Tune in tomorrow for the webcast – “Growing Controversies Over Company Valuations Under Delaware Law” – to hear Kevin Miller of Alston & Bird, Jennifer Muller of Houlihan Lokey and Kevin Shannon of Potter Anderson discuss whether – despite case law to the contrary – fair value (in appraisal) and fair price (under entire fairness) shouldn’t be viewed as identical. Please print off these two sets of Course Materials in advance – fair value and control premiums.
From Mark Poerio’s “ExecutiveLoyalty.org“: The IRS has published generic legal advice with respect to stock options and SARs that a target company cashes-out within several days after an acquisition closes (using its own funds or those received from the acquiring company). The IRS advises that “these deductions are governed by the end-of-the-day rule [under Treas. Reg. 1.1502-76(b)(1)(ii)(A)] and are properly reported on Target’s short-year return for the taxable year.”
John Grossbauer of Potter Anderson notes: In Meso Scale Diagnostics v. Roche Diagnostics, Delaware Vice Chancellor Parsons granted summary judgment in favor of defendants on the question whether a reverse triangular merger could be an “assignment by operation of law” of a license agreement. The Court declined to follow the decision of the Northern District of California in SQL Solutions v. Oracle, which had reached the opposite conclusion.
The summary judgment opinion should provide comfort on the issue the Vice Chancellor had raised in his motion to dismiss opinion, in which he found it possible at that stage that an assignment could have occurred. The Vice Chancellor refused to grant summary judgment on the issue whether plaintiffs could enforce a license agreement to which they were not parties but to which they both consented and “joined in,” finding the contracts at issue ambiguous on this point.
One of my favorite blogs is Mark Suster’s “Both Sides of the Table,” even though Mark is a venture capitalist and that’s not really my thing. One of his most interesting blogs is entitled “How to Work with Lawyers at a Startup.” Check it out. It could give lawyers ideas about how they should market themselves…
Recently, the SEC settled insider trading charges against a guy, who allegedly learned of Texas Instruments’ pending acquisition of National Semiconductor from his wife, a partner at a law firm working on the deal. Lesson learned.
According to PwC’s 16th Annual CEO Survey released recently, US CEOs are more intent on M&A in 2013 than their global peers, and they’re concentrating on consolidation and expansion in the US market. Among the key US M&A findings of the survey:
– Forty percent of US CEOs consider M&A/joint ventures/strategic alliances to be a top investment priority; and 42% of US CEOs say they’re planning to complete a domestic deal this year (30% completed a domestic deal in 2012)
– Aside from North America, US CEOs’ target regions for M&A/joint venture/strategic alliances include Western Europe (43%), Latin America (28%), and East Asia (26%)
– Divestitures are a critical piece of the US deals market, representing around a third of deal volume in 2012 – and PwC expects them to retain a prominent strategic position in 2013 for US CEOs
– Joint ventures and alliances are also on US CEOs’ agenda with nearly 60% planning a new alliance/JV in 2013
– Some industry specific shifts may drive activity including healthcare reforms that are likely to spur consolidation, and financial services companies pursuing divestitures to bolster capital levels and unlock asset values. The technology and oil & gas sectors also present opportunities for M&A activity in 2013
Here’s a note from Harvard Professor Lucian Bebchuk:
My latest New York Times DealBook column focuses on an important but overlooked aspect of the debate on whether the SEC should tighten the disclosure requirements of activist blockholders. The column, Don’t Make Poison Pills More Deadly, develops an argument that I made in a Conference Board debate with Martin Lipton.
The column explains that the considered reform may facilitate the adoption of low-threshold poison pills that cap ownership at low levels. Even if the SEC were to decide that tightening disclosure requirements is desirable, it should limit the application of tightened requirements to companies whose charters do not permit the use of low-threshold poison pills. The SEC, I argue, should ensure it does not take any action that would harm investors by facilitating the pernicious use of low-threshold poison pills.
Recently, as noted in this memo, the FTC proposed changed to its premerger notification rules related to the withdrawal of HSR filings. The proposed rules seek to formalize the existing procedures whereby an acquiring person may voluntarily withdraw a pending HSR filing and resubmit within two business days without paying an additional HSR filing fee – and to establish a “bright line” trigger for the automatic withdrawal of an HSR filing that is tied to the SEC’s disclosure requirements. In other words, it would establish a procedure for the automatic withdrawal of an HSR filing when a SEC filing is made announcing that a transaction has been terminated. While the former merely seeks to formalize existing procedures, the latter is an entirely new mechanism that may have negative repercussions for certain filing parties.