The recent Delaware ruling in In Ancestry.com Inc. Shareholder Litigation provides a cautionary tale relating to a target company developing aggressive projections during an auction process. The Relevant Facts Following the announcement of a going-private transaction, some shareholders of Ancestry.com filed suit in the Delaware Court of Chancery alleging, among other things, that the board… → Read More
Category Archives: Public M&A
Subscribe to Public M&A RSS FeedChallenges for State-Owned Enterprises Arising From Proposed Amendments to the Investment Canada Act
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, StrategyThe Canadian government’s Bill C-60 contains proposed amendments to the Investment Canada Act that will significantly impact foreign investors whom the Canadian government considers as state-owned enterprises (SOEs). An investor might be an SOE even if a foreign state only indirectly “influences” the investor. Under these amendments, if the Minister of Industry determines that an… → Read More
Ignorance is not bliss: beware minimal due diligence
Lessons from the Quebec Court of Appeal
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, StrategyThe Quebec Court of Appeal’s decision in Francoeur v. 4417186 Canada Inc., 2013 QCCA 191, provides a cautionary tale on the dangers of entering into a share purchase agreement and subsequently closing a share purchase transaction, without ample due diligence. The one-sided apportionment of risk The Francoeur share purchase agreement (the “SPA”), which was signed… → Read More
The Spin on Spin-Offs (Part 3)
A Valuable Tool to Unlock Shareholder Value
Posted in Public M&A, Shareholders, StrategyIn our recent series on corporate-spin off transactions, we focused on why a company should consider a spin-off, and how the spin-off could be implemented. In this post, we briefly outline some of the common risks that a company should be aware of before pursuing the spin-off. Even for seasoned practitioners, a great deal of… → Read More
The Spin on Spin-Offs (Part 2)
A Valuable Tool to Unlock Shareholder Value
Posted in Public M&A, Shareholders, StrategyIn our last post, we outlined some of the reasons why corporate spin-offs are used. In this post, we address some of the most common methods used to implement the corporate spin-off. How do I implement it? In some cases, a Canadian public corporation seeking to distribute shares of Spinco to its shareholders will be… → Read More
Don’t be a “Dummy Director”
Delaware ruling on the obligations of directors of companies operating in emerging markets
Posted in Public M&A, Shareholders, Strategy“Independent directors who step into these situations involving essentially the fiduciary oversight of assets in other parts of the world have a duty not to be dummy directors.” p. 21 of transcript, In re Puda Coal Stockholders Litigation, Del. Ch. C.A. 6476-CS (February 6, 2013). A recent Delaware bench ruling considers… → Read More
Doing Business in Canada – 2013 Edition
Buying a Canadian Business, eh? A look back.
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, StrategyLast Spring we announced a special series of blog posts aimed at addressing some of the most significant distinctions between Canadian and US law that ought to be considered in the early stages of the proposed acquisition of a Canadian target. Following the launch of that series our team blogged about important topics like: Financing… → Read More
Good Faith in the Shadow of Contractual Rights
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, StrategyMost M&A contracts contain provisions that confer discretionary contractual powers on one or both parties to the transaction (e.g., the right to withhold consent to an assignment). One of the most pressing questions in modern contract law is whether the party in possession of such a power must exercise it in good faith. In Bhasin… → Read More
The Spin on Spin-Offs (Part 1)
A Valuable Tool to Unlock Shareholder Value
Posted in Public M&A, Shareholders, StrategyOn March 6, 2013, Time Warner Inc. issued a press release announcing plans to implement, courtesy of a spin-off transaction, a “complete legal and structural separation of Time Inc. from Time Warner.” The proposed spin-off highlights an increasing trend among public companies in the face of tough market conditions – the transformation of what are… → Read More
Proposed Changes to Early Warning Reporting System Address Market Transparency and Shareholder Activism in Canada
Posted in Public M&A, Shareholders, StrategyUnder Canada’s early warning reporting (EWR) system, investors holding 10% or more of a public company’s voting securities must publicly report their ownership levels, the purpose of the transaction and any future intention to accumulate more securities. Eligible institutional investors can report more slowly than EWR filers and provide less information by making use of… → Read More
Shareholder Rights Plans – The CSA Proposal
Posted in Public M&A, Shareholders, StrategyOn March 14, 2013, the Canadian Securities Administrators (otherwise known as the “CSA”) published a request and notice for comments regarding Proposal National Instrument 62-105 – Security Holder Rights Plans, the purpose of which is to introduce the CSA’s proposed regulatory regime for rights plans. The proposed rule, which is discussed in more detail in… → Read More
Defensive Tactics – The AMF Alternative Approach
Posted in Public M&A, Shareholders, StrategyOn March 14, 2013, the Autorité des marchés financiers has published a consultation paper regarding An Alternative Approach to Securities Regulators’ Intervention in Defensive Tactics (the “AMF Approach”). Concurrently, the Canadian Securities Administrators (otherwise known as the “CSA”) published a request and notice for comments regarding Proposal National Instrument 62-105 – Security Holder Rights Plans,… → Read More
OfficeMax and Office Depot Merger of Equals – Who Will Sit Behind the CEO’s Desk?
A Difficult Governance Issue Deferred.
Posted in Public M&A, StrategyOne of the more interesting governance issues in any merger of equals transaction is determining which Chief Executive Officer will take the helm of the combined company. OfficeMax and Office Depot announced the signing of a definitive merger agreement on February 20, 2013 under which the two companies agreed to combine in an all-stock merger… → Read More
Defined Contribution Pension Plans: Uncovering the Wolf in Sheep’s Clothing?
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, StrategyIn my last post, I briefly canvassed the differences between defined benefit (DB) and defined contribution (DC) pension plans. I cautioned that, due to their perceived financial predictability and apparent straightforward nature, DC plans don’t always get the attention that they deserve from buyers undergoing the due diligence review of a target. While DB plans… → Read More
Advance Notice By-Laws & Defending Against a Surprise Attack
Posted in Public M&A, Shareholders, StrategyShareholders typically have three options available to them when looking to nominate directors different than those put forth by the company’s management, (i) a shareholder proposal that is added to the management proxy circular for the applicable shareholder meeting, (ii) the more popular and publicized proxy contest, which generally requires that the shareholder(s) soliciting proxies… → Read More
New 2013 Competition Act Merger Notification Threshold
Posted in Private Equity, Private Transactions, Public M&AThe Competition Bureau (Bureau) has announced that the pre-merger notification transaction-size threshold for 2013 will increase to $80 million from the 2012 threshold of $77 million. As per the indexing mechanism set out in the Competition Act (Act), the pre-merger notification threshold is reviewed annually. The 2013 threshold is anticipated to come into effect on… → Read More
New 2013 Investment Canada Act Review Threshold
Posted in Private Equity, Private Transactions, Public M&AIndustry Canada has announced that the Investment Canada Act (Act) threshold for 2013 that applies to most direct acquisitions of Canadian businesses by non-Canadian investors from World Trade Organization (WTO) member countries is $344 million (an increase from last year’s $330 million threshold). The threshold applies to the gross book value of the target’s assets…. → Read More
You Say UCC, We Say PPSA.
A discussion of the Canadian equivalent of the UCC - the Personal Property Security Act in the context of an M&A transaction.
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, StrategyAlthough we often think of the regimes that govern registrations made against personal property as a concern to lenders and their counsel, M&A lawyers and business people are unable to escape this area of the law… at least not completely. As part of the legal due diligence process in almost any M&A deal, registrations against… → Read More
Defined Benefit Versus Defined Contribution Pension Plans: The Basics
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, StrategyWhen purchasing an existing business, many buyers are understandably reluctant to assume obligations under a target’s defined benefit (DB) pension plan. Under a traditional DB plan, members (i.e. plan participants) are entitled to a guaranteed pension amount calculated by a formula. While active employees may contribute to such plans, each Canadian jurisdiction’s laws place the… → Read More
Regulatory Approvals in M&A Deals
Purchasers’ Contractual Covenants related to Regulatory Approvals
Posted in Private Transactions, Public M&ARecent proposed mergers blocked by the Canadian government and other regulators, such as the Minister of Industry’s ruling against BHP Biliton’s proposed hostile take-over bid for Potash Corporation in November 2010, the recent CRTC decision to deny BCE’s friendly bid for Astral Media and the initial rejection by the Minister of Industry of the proposed… → Read More
Plugging (You Into) Even More Online M&A Resources
More Online Resources for Deal Makers – What you should know about (Part 2 of 2)
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, StrategyIn our last post, we looked at six traditional resources and more sophisticated paid services that help bring us up to speed in the M&A world. In this post we will list some of the more contemporary deal commentary resources: NY Times DealB%k: This blog delivers the latest news on mergers, acquisitions, venture… → Read More
Plugging (You Into) Online M&A Resources
Top 6 Online Resources for Deal Makers – What you should know about (Part 1 of 2)
Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, StrategyWhether you’re a seasoned deal maker or just starting out, we all rely on various resources to stay apprised of the cutting edge developments in M&A. Given that the latest information is driven by online resources, we thought it would be appropriate to put together a list of our favourite resources that help keep us… → Read More
Go-Shops in Canada
Go-Shop Provisions in Canadian M&A Transactions: Advantages, Disadvantages and Considerations
Posted in Contractual Matters, Public M&AIt is quite common in negotiated acquisitions for companies to perform a pre-signing market canvass and to enter into an acquisition agreement that contains a “no-shop” provision with a fiduciary out clause for unsolicited third-party proposals, as well as a break fee payable in the eventuality of the target company accepting a superior offer. Less… → Read More
Working Capital in Public M&A – Is Varying Cash Consideration the Solution?
Posted in Public M&A, StrategyDealing with a target company’s working capital in the context of a public M&A transaction is often a challenge because the buyer has no recourse against the target’s former shareholders after closing if working capital is not at an agreed-upon level. It’s impracticable to implement a post-closing working capital adjustment mechanism where there’s no one… → Read More
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