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Debevoise & Plimpton Discusses CFIUS Pilot Program Aimed at Technology

On November 10, the U.S. government’s pilot program regulations aimed at monitoring and controlling foreign investment in certain “critical technologies” became effective. How might the program, which follows on the recent statutory expansion of CFIUS review, affect tech companies’ ability to raise investment capital from foreigners?

Companies in the technology sector—including telecommunications, software, manufacturing and biotechnology—are likely familiar with potential CFIUS review of transactions where foreign persons’ acquisition of control of U.S. businesses raises national security concerns. Notably, the concept of “control” goes well beyond having a majority voting interest and includes governance rights and significant economic stakes that would … Read more

Paul Weiss Offers M&A at a Glance for October 2018

M&A activity in October 2018 remained mixed, but included more positive indicators compared to September and the general declining trend line so far this year. Deal volume by dollar value[1] significantly increased overall, by 98.2% to $154.56 billion in the U.S., and by 35.5% to $328.77 billion globally. The number of deals, however, decreased slightly overall, by 2.6% to 371 in the U.S. (among the lowest levels since the beginning of this publication in 2012) and by 4.5% to 2,248 globally.

Strategic vs. Sponsor Activity

Reversing a more typical trend over the last year, strategic deals showed less strength … Read more

Skadden Discusses Merger Reviews and Antitrust Inquiries in Case of “No-Deal” Brexit

As the U.K.’s March 29, 2019, exit date from the European Union approaches, companies involved in merger reviews or antitrust investigations should pre-emptively address the risk of a “no-deal” Brexit.

Both the U.K. and EU have antitrust laws that can apply simultaneously to the same merger or allegedly anti-competitive conduct. Currently, procedural rules determine how jurisdiction is divided between the European Commission (Commission), at the EU level, and the Competition and Markets Authority (CMA), at the U.K. level. But there are no transitional provisions dictating how jurisdiction for pending matters is to be handled in the event of a “no-deal” … Read more

Can Companies and M&A Law in Europe Adapt to the Market for Corporate Control?

Takeover regimes in Europe have been under persistent scrutiny by the public, politicians, and market participants. Sometimes, that is just the nature of the game: Takeovers create winners and losers, and the latter (with the help of their champions and constituencies) often complain. But other times the discontent derives from the inadequacy of regimes in handling certain deals. The task of the law is not easy: Deals are complex and unique, while the law is general. In particular, target companies have a particular ownership structure that must fit the paradigm contemplated by the law, which in the EU consists almost … Read more

Debevoise Discusses UK’s Proposed National Security Review for M&A

Many countries have been looking again at their ability to block acquisitions when they threaten national security. For example, we reported on a change to German law in July last year, and a European Commission proposal (which would cover all EU member states) in October. Most recently, a new law in the United States has increased the power of the Committee on Foreign Investment (CFIUS) to block deals. Such rule changes – often triggered by a controversial foreign acquisition – are understandable, but investors need to know the process and timeline. Vague tests, long clearance procedures or excessive look-back periods … Read more

Debevoise Discusses the UK’s Proposed National Security Review for M&A Deals

Many countries have been looking again at their ability to block acquisitions when they threaten national security. For example, we reported on a change to German law in July last year, and a European Commission proposal (which would cover all EU member states) in October. Most recently, a new law in the United States has increased the power of the Committee on Foreign Investment (CFIUS) to block deals. Such rule changes – often triggered by a controversial foreign acquisition – are understandable, but investors need to know the process and timeline. Vague tests, long clearance procedures or excessive look-back periods … Read more

Paul Weiss Offers M&A at a Glance for September 2018

M&A activity in September 2018 was mixed compared to August levels, but generally reflected an overall continuing downward trend starting in April of this year.  Deal volume by dollar value0F[1] decreased in the U.S. by 44.5% to $77.06 billion and globally by 16.1% to $238.25 billion.  While the number of deals increased in the U.S. by 2.0% to 357 (the second lowest level since the beginning of this publication in 2012), the number of deals decreased globally by 1.5% to 2,195.

Strategic vs. Sponsor Activity

The number of strategic deals increased in September 2018 by 4.8% to 262 in … Read more

Wachtell Lipton Discusses the State of Play in Activism

As we approach the 2019 proxy season, developments since September 2017 prompt a brief updated review of the state of play.

  • The threat of activism remains high, and has become increasingly global.
  • Activist assets under management remain at elevated levels, encouraging continued attacks on many large successful companies in the U.S. and abroad.
  • In the current robust M&A environment, deal-related activism is prevalent, with activists instigating deal activity, challenging announced transactions (g., the “bumpitrage” strategy of pressing for a price increase) and/or pressuring the target into a merger or a private equity deal with the activist itself.
  • “Short”

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Debevoise Discusses Delaware Chancery Ruling on a Material Adverse Event

On October 1, the Delaware Court of Chancery, in a record-breaking 246-page opinion, held that Fresenius Kabi AG (a German publicly listed healthcare company) did not have to consummate its proposed acquisition of Akorn, Inc. (a Nasdaq-listed generic pharmaceutical company) on the basis that Akorn had suffered a Material Adverse Effect, or MAE. The court also found that Akorn had breached certain representations in the parties’ merger agreement, and that the breach would reasonably be expected to result in an MAE. The decision represents the first time in memory that a Delaware court has allowed a buyer to walk away … Read more

Justice Department’s Antitrust Chief Talks Modernizing M&A Review

Good morning, and thank you for inviting me to speak here today. It is a pleasure to be at Georgetown University for this year’s Global Antitrust Enforcement Symposium.

Events like these, which bring competition enforcement officials together to speak with members of the private bar, the business community, and the academic community, serve an important role in the continued development of antitrust law and its enforcement.  They facilitate the rule of law by increasing transparency and predictability in enforcement.  This, in turn, promotes competition and conserves both public and private resources by allowing the private bar to better counsel their

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Covington & Burling on the UK’s “No-Deal” Competition and Merger Guidance

The UK Government published its highly-anticipated technical guidance on merger review and anti-competitive activity on 13 September 2018 which will apply in the case of a ‘no-deal’ Brexit (the ‘Guidance’). Although brief, it provides market players with some form of practical advice and insights on what to expect, how cases are likely to be divided between the EU and UK regimes, how UK competition law will develop, and suggests in what ways post-Brexit competition damages actions in the UK Courts may change. This Guidance follows on from the previously released ‘no-deal’ state aid guidance – as was covered in our … Read more

Corwin at a Crossroads: Could DVMT Stock Be the Tracker Jacker in Dell’s Hunger Games?

Of all the conjured hazards faced by the teenage gladiators in the dystopian novel The Hunger Games, the Tracker Jacker (a genetically engineered wasp) was the most deadly and unpredictable when provoked. Dell Technologies Inc. may soon have to contend with its own species of Tracker Jacker, as speculation mounts around the company’s pending offer to its public Class V tracking stock shareholders (NYSE: DVMT)—a cash-and-stock transaction with a claimed valuation of $109 per share.  Several activist hedge funds with substantial DVMT positions have vigorously opposed the proposed deal, and their burgeoning resistance has evidently induced Dell to hint Read more

The Sky’s the Limit as Comcast and Fox Prepare for Battle at the Auction Block

For the last year, a heated ownership battle has been unfolding between Comcast and 20th Century Fox in their contest to acquire Sky PLC. Sky is Europe’s leading media company and the largest pay-TV broadcaster in the UK, with over 21 million subscribers and 30,000 employees (not to mention a mercilessly dominant professional cycling club). While many such battles are settled outside of the public eye, this one is destined for a different fate: Over the next two days, the Comcast/Fox contest will culminate in an old-school auction—one ordered by the UK Takeover Panel, which oversees and regulates all … Read more

Paul Weiss Offers M&A at a Glance for August 2018

M&A activity in August, like July, continued the recent downward trend in number of deals across most sectors while showing more mixed results as measured by total dollar value.[1]  The number of deals decreased in the U.S. by 39.4% to 274 and globally by 19.2% to 2,027 (the third consecutive month with the lowest levels since the beginning of this publication in 2012).  However, deal volume by dollar value increased in the U.S. by 10.1% to $136.47 billion while it decreased globally by 6.6% to $275.93 billion.

Strategic vs. Sponsor Activity

The number of strategic deals decreased by 43.2% … Read more

Sullivan & Cromwell Discusses “Day One” Market Reactions to Bank Mergers

There has recently been a pick-up in bank merger and acquisition activity that likely reflects both the increased importance of scale in the banking industry, particularly in the technology area, and regulatory and legislative developments that reduce certain obstacles to approval of bank merger transactions.  Nonetheless, the immediate negative market reaction that has greeted the announcement of several recent mergers may discourage other banks from considering sensible consolidation transactions.  Not only purchasers, but sellers, may be reluctant to engage in transactions, notwithstanding their strong business and financial merits, if concerns over the “day-one” market reaction play an outsized role in … Read more

Sullivan & Cromwell Discusses How FCPA Enforcement Will Affect M&A

During a speech delivered on July 25, 2018 at the American Conference Institute 9th Global Forum on Anti-Corruption Compliance in High Risk Markets, Deputy Assistant Attorney General Matthew Miner, who oversees the U.S. Department of Justice’s (“DOJ”) Fraud Section (which includes the DOJ’s Foreign Corrupt Practices Act (“FCPA”) Unit), announced that successor companies that identify potential FCPA violations in connection with a merger or acquisition and disclose that conduct to the DOJ will be treated in conformance with the DOJ’s FCPA Corporate Enforcement Policy (the “Policy”).  The Policy, which went into effect in November 2017, created a presumption that … Read more

Latham & Watkins Discusses U.S. Inversion Regulations After New Tax Law

On July 11, 2018, the US Department of the Treasury (Treasury) and the Internal Revenue Service (the IRS) issued final regulations (the Regulations) continuing efforts aimed at curbing cross-border corporate expatriation transactions — commonly referred to as inversions — and diminishing the tax advantages associated with inversions.

The Regulations generally follow the guidance provided in notices and temporary and proposed regulations promulgated during the 2014-2016 period (the Prior Guidance), with certain clarifications and modifications. Differences between the Regulations and the relevant Prior Guidance are generally technical, and the Regulations do not change fundamental policy decisions reflected in such guidance.[1]Read more

Paul Weiss Offers M&A at a Glance for June 2018

M&A activity in June 2018 weakened from last month across most measures, although still generally strong for the first half of the year.  The total number of deals decreased in the U.S. by 28.6% to 528 (the lowest level since the beginning of this publication in 2012) and globally by 17.5% to 2,457 (the lowest level since March 2014).  However, while June deal volume by dollar value also decreased globally by 14.0% to $348.56 billion, deal volume increased in the U.S. by 27.6% to $184.30 billion.[1]

Strategic vs. Sponsor Activity

The number of strategic deals decreased by 33.0% to … Read more

How M&A Can Lead to Better Management

A fundamental question in corporate finance is how mergers and acquisitions create value. Possibilities include generating economies of scale or scope, increasing managerial efficiency, improving production techniques, or strengthening market power. Synergies are a leading motive for doing mergers, but direct empirical evidence on how they are created is lacking. In a new study, we investigate a potential source of synergies—improvements in management practices.

We use a novel survey dataset of plant-level management practices from the U.S. Census Bureau. Specifically, we use the 2010 Management and Organizational Practices Survey, the first large-scale management practices survey of manufacturing plants in the … Read more

Skadden Discusses When It Makes Sense to Prepay Appraisal Claims

In response to the growing practice of “appraisal arbitrage,” in 2016 Delaware’s General Assembly amended the state’s appraisal statute, Section 262 of the Delaware General Corporation Law. The amendment to Section 262(h) granted corporations the option to “prepay” appraisal claimants an amount of the corporation’s choosing in order to stop the accrual of interest. While corpora­tions now have the option to pay, should they? Whether, when and how much to prepay is a complex and nuanced judgment that will vary depending on the particular facts and circumstances of a case.

Background

Prior to the amendment, corporations in an appraisal action … Read more