Public Company M&A: Transaction Structures, Securities Compliance, Avoiding Shareholder Litigation

Description

Acquiring a public company, whether by a private equity sponsor or another public company, involves a number of deal points and legal considerations, including disclosure issues under federal securities law and fiduciary duty issues under applicable state law. Getting a public company deal done therefore requires careful planning on the process and thoughtful consideration on the deal terms.

A negotiated acquisition of a public company typically is structured as a "one-step" statutory merger governed by the law of the state in which the target company is organized, or a "two-step" merger, comprised of a tender or exchange offer followed by a "back end" statutory merger.

A prospective acquirer can elect to build a stake in the target company's shares prior to commencing discussions with the target, but a party that acquires more than five percent equity with a view toward pursuing an acquisition must make a public filing with the SEC on Schedule 13D.

Acquisitions of U.S. public companies can result in shareholder actions in the form of "strike suits," which attack flaws in the sale process and/or the disclosures regarding the transaction, and appraisal actions in which shareholders demand a judicial determination of the "fair value" of their shares. Care should be taken at each step of the merger process to mitigate the risk of shareholder suits.

Listen as our authoritative panel discusses structuring and regulatory issues associated with public company M&A and how to anticipate and respond to shareholder litigation opposing a proposed merger.