Two decisions by the Delaware Court of Chancery in the past two weeks reached seemingly disparate outcomes on fair value for the companies involved, but together stand for the general trend of recent appraisal decisions that deal price is the best indicator of fair value if the price resulted from a fair and robust sale process. However, the court will rely on other methods to determine fair value if the record suggests that the process could not have resulted in a deal price that is a reliable indicator of fair value (for example, where there were board conflicts or other … Read more
Recently in In re Cyan, Inc. Stockholders Litigation, the Delaware Court of Chancery dismissed a fiduciary duty claim and a request for a quasi-appraisal remedy in connection with the acquisition of Cyan, Inc. by Ciena Corporation. Relying on principles of existing Delaware case law, the court held that the business judgment rule applied to the Cyan board’s decision to approve the mostly stock-for-stock merger, a holding further reinforced under the doctrine set forth in Corwin v. KKR Financial Holdings LLC because Cyan shareholders had voted to approve the deal. The shareholders alleged numerous board conflicts (including that certain directors were … Read more
Global M&A activity in April 2017 declined by most measures from its March 2017 level, while the U.S. showed more mixed results. Globally, total deal volume, as measured by dollar value, decreased by 16.6% to $253.91 billion, whereas in the U.S., a large increase in average deal size led to a 58.4% increase in total dollar volume to $108.11 billion. The increase in U.S. volume came despite a 27.1% decrease in number of deals to 669, similar to the global decrease of 25.3% to 2,708 (a new 12-month low for number of deals globally).
Strategic vs. Sponsor Activity
Strategic activity … Read more
M&A activity generally declined in February 2017, both globally and in the U.S. Total deal volume, as measured by dollar value, decreased globally by 30.1% to $202.45 billion, and in the U.S. by 3.7% to $106.47 billion. The number of deals followed similar trends, decreasing globally by 8.4% to 2,858 and decreasing in the U.S. by 10.2% to 828. These declines were primarily driven by declines in strategic M&A activity. Globally, strategic deal volume decreased by 40.6% to $144.56 billion and the number of deals decreased by 10.4% to 2,520. In the U.S., strategic deal volume decreased by 2.7% to … Read more
M&A activity in January 2017 showed mixed results, with the global M&A market generally down and the U.S. M&A market generally up. Total deal volume as measured by dollar value decreased globally by 26.9% to $280.97 billion, but increased in the U.S. by 36.0% to $108.11 billion. The number of deals followed similar trends, decreasing globally by 0.4% to 2,832 and increasing in the U.S. by 21.6% to 789.
Globally, both strategic and sponsor-related M&A activities were down, with deal volume, as measured by dollar value, decreasing by 22.4% to $235.77 billion and 43.9% to $45.20 billion, respectively. The number … Read more
2016 was an active year for M&A, though year-end results did not surpass record-levels set in 2015. Global deal volume for the year was $3.7l trillion and U.S. deal volume was $1.66 trillion (14.8% and 16.4% lower than their respective record levels in 2015). Sponsor-related deal volume for the year was $776.52 billion globally and $396.69 billion in the U.S. (down 22.6% and 32.9%, respectively, from 2015 levels and 12.5% and 6.5%, respectively, from 2014 levels). Strategic deal volume was $2.93 trillion globally and $1.26 trillion in the U.S., surpassing 2014 levels though falling short of 2015 record levels by … Read more
While 2016 was strong overall (see our annual review here), M&A activity in the last month was mixed. Total deal volume in December 2016 rose globally by 31.2% to $376.14 billion but declined in the U.S. by 49.4% to $78.58 billion. The number of deals reached 12-month lows both globally and in the U.S., with decreases of 24.2% to 2,505 and 28.8% to 591, respectively, with a more pronounced drop in the number of sponsor-related deals. Global strategic deal volume increased by 38.8% to $296.59 billion, while deal volume in the U.S. decreased by 58.5% to $48.54 billion. The … Read more
After the spike in activity due to megadeals in October, M&A activity returned in November to more normalized levels both in deal volume and number of deals. Total deal volume in the U.S. and globally declined in November 2016, by 56.1% to $154.31 billion and by 37.5% to $352.27 billion, respectively. The number of deals recovered somewhat from near record-low territory in October, with U.S. deals increasing by 9.5% to 774 and global deals by 10.7% to 3,095. These trends were primarily driven by a return to the norm in the level of strategic megadeal activity (as compared to October). … Read more
M&A volume in October 2016 increased to record levels, as measured by total dollar value, largely due to a spike in the number of megadeals, with eight October deals valued at or above $10 billion dollars. Total deal volume in the U.S. and globally rose in October 2016, by 163% to $341.10 billion and by 75.6% to $549.10 billion, respectively—the highest monthly deal volume totals since the inception of this publication in April 2012. Despite the increase in M&A volume, however, the number of deals continued to fall towards record-low territory, with U.S. deals falling by 8.5% to 668 and … Read more
M&A activity in September 2016 rebounded across most metrics as compared to August 2016, both in the U.S. and globally. In the U.S., total deal volume increased by 18.9% to $129.08 billion and average deal value increased by 24.7% to $448.2 million, despite a 1.5% decrease in the total number of deals to 717. The global market also fared well, increasing by approximately 37.8% in total deal volume to $306.36 billion and approximately 50.6% in average deal value to $208.8 million, even though the total number of deals declined 7.1% to a 12-month low of 2,734, which equated to a … Read more
In In re Books-A-Million, Inc. Stockholders Litigation, the Delaware Court of Chancery dismissed the fiduciary duty claims of former minority stockholders following a going-private, squeeze-out merger because the transaction satisfied the framework to invoke business judgment review as approved by the Delaware Supreme Court in Kahn v. M&F Worldwide Corp.
The plaintiffs brought fiduciary duty claims challenging the transaction pursuant to which the controlling stockholders of Books-A-Million, Inc. took the company private. The agreed price offered a premium to market, but was nevertheless lower than a competing offer from a third party to whom the controlling stockholders … Read more
In Larkin v. Shah, issued on August 25, the Delaware Court of Chancery dismissed a stockholder challenge to a merger due to the cleansing effect of fully informed stockholder approval, applying the Delaware Supreme Court’s recent Corwin v. KKR Financial Holdings LLC decision (which held that fully informed and uncoerced stockholder approval of a merger not subject to entire fairness review invokes the business judgment rule rather than heightened scrutiny under Revlon). The Larkin opinion confirms that, other than with respect to transactions to which entire fairness applies ab initio (i.e., transactions involving a conflicted controlling stockholder or group), … Read more