TAKEOVERS, MERGERS AND ACQUISITIONS
LAWG/J-700-09
Georgetown University Law Center
Professors Daniel F. Duchovny and Joseph E. Gilligan
Spring Semester 2015
TIME/LOCATION:
Tuesdays 7:55 - 9:55 pm, McDonough 200
COURSE MATERIALS:
1.
Reading Materials (provided on Courseware)
2.
Federal Securities Law, Selected Statutes, Rules & Forms, Coffee and Seligman
(Rulebook only)
3.
Delaware General Corporation Law
4.
Mergers and Acquisitions: Cases and Materials, Third Edition, by Therese
Maynard, Aspen Publishers (ISBN: 9781454825029) – Optional Additional
Reading; Not Required
READING ASSIGNMENTS:
Each section of the course outline has assigned reading material. Announcements will be
made during each class on the materials we expect to cover the following week. Every
effort should be made to read the assignments before class.
We will be discussing current transactions and news relating to the course during
each class session. We strongly encourage reading the Wall Street Journal, the New
York Times, or the Financial Times on a regular basis during the semester. We also
encourage you to keep up with related blogs (e.g., http://www.deallawyers.com/blog/;
http://blogs.wsj.com/deals/; and http://dealbook.blogs.nytimes.com).
EXAM:
The exam will be in class and approximately 2-3 hours.
Students will be allowed to bring into the exam only their personal copies of #1, #2 and
#3 from the Course Materials list above (i.e., class Reading Materials, Federal Securities
Law, Selected Statutes, Rules & Forms, Coffee & Seligman and the Delaware General
Corporation Law) and his/her personal notes and outlines in printed form (i.e., no
electronic copies or materials). These materials may be marked with the student’s notes,
cross-references and other comments as well as highlighting, tabbing and similar
notations.
No other documents, literature, materials or aids will be permitted in the exam. Students
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Takeovers, Mergers and Acquisitions
Professors Duchovny and Gilligan
Spring 2015
may use their laptop computers during the exam solely as typing devices. Accessing the
internet or using information or materials stored on the student’s laptop / hard drive /
external storage device is prohibited. No smartphones or other portable electronic
devices are allowed to be used during the exam, including iPhones, iPads, Blackberrys,
cell phones or similar devices.
GRADE:
Your grade will be based on the final examination, with a possible upward adjustment
for class participation. We strongly encourage class participation.
OFFICE
HOURS:
We may be reached any time during business hours at the following telephone
numbers and e-mail addresses:
Professor Duchovny:
Professor Gilligan:
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Spring 2015
Course Schedule
Class
Topic
1.
January 13
Course Introduction; M&A Overview and History,
M&A Mechanics
2.
January 20
M&A Mechanics (cont’d); Disclosure of
Preliminary Merger Negotiations
3.
January 27
The Williams Act: Beneficial Ownership Reporting
4.
February 3
The Williams Act: Tender Offers
5.
February 10
The Williams Act: Tender Offers
*
February 17
No Class
6.
February 24
Proxy Contests to Influence Control
7.
March 3
Proxy Contests to Influence Control
*
March 10
Spring Break – No Class
8.
March 17
Defending Against a Hostile Takeover
9.
March 24
State Corporate Law Considerations
10.
April 3
State Corporate Law Considerations
11.
April 10
Going Private Transactions
12.
April 17
Going Private Transactions
13.
April 24
Cross-Border Business Combination Transactions
*
Final Exam Week (April 28 – May 12)
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Professors Duchovny and Gilligan
Spring 2015
Course Outline
I.
Course Introduction; M&A Overview and History (Class 1)
A.
History
1. Takeover/Consolidation Waves
2. Stock Market Correlation
B.
Legal Overview
1. State corporate law
2. Federal securities laws
i.
Securities Exchange Act of 1934
ii.
Securities Act of 1933
iii. Regulation M-A
3. Stock exchange listing standards and NASD rules
4. Tax
5. Antitrust
6. Regulated Industries (e.g., banking)
7. Accounting
C.
Regulators
1. U.S. Securities and Exchange Commission
2. New York Stock Exchange/NASDAQ.
3. Financial Industry Regulatory Authority (FINRA)
4. State Attorneys General/Secretary of State Offices
5. U.S. Department of Justice/Federal Trade Commission
6. Financial Accounting Standards Board/Public Company Accounting Oversight Board
7. President of the United States; Exon-Florio; Committee on Foreign Investment in the
United States (“CFIUS”)
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II.
M&A Mechanics (Classes 1 & 2)
A.
Overview of Acquisition Methods
1. Open Market/Privately Negotiated Stock Purchases
2. Merger
3. Tender Offer
i.
Third party
ii.
Issuer
4. Exchange Offer
5. Sale of Assets/Division
6. Spin-offs
7. Going-Private Transactions
8. Hostile v. Friendly
B.
Documentation
1. The Letter of Intent/Confidentiality Agreements
2. The Merger/Acquisition Agreement
3. Employment and other compensation arrangements
4. Disclosure schedules
III.
C.
Due Diligence and Market Considerations
D.
Disclosure of Preliminary Merger Negotiations
Beneficial Ownership Reporting, Tender Offers and the Williams Act (Classes 3, 4 & 5)
A.
History of Federal Regulation of Takeovers
B.
Beneficial Ownership Reporting Provisions
1. The Statute and Rules
2. Group Theory
C.
Regulation of Tender Offers
1. What is a "Tender Offer?"
2. Disclosure Framework and Procedural Safeguards
3. Trading Practice Rules
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4. Other Disclosure Provisions
D.
Offers Implicating the Proxy Rules and/or the Securities Act
1. Mandated Disclosure to Shareholders
2. Rule 145/Form S-4
3. Registered and Exempt Offers
4. Regulation M-A
5. Rules 801 & 802
6. Rule 425 & Rule 14a-12 Communications
IV.
Proxy Contests to Influence Control (Classes 6 & 7)
A.
Interaction between State and Federal Law
B.
Action by Consent versus Shareholder Meeting
C.
Mechanics of a Shareholder Meeting
D.
Definition of "Solicitation"
E.
Filing and Dissemination Requirements
1. Information Statements v. Proxy Statements
2. Exemptions
F.
Shareholder Communication Provisions; Rule 14a-8 Proposals; Proposed Access Rules
G.
Contested Solicitations
1. Strategy and Tactics
2. Regulatory Parameters: State and Federal
3. Defenses
4. Facilitating a Takeover through a Proxy Contest
H.
V.
Corporate Governance
Defending Against a Hostile Takeover (Class 8)
A.
Pre-Offer Planning
B.
Tactics During a Takeover
C.
The Poison Pill/Rights Plan
D.
Regulatory Defenses
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Takeovers, Mergers and Acquisitions
Professors Duchovny and Gilligan
Spring 2015
VI.
State Corporate Law Considerations (Classes 9 & 10)
A.
Overview of Delaware Corporate Law/Other Corporation Codes
B.
Directors’ Duties in Applying Defensive Tactics
1. Rights Plans
2. Shark Repellents
3. “Just Say No” Campaigns
4. Other Defenses
C.
Directors’ Duties in Selling the Company
1. Business Judgment Rule
2. Revlon Duties
3. Validity of No-Shop, Lock-Up and Similar Provisions
D.
Directors’ Duties in Conflicted Transactions
1. Types of Conflicted Transactions
2. Entire Fairness Standard
VII.
VIII.
E.
Duties to Creditors
F.
State Anti-takeover Statutes
G.
Shareholders Right of Appraisal
H.
Access to Shareholder List
I.
Overview of Exchange and NASDAQ Listing Requirements
Going Private Transactions (Classes 11 & 12)
A.
State Regulatory Scheme
B.
Federal Regulatory Scheme
C.
Disclosure Requirements
Cross-Border Business Combination Transactions (Class 13)
A.
Foreign Bidders; Special Disclosure Issues
B.
Foreign Target Companies: Extraterritorial Reach of the Williams Act
C.
Steps Toward Regulatory Harmonization: Cross-Border Tender Offer Exemptions
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Reading Materials
M&A Mechanics (Classes 1 and 2)
Acquisition Structuring and Process
Statutory reading:
Securities Act §5 and Rule 145
Form S-4 (briefly review; do not outline)
1.
Frankle, Landsman and Greene, The Mergers and Acquisitions Handbook, A Practical
Guide to Negotiated Transactions (2007), Chapter 5 Deal Structures (pgs – 33-46).
2.
R. Franklin Balotti and Jesse A. Finkelstein, The Delaware Law of Corporations & Business
Organizations, Third Edition (Section 9.17, pgs 9-34 through 9-37).
3.
Sample Confidentiality Agreement (briefly review; do not outline)
4.
Gallardo, Little and Souza, “Martin Marietta Materials, Inc. v. Vulcan Materials Co: Breaches
of Confidentiality Agreements,” Insights, Volume 26, Number 5, May 2012.
Disclosure of Preliminary Merger Negotiations
Statutory reading:
Form 8-K, Items 1.01, 1.02, 2.01, 5.01 and 5.02
Schedule 14D-9 (Cover page and Item 7 only)
Exchange Act §10(b) and Rule 10b-5
Securities Act Rule 165, 166
5.
In the Matter of Carnation Company, Exchange Act Release No. 22214 (July 8, 1985).
6.
Basic v. Levinson, 485 U.S. 224 (1988).
7.
Stephen A. Radin, “Disclosure of Merger Negotiations: New Rules in Delaware,” The New
York Law Journal (August 2004).
8.
In the Matter of E.ON AG, Exchange Act Release No. 43372 (September 28, 2000).
9.
NYSE Listed Company Manual, Rules 202.01 - 202.07.
10.
Gilluly and Scheick, “Rule 10b-5 and Disclosure of Merger Negotiations,” Insights, Volume 24
Number 4, April 2010.
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Beneficial Ownership Reporting, Tender Offers and the Williams Act (Classes 3, 4 and 5)
Beneficial Ownership Reporting and the Williams Act
Statutory Reading:
Exchange Act §§13(d) and (g)
Regulation 13D-G
Schedules 13D and 13G
11.
Amendments to Beneficial Ownership Reporting Requirements, Exchange Act Release
No. 39538 (January 12, 1998).
12.
Rondeau v. Mosinee Paper Corp., 422 US 49 (1975).
13.
In the Matter of Harvey Katz, Exchange Act Release No. 20893 (April 25, 1984), Fed. Sec. L.
Rep. 83,618 (CCH).
14.
In the Matter of Cooper Laboratories, Exchange Act Release No. 22171 (June 26, 1985),
Fed. Sec. L. Rep. 83,618 (CCH).
15.
SEC v. First City Financial Corporation Ltd., 890 F.2d 1215 (D.C. Cir. 1989).
16.
Shearman & Sterling LLP M&A Alert, “CSX Corporation v. The Children’s Investment Fund
Management (UK) LLP, et al” (June 2008).
17.
In the Matter of Tracinda Corp., Exchange Act Release No. 58451 (September 3, 2008).
18.
In the Matter of Perry Corp., Exchange Act Release No. 60351 (July 21, 2009).
19.
SEC Press Release, SEC Announces Charges Against Corporate Insiders for Violating Laws
Requiring Prompt Reporting of Transactions and Holdings, September 10, 2014.
Tender Offers
Statutory Reading:
Exchange Act §§13(e), 14(d) and 14(e)
Regulation 14D
Regulation 14E
Rule 13e-4
Schedule TO
Securities Act §5 and Rule 145
20.
Regulation of Takeovers and Security Holder Communications, Securities Act Release
No. 7760 (October 22, 1999). (Review Parts I and II and related footnotes)
21.
Commission Guidance on Mini-Tender Offers and Limited Partnership Tender Offers,
Exchange Act Release No. 43069 (July 24, 2000). (Review Parts I and II and related
footnotes)
22.
Wellman v. Dickinson, 475 F. Supp. 783 (S.D.N.Y. 1979).
23.
SEC v. Carter Hawley Hale, 760 F.2d 945 (9th Cir. 1985).
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24.
Hanson Trust v. SCM Corporation, 774 F.2d 47 (2nd Cir. 1985).
25.
City Capital Associates v. Interco, 860 F.2d 60 (3 rd Cir. 1988).
26.
Hogan Lovells SEC Update, “SEC Amends the Tender Offer Best-Price Rule” (November
2006).
27.
Paul Hastings Client Alert, “Tender Offers: Past, Present and Future – the Evolution of
Section 251(h)” (May 2014).
Proxy Contests to Influence Control (Classes 6 & 7)
Statutory Reading:
Exchange Act §14(a)
Regulations 14A and 14C
Schedules 14A and 14C
Delaware §§211, 212, 222 and 228
28.
SEC v. Okin, 132 F.2d 784 (2nd Cir. 1943).
29.
Long Island Lighting v. Barbash, 779 F.2d 793 (2nd Cir. 1985).
30.
Blasius Industries, Inc. v. Atlas Corp., 564 A. 2d 651 (Del. Ch. 1988).
31.
Regulation of Communications Among Shareholders, Exchange Act Release No. 31326
(October 16, 1992). (Review Parts I and II and related footnotes)
32.
Willkie Farr & Gallagher Memorandum, “SEC Adopts ‘Proxy Access’ Rules to Facilitate
Facilitating Director Nominations by Shareholders” (August 2010).
33.
Zeberkiewicz and Rohrbacher, “Dealing with Dissidents: Vote-Buying and Management
Slates,” Insights, Volume 22, Number 4 (April 2008).
34.
Disclosure in Proxy and Information Statements, Exchange Act Release No. 15230 (October
13, 1978).
Defending Against a Hostile Takeover (Class 8)
and
State Corporate Law Considerations (Classes 9 & 10)
Statutory Reading:
Delaware §109
Exchange Act Rule 13e-1; Schedule 14D-9
Sample Form 8-A (Handout)
35.
Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985).
36.
Dechert Memo, “Doing Public M&A Deals in Pennsylvania: Minesweeper Required”
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(September 2005).
37.
Unocal v. Mesa Petroleum, 493A.2d 946 (Del. 1985).
38.
Moran v. Household International, 500 A.2d 1346 (Del. 1985).
39.
Paramount v. Time, 571 A.2d 1140 (Del. 1990).
40.
Unitrin v. American General, 651A.2d 1361 (Del. 1995).
41.
Cinerama v. Technicolor, 663 A.2d 1156 (Del. 1995).
42.
Revlon v. MacAndrews & Forbes, 506 A.2d 173 (Del. 1986).
43.
Paramount v. QVC, 637 A.2d 34 (Del. 1994).
44.
Arnold v. Society for Savings Bancorp, 650 A.2d 1270 (Del. 1994).
45.
Johnson and Zapata, “Optima is Optimal: Sidestepping Omnicare in Private
Company M&A Transactions” Deal Points: The Newsletter of the Committee on
Mergers and Acquisitions of the Business Law Section of the American Bar
Association (Summer 2009).
46.
Richards, Layton & Finger Memorandum, “In re OPENLANE, Inc. Shareholder Litigation:
Court of Chancery Denies Injunction Where Merger Agreement Lacks Fiduciary Out”
(October 31, 2011).
47.
In re Netsmart Technologies, Inc. Shareholders Litigation, 924 A.2d 171 (Del. Ch. 2007).
48.
Milbank, Tweed, Hadley & McCloy Client Alert, “Hexion v. Huntsman: Delaware Court
Offers Interpretive Guidance on Key Terms of Disputed Merger Agreement” (October 13,
2008).
49.
Lyondell v. Ryan, 970 A.2d 235 (Del. 2009).
50.
Richards, Layton & Finger Memorandum, “In re Smurfit-Stone Container Corp. Shareholder
Litigation: Court of Chancery Considers Applicability of Revlon in Cash/Stock Transaction”
(August 1, 2011).
Going Private Transactions (Classes 11 & 12)
Statutory Reading:
Exchange Act Rule 13e-3
Delaware §253
51.
Weinberger v. UOP, 457 A.2d 701 (Del. 1983).
52.
Kahn v. Lynch Communication, 638 A.2d 1110 (1994).
53.
In Re Pure Resources, 808 A.2d 421 (Del. Ch. 2002).
54.
In re CNX Gas Corporation Shareholders Litigation, C.A. No. 5377-VCL, 2010 WL
2291842 (Del. Ch. May 25, 2010).
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55.
Green, Freedman and Smith, “In re MFW Shareholder Litigation – A New Blueprint for
Controlling Shareholder Transactions?” Insights, Volume 28, Number 4 (April 2014).
56.
Grossbauer and Reilly, “Special Committees: A Primer,” Corporate Governance
Advisor, Volume 15, Number 2 (March/April 2007).
57.
In the Matter of William A. Wilkerson, et al., Exchange Act Release No. 48703 (October 27,
2003).
Cross-Border Business Combination Transactions (Class 13)
Statutory Reading:
Securities Act Rules 801 and 802
Exchange Act Rules 14d-1(c), (d) and (e); Rule 13e-4(h)(8) and
(h)(i); Rule 13e-3(g)(6)
58.
Commission Guidance and Revisions to the Cross-Border Tender Offer, Exchange Offer,
Rights Offerings, and Business Combination Rules and Beneficial Ownership Reporting
Rules for Certain Foreign Institutions, Securities Act Release No. 8957 (September 19,
2008). (Briefly review; do not outline.)
59.
Cross-Border Tender and Exchange Offers, Business Combinations and Rights Offerings,
Securities Act Release No. 7759 (October 22, 1999). (Briefly review; do not outline.)
60.
McKinney, “Doing Deals Under the SEC’s Revised Cross-Border Tender Offer, Exchange
Offer and Business Combination Rules,” Securities Regulation Law Journal, Volume 37,
Number 3 (Fall 2009).
61.
Plessey v. General Electric, 628 F. Supp 477 (D. Del. 1986). (Briefly review; do not
outline.)
62.
Consolidated Gold Fields v. Minorco, 871 F.2d 252 (2 nd Cir. 1989). (Briefly review; do
not outline.)
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