Deal Lawyers' Guide to Major Issues in Drafting Public Company Acquisition Agreements

Synopsis

A panel of noted mergers and acquisitions attorneys discuss market trends in public company acquisitions, focusing on the types of provisions that are being used to address financing risk, solicitation of bids, material adverse events, and antitrust issues in these deals. The discussion touches on a number of recent deals that dealt with such issues by incorporating provisions including reverse termination fees, financing convenants, specific performance, closing conditions, go-shop provisions, MAE carve-outs, and divestiture commitments, among others.



Outline

I. Financing Risk
      A. Introduction
      B. Re-emergence of Private Equity
      C. Reverse Breakup Fees
      D. Full Equity Financing
      E. Financing Covenants
      F. Specific Performance
      G. Increasing Breakup Fees
      H. Every Deal Is Unique
      I. Lenders and Specific Performance
II. Go-Shop Provisions
      A. Reasons for Go-Shop Provisions
      B. Bid Disclosure
      C. Effectiveness of Go-Shop Provisions
III. Material Adverse Events
      A. Carve-Outs
      B. Financial Metrics
IV. Antitrust-Related Provisions
      A. “Hell or High Water” Provision
      B. Divestiture Provisions
      C. Enforcement Concerns
      D. E.U. Versus U.S. Enforcement
      E. Ticking Fees and Top-Up Options
      F. One Step or Two Steps?
      G. Use of Top-Up Option
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The Penn State Dickinson School of Law

Founded in 1834 by Judge John Reed, The Dickinson School of Law is the oldest law school in Pennsylvania and the fifth oldest in the nation. Throughout its history, the law school has trained distinguished graduates who have gone on to become leaders of the bar, of the judiciary, of government, and of business. These alumni include the first secretary of the U.S. Department of Homeland Security, five governors, three U.S. senators, and more than 100 federal, state and county judges and countless prominent lawyers and civic leaders. In 2000, the law school merged with Penn State, one of the country’s premier research universities, and stepped into a new era of legal excellence.

Penn State Dickinson School of Law Center for the Study of Mergers and Acquisitions

The center, headed by Samuel C. Thompson Jr., former director of the UCLA Center for the Study of Mergers and Acquisitions, examines corporate, securities, tax, antitrust, and other legal and economic issues that arise in mergers and acquisitions. An important part of the center’s mission is to sponsor continuing legal education programs addressing these issues.

The Association of the Bar of the City of New York

The years following the Civil War were tumultuous ones for New York City, offering many opportunities to the dishonest. Unsavory politicians and errant members of the bench and bar were among those who took advantage of those troubled times. In December 1869, a letter was circulated among some of the city’s lawyers addressing those improprieties. It called for the creation of a new bar association to “sustain the profession in its proper position in the community, and thereby enable it ... to promote the interests of the public ....” More than 200 lawyers responded by signing a declaration of organization and in 1870 The Association of the Bar of the City of New York was born. The young organization quickly made its presence felt. Among its first activities was a campaign to defeat corrupt politicians and judges at the polls and to establish standards of conduct for those in the legal profession.

The association continues to work at political, legal and social reform, and maintaining high ethical standards for the legal profession. The association also continues to implement innovative means by which the disadvantaged may be helped. Much of this work is accomplished through the Association's more than 160 committees, each charged to consider a specific area of law or the profession.

The association has grown to more than 23,000 members. To serve them, the association strives to move ahead in many areas. The library is the largest member-funded law library in the country, and provides members with a “gateway” to online services, including free use of LexisNexis and WestLaw, while continuing to provide more traditional library services. The Small Law Firm Center, Career Management Program and other benefits are constantly evolving to serve members’ needs. More than 150 continuing legal education programs are presented annually.

The public good remains one of the association’s highest priorities. The Legal Referral Service, jointly sponsored by the association and the New York County Lawyers’ Association, provides an array of services directly aimed at serving the needs of the public. The City Bar Justice Center identifies the most pressing legal concerns of New York’s neediest and uses novel approaches to address them, often involving community participation.






Speakers / Authors:

Photo of Leigh Walton

Leigh Walton
Bass Berry & Sims PLC

Leigh Walton joined Bass, Berry & Sims PLC in May of 1979, and was named a member of the firm in 1984. Ms. Walton is a former co-chair of the firm’s Healthcare Practice Group and is also active in corporate and securities law matters. Her work with public companies includes securities, mergers and acquisitions, and corporate governance matters. For health care clients, she assists in the acquisition of hospital systems, structures hospital syndications and joint ventures and coordinates financing transactions. She led the firm’s health care regulatory team when Bass, Berry & Sims PLC represented HCA Inc. in its 2006 sale to a consortium of private equity buyers.

Ms. Walton is active in the American, Tennessee and Nashville Bar Associations, serving as chair of the ABA’s Mergers and Acquisitions Committee and as a member of the ABA’s Corporate Practice Committee. She lectures annually at the ABA’s Annual Mergers and Acquisitions Institute, at the Northwestern University School of Law’s Securities Regulation Institute, and participates regularly in other seminars and programs on health care, corporate and securities law matters. Ms. Walton served as co-chair of the Tennessee Corporate Law Revision Committee, which drafted the Tennessee Business Corporation Act. She was a lecturer at Vanderbilt University Law School from 1980 to 1987. She is a fellow of the Tennessee Bar Foundation and serves as co-chair of the Transactions Affinity Group of the American Health Lawyers Association Business Law and Governance Practice Group. She is a member of the Metropolitan Development and Housing Agency of Metropolitan Davidson County.

Ms. Walton is listed in The International Who’s Who of Corporate Governance Lawyers, The International Who’s Who of Business Lawyers, Who’s Who in American Law, Mid-South Super Lawyers 2006, The Best Lawyers in America® (Nashville Securities Lawyer of the Year for 2010), Lawdragon 500, Lawdragon 3000 Leading Lawyers in America, Lawdragon 500 Dealmakers and Chambers USA. She has also been listed in the Nashville Business Journal’s Healthcare 100 and Best of the Bar and Nashville Post’s “Nashville’s 101 Top Lawyers” in 2011.

Ms. Walton received a B.A. degree, magna cum laude, from Randolph-Macon Woman’s College in Lynchburg, Va., and her J.D. from Vanderbilt University Law School, where she was a member of Order of the Coif and the National Moot Court Team.

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Martin W. Korman
Wilson Sonsini Goodrich & Rosati

Martin W. Korman is a partner in the Palo Alto and San Francisco offices of Wilson Sonsini Goodrich & Rosati, where he leads the firm’s mergers and acquisitions practice. In 2009, the firm advised on nearly 120 M&A transactions valued at over $70 billion.

Representing public and private companies in purchase and sale transactions on both a friendly and contested basis, Mr. Korman is recognized as a leading mergers and acquisitions attorney in the technology industry.

He is a frequent guest lecturer on the subject of mergers and acquisitions. He has presented at a number of law schools throughout the country, including Columbia University Law School, Stanford Law School, and Yale Law School.

Mr. Korman is currently a member of the firm’s Policy Committee. He earned his J.D. from Yale Law School and his undergraduate degree from Stanford University. He is admitted to practice in California and New York.

Photo of Peter D. Lyons

Peter D. Lyons
Shearman & Sterling LLP

Peter D. Lyons is a partner in the New York office of Shearman & Sterling LLP and co-head of the firm’s mergers and acquisitions group. He represents clients in acquisitions and sales of public and private companies, asset acquisition and disposition transactions and joint ventures. He also regularly represents the mergers and acquisitions group of the firm’s investment banking clients, and provides general securities law advice. Mr. Lyons joined the firm in 1980 and became a partner in 1989. He is a member of the firm’s senior management team.

Mr. Lyons earned his J.D. from Georgetown University Law Center in 1980 and his B.A. from the University of Virginia in 1977. He is admitted to practice in New York and California.

Photo of Philip A. Gelston

Philip A. Gelston
Cravath, Swaine & Moore LLP

Philip A. Gelston is a partner in the Corporate Department of Cravath, Swaine & Moore LLP, and chairman of the firm’s mergers and acquisitions practice. He has extensive experience in mergers and acquisitions, joint ventures and general corporate counseling. Mr. Gelston’s practice encompasses hostile transactions (both offense and defense), complicated negotiated transactions, cross-border transactions and advising boards and senior executives.

Mr. Gelston’s clients have included Ciba Specialty Chemicals; Novartis AG; Kraft Foods, Inc.; White Mountains Insurance Group, Ltd.; OneBeacon Insurance Group, Ltd.; BAE Systems; FPL Group; Kerzner International; the independent directors of General Motors; the independent directors of Fannie Mae; British American Tobacco; The Tengelmann Group and London Stock Exchange Group, plc.

Mr. Gelston’s recent assignments include representing Kraft in its successful bid for Cadbury and the sale of its frozen pizza business to Nestlé, the independent directors of General Motors in connection with the financial and operational restructuring of GM as well as in connection with the conversion of GMAC into a bank holding company, White Mountains Insurance in its disposition of two run-off businesses to Berkshire Hathaway through a tax-free “cash rich” split-off, Kraft in the tax-free disposition of its Post cereal business to Ralcorp and its negotiations with Trian, Applebee’s International, Inc. in its proxy fight with Breeden Partners and its sale to IHOP, Novartis AG in the sale of Gerber to Nestlé, BAE Systems in its acquisition of Armor Holdings, and Tengelmann in A&P’s purchase of Pathmark Stores. He also represented the LSE concerning the United States aspects of the Nasdaq takeover bid, GTECH Corp.’s independent directors in the merger with Lottomatica, and the Special Committee of Kerzner International in the buyout of Kerzner.

Other representative assignments include advising B.A.T plc and Brown & Williamson in the combination of Brown & Williamson with RJR; White Mountains Insurance Group, Ltd. in its acquisition of CGU Corp., its restructuring of certain insurance operations with Liberty Mutual and its acquisitions of Sirius Reinsurance and Safeco Life; IGEN International Inc. in its acquisition by Hoffman La Roche; BAE Systems in its acquisitions of United Defense and the AES Business of Lockheed Martin as well as in the examination of a number of other strategic transactions; Financial Security Assurance Holdings Ltd. in its sale to Dexia S.A.; and White Mountains Insurance in its redomestication to Bermuda.

Mr. Gelston has also advised boards and senior management of clients, such as White Mountains, General Motors, Kraft, OneBeacon, FPL Group, Fannie Mae and Kerzner on governance and takeover defense issues.

Mr. Gelston was cited as being one of the country’s leading practitioners in the mergers and acquisitions area by Chambers USA: America’s Leading Lawyers for Business in 2008, 2009 and 2010 and by Chambers Global: The World’s Leading Lawyers for Business in 2010. In addition, Cravath’s mergers and acquisitions practice received a high ranking by Chambers for being “knowledgeable and responsive, with excellent levels of service.” He was also named in The Best Lawyers in America in 2009 and 2010 as a leader in mergers and acquisitions law.

Mr. Gelston received an A.B. cum laude from Harvard College in 1974, where he was elected to Phi Beta Kappa, and a J.D. magna cum laude from Harvard Law School in 1977, where he was the Supreme Court Note Editor of the Law Review and was awarded the Sears Prize. After a one-year clerkship with Hon. John M. Wisdom of the U.S. Court of Appeals for the Fifth Circuit, he joined Cravath in 1978. Mr. Gelston became a partner in 1984.

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Details

Course Code : 776435

Release Date: 8/10/2011 12:00:00 AM
Length: 1hr 14min
Recorded Date: 10/7/2010
Format Type: Video

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