According to Cornerstone’s 2020 review of securities class action settlements, settlements in 2020 generally kept pace with trends seen in recent years, notwithstanding COVID-19 and brief lulls in March and April 2020.
Sidley and Mergermarket are pleased to present Creative Deal Structures: Energizing the M&A Market Post-Crisis.
Creative structures have become increasingly important in bridging the gap between sellers’ expectations and buyers’ willingness to pay. Based on interviews with 150 respondents from U.S. corporates and private equity firms, this report analyzes the ways in which M&A is moving forward in spite of the pandemic.
Please join us for an exclusive discussion on the current state of hostile M&A and shareholder activism. The leaders of Sidley’s Shareholder Activism practice will discuss the evolution of hostile M&A and shareholder activism in the COVID era, what to expect in the 2021 proxy season, and how to stay on the front foot in the current environment.
Sidley is pleased to share the December 2020 issue of Sidley Perspectives on M&A and Corporate Governance, a quarterly newsletter designed to keep you current on what we consider to be the most important legal developments involving M&A and corporate governance matters.
The Court of Chancery recently allowed a buyer to walk away from an acquisition due to, among other things, the seller’s failure to satisfy the ordinary course covenant because of changes made to the operating business in response to the COVID-19 pandemic. The opinion, penned by Vice Chancellor Laster, is the first decision offering post-trial guidance as to the application of material adverse effect (MAE) and ordinary course provisions during the pandemic. Its guidance on the application of these provisions should be of interest for all negotiating M&A deals and other commercial agreements generally, and during the COVID-19 pandemic in particular.
In AB Stable VIII LLC v. Maps Hotels and Resorts One LLC, plaintiff sought to sell a subsidiary that owned an approximately US$5.8 billion portfolio of luxury hotels. The deal was signed in September 2019, and was slated to close in April 2020. Due to COVID-19, shortly before the planned closing, the seller made material changes to its business. These included closing two hotels entirely, gutting operations at 13 others, terminating or furloughing staff, and cutting spending on marketing and capital expenditures. The seller filed a complaint seeking specific performance to force a closing; the buyer responded with counterclaims contending, among other things, that it had no obligation to close because an MAE occurred, and the seller breached the ordinary course provision. The Court’s rulings on both of these points are highly instructive.
On August 31, 2020, Vice Chancellor J. Travis Laster of the Delaware Chancery Court issued his long-awaited resolution of the prolonged litigation involving the failed merger of Anthem, Inc. and Cigna Corporation — two of the nation’s largest health insurance companies. As Vice Chancellor Laster found and detailed in the 311-page opinion, no party won this protracted battle, no merger was consummated, and no damages were awarded to either side.1 See In re Anthem-Cigna Merger Litigation, Case No. 2017-0114-JTL, at 305-06 (Del. Ch. 2020).