, and one that I’ve blogged about a couple of times over on the old “John Tales” Blog.

– John Jenkins