Mergers and acquisitions law and finance

Cover
Halftitle Page
Editorial Advisors
Title Page
Copyright Page
About Wolters Kluwer Legal & Regulatory U.S.
Dedication
Contents
Preface
1. Why Mergers Happen: Macroeconomic Trends
	A. Merger Waves
	B. Macroeconomic Factors That Contributed to Merger Waves
	C. Who Captures the Benefits of Acquisitions?
		1. Target Shareholders and Acquirer Managers
		2. Impact on Other Stakeholders
2. Financial and Economic Incentives That Shape Mergers
	A. Synergies
	B. Change of Control Benefits and Changes in Financial Aspects of the Business
	C. Summary of Gains from Acquisitions
	D. Costs of Acquisitions; Why Acquisitions Fail
		1. Costs Incurred in Acquisitions
		2. How Acquisitions Destroy Wealth
	E. Acquisition Financing Decisions
		1. How Much of the Target Does the Bidder Wish to Acquire?
		2. Currency Choices
			a. Stock or Cash
			b. Economic Effects of Financing Choices
			c. Impact on the Acquirer's Capital Structure and Costs of Capital
			d. Ownership Structure
			e. Tax Liability
			f. Risk Bearing Under Alternative Currencies
				Problems
3. Legal Shaping of Deals
	A. The Law's Distinctive Roles
	B. Mergers and Other Acquisitions as a Decision Governed by Law
		1. Corporate Law Reduced to Four (Overly Simplified) Rules
		2. The Merger Form as a Template for Understanding Legal Regulation of Acquisition Transactions
		3. Alternative Legal Structures for Acquisition That Permit Planners to Avoid One or More of the Requirements of the Merger Template
	C. Judicial Limits on Private Planning to Avoid Particular Merger Effects: De Facto Merger
		Hariton v. Arco Electronics, Inc.
		Farris v. Glen Alden Corp.
		Terry v. Penn Central Corp.
		Notes and Questions
	D. Federal Law Affecting Deals
		1. Securities Law
			a. “Disclosure, Again Disclosure, and Still More Disclosure”
				Prudent Real Estate Trust v. Johncamp Realty, Inc.
				Notes and Questions
			b. Substantive Regulations from Securities Law, Particularly Tender Offers
			c. Avoiding Securities Regulation
		2. Tax
		3. Antitrust
		4. National Security
4. Deal Strategy: the Bidder's Approach
	A. Beginning the Deal Dance: Who to Approach?
	B. Getting to a Definitive Agreement
		1. Deal Terms: Financial, Legal, and Social
		2. Due Diligence
		3. Negotiating the Acquisition Agreement
			In re IBP, Inc. Shareholders Litigation
			Notes and Questions
			Martin Marietta Materials, Inc. v. Vulcan Materials Co.
			Notes and Questions
5. The Target's Approach: Remaining Independent or Getting the Best Deal from the First or Another Bidder
	A. The Legal and Economic Framework
		1. Financial Defenses
		2. Legal Defenses
	B. Fiduciary Duties and Legal Challenges to Board Action
		Smith v. Van Gorkom
		Notes and Questions
		Gantler v. Stephens
		Notes and Questions
		Lyondell Chemical Co. v. Ryan
		Notes and Questions
6. Judicial Review of Defensive Tactics
	A. The Corporate Law Template for Considering Takeover Defenses
		Unocal Corp. v. Mesa Petroleum Co.
		Notes and Questions
		Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.
		Notes and Questions
	B. Applying Unocal and Revlon—The Two Paramounts
		Paramount Communications, Inc. v. Time Inc.
		Notes and Questions
		Paramount Communications, Inc. v. QVC Network Inc.
		Notes and Questions
	C. The Evolution of Unocal; Deal Protection Devices
		Louisiana Municipal Police Employees' Retirement System v. Crawford
		Omnicare, Inc. v. NCS Healthcare, Inc.
		Notes and Questions
	D. State Anti-Takeover Statutes as Defensive Mechanisms
		Amanda Acquisition Corp. v. Universal Foods Corp.
		Notes and Questions
7. Poison Pills: a Case Study of Defensive Tactics and Judicial Review
	A. The Challenge Facing the Drafters of the Poison Pill
		Wachtell, Lipton, Rosen & Katz, The Share Purchase Rights Plan
		Notes and Questions
	B. Judicial Review of Director Action to Implement or Continue a Poison Pill
		Moran v. Household International, Inc.
		Notes and Questions
		City Capital Associates Ltd. Partnership v. Interco Inc.
		Notes and Questions
		Air Products and Chemicals, Inc. v. Airgas, Inc.
		Notes and Questions
	C. Evolution in the Poison Pill and Judicial Responses
		Carmody v. Toll Brothers, Inc.
		Quickturn Design Systems, Inc. v. Shapiro
		Notes and Questions
8. Is a Defense Affecting Voting Different?
	Schnell v. Chris-Craft Industries, Inc.
	Blasius Industries, Inc. v. Atlas Corp.
	Notes and Questions
	Unitrin, Inc. v. American General Corp.
	Notes and Questions
	MM Companies, Inc. v. Liquid Audio, Inc.
	Notes and Questions
9. Finance Foundation for Valuation
	A. Introduction
	B. A Primer on Financial Theory Underlying the Discounted Cash Flow Method of Valuation
		Problem
	C. The Mechanics of a Discounted Cash Flow Analysis
		1. Forecasting Free Cash Flow
			a. The Explicit Forecast Period (i.e., The First Five Years)
			b. Terminal Value
		2. Picking an Appropriate Discount Rate
		3. Adjustments
		4. Forecasting Change in Free Cash Flow from the Merger
	D. Deal Comparables, Company Comparables, and Other Measures
10. Cash-out Mergers
	A. Majority Power, Minority Rights to Exit Via Appraisal or Gain Judicial Review for Breach of Fiduciary Duty
		Weinberger v. UOP, Inc.
		Notes and Questions
		Cede & Co. v. Technicolor, Inc.
		Notes and Questions
	B. Valuation Techniques
		In re Emerging Communications, Inc. Shareholders Litigation
		Notes and Questions
	C. Planning to Minimize Judicial Review
		Kahn v. M&F Worldwide Corp.
		Notes
		In re Volcano Corporation Stockholder Litigation
		Notes and Questions
		Notes on Shareholder Litigation in Mergers
	D. Short-Form Mergers
		Glassman v. Unocal Exploration Corp.
		Notes and Questions
		Berger v. Pubco Corp.
11. Sale of Control for a Premium
	Perlman v. Feldmann
	Notes and Questions
	Mendel v. Carroll
	Notes and Questions
	In re Synthes, Inc. Shareholder Litigation
	Notes and Questions
12. Disclosure and Limits on the Use of Information
	A. Risk Arbitrage, Mandatory Disclosure, and the Search for Information
	B. Law's Effect on Information
		1. Mandatory Disclosure from Federal Law
		2. Mandatory Disclosure's Impact on Information About Merger Transactions and the Additional Effect of Antifraud Prohibitions
			a. When Will Merger Information Have to Be Disclosed?
			b. Remedies for Failure to Comply with Mandatory Disclosure or Antifraud Provisions Relating to Mergers
		3. Disclosure Duties Arising from State Law Fiduciary Duty
	C. Law's Limits on the Use of Inside Information
		1. Classical Insiders and Misappropriators
			Chiarella v. United States
			Notes and Questions
			United States v. O’Hagan
			Notes and Questions
		2. Extensions of Classical and Misappropriation Liability
			a. Tippee Liability
				Salman v. United States
				Notes
			b. Insider Trading Liability Under Rule 14e-3
				United States v. O’Hagan
		3. Assembling the Bases for Insider Trading Liability
13. Financial Reorganizations: Highly Leveraged Transactions, Going Private, Asset Restructuring
	A. Leveraged Buyouts, Going Private, and Other Transactions Making Use of Leverage
		1. Economic Factors Used to Create Wealth in LBOs
		2. It's Not for Everyone: The Ideal Candidate for an LBO; Empirical Evidence on Post-Transaction Performance
		3. Exit
		4. Law Shaping the LBO Deal
			Metropolitan Life Insurance Co. v. RJR Nabisco, Inc.
		5. HCA's LBO as a Case Study
		6. Topps as a Case Study of the Overlap of Federal Disclosure and State Intermediate Scrutiny
			In re The Topps Co. Shareholders Litigation
			Notes and Questions
	B. Leveraged Recapitalizations
	C. Asset Restructuring
		1. Divestitures
		2. Carve-Outs
		3. Spinoff
14. Activist Shareholders
	A. Who Are Activist Shareholders?
	B. Patterns of Engagement
		CSX Corp. v. Children's Inv. Fund Management (UK) LLP
		Notes and Questions
15. International Transactions
	A. Determining Which Law
	B. More Expansive Roles for Shareholders in Friendly Deals
	C. Roles for Groups Other than Shareholders
	D. Different Approaches to Ability of Management to Oppose Deals Favored by Shareholders
	E. Different Rules in Deals by a Controlling Shareholder
	F. Different Methods of Conflict Resolution
	G. Cadbury/Kraft as a Case Study
Appendix A: Delaware General Corporation Law
Appendix B: Federal Statutes & Regulations
Table of Cases
Index