Canadian M&A Perspectives Private and Public Mergers & Acquisitions | Private Equity

Monthly Archives: October 2011

Earn-outs – Key Considerations in M&A Transactions

Posted in Contractual Matters, Private Transactions

This post was co-authored by Marek Lorenc, an articling student in our Calgary office.

In recent years, and particularly since the financial crisis, earn-outs continue to find favour in private (and occasionally public) acquisitions as a means of bridging the valuation gap between purchasers and sellers. The drafting of earn-out clauses can be challenging, as the amount of the earn-out is calculated long after the deal is done. In our experience, there are a few key thoughts buyers and sellers should bear in mind when negotiating earn out clauses.

  1. KISS. If an earn-out is on the table, keep
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Financing Condition – A New Item on the Canadian Public M&A Menu

Posted in Public M&A

Prime Restaurants Inc., owner and operator of a network of casual dining restaurants and pubs (including one of my wife’s faves, East Side Mario’s!), announced this week that it had entered into an agreement to be acquired by Cara Operations Limited by way of a plan of arrangement under the Business Corporations Act (Ontario). One of the more interesting aspects of this deal is the fact that the parties agreed that Cara’s obligations to acquire Prime would be conditional on Cara completing an offering of securities or other financing transaction to finance the acquisition. The acquisition agreement also contains a … Continue Reading

The Clash of the Rights Plan Cases (Redux)

Posted in Public M&A, Shareholders

The Ontario Securities Commission issued an order this week in connection with a shareholder rights plan adopted by the board of directors of MOSAID Technologies Incorporated in response to a hostile bid made by Wi-LAN Inc. The OSC ordered that effective November 1, 2011 (i.e. 70 days after the commencement of Wi-LAN’s unsolicited offer), MOSAID’s shareholder rights plan must go. The key factors considered by the OSC in arriving at its decision to allow the rights plan to stick around for another couple of weeks (not as long as MOSAID had wanted) included:

  • MOSAID was continuing to run an auction
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Poison Pill 101: Comparing the Canadian and US Regimes

Posted in Public M&A, Shareholders

A poison pill, or shareholder rights plan, is a device implemented by a company’s board of directors in order to deter unsolicited or hostile acquisition proposals. The rights plan originated in the United States and was introduced in Canada in 1988 when Inco adopted its first rights plan. The introduction of poison pills in both countries was met with questions as to their legality. In the divergent approaches through which these questions were resolved in Canada and the United States (in particular Delaware), the rights plan and its effectiveness as a take-over defence have followed divergent paths.

In Delaware, the … Continue Reading

Fighting Back: Considerations for Addressing a Dissident Proxy Battle

Posted in Shareholders, Strategy

Contested shareholder meetings are often dramatic events which have the potential to result in, among other things, enhanced scrutiny of a board of directors, increased media coverage and litigation. Emotions tend to run high and decisions often need to be made quickly (particularly for those facing a dissident group who followed the advice given in Matthew Cumming’s blog post, Dissident Ambush of a Shareholders’ Meeting – Tactics to Consider).

If faced with a dissident proxy battle, a careful and deliberate approach can mitigate reputational risk, result in an orderly meeting and assist in avoiding unnecessary costs and litigation. The … Continue Reading