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Mergers Outline

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This is an extract of our Mergers document, which we sell as part of our Business Associations Outlines collection written by the top tier of Thomas Jefferson School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Business Associations Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

MERGERS IX. Mergers, (Market for corporate control, if managed poorly market will show stock is underperforming & will be susceptible to takeover; however, underperforming companies can be fixed by operation of market forces), 2 types of mergers: friendly and hostile A. One or more domestic corporations may merge with a domestic or foreign

corporation or other entity pursuant to a plan of merger (MBCASS11.02) a. Plan for merger: (2 types- friendly and hostile) i. 3 ways to merge:

1. Wholly owned subsidiary: merger of 2 companies to

form a 3rd company a. Target shareholders get to vote on merger

(exception: short form merger) b. Acquiring shareholders generally never get to

vote unless acquirer has to issue a lot of new stock to amend charter or if merger itself requires amend to charter, if dilute of share issuance

2. Asset purchase: 1 company buys everything of 2nd

company a. Target shareholders get to vote

3. Stock purchase: 1 company buys all shares of other

company a. Target shareholders get to vote b. Only one that can be used for hostile purchase

b/c board can't control who buys their stock i. Tender offer: if shareholders agree to sell

to acquiring company and enough shareholders agree, then once enough shareholders agree the acquiring company will actually buy the shares at a set price ii. Reasons for merger:

1. Keep companies out of hands of rivals

2. Expansion of markets

3. Diversification

4. Prestige iii. All assets and liabilities of target company transfer to acquirer

when # of acts happen (MBCASS11.04)

1. Both boards approve the merger

2. Shareholders w/ voting rights approve the merger

3. Company files paper in state of incorporation iv. Time lag between agreement to merge & final merger

1. Due diligence (most important): going through target's

Ks for change in control provisions, real estate deeds/liabilities

2. Any further negotiating terms

3. Securing regulatory approval

b. Short-form merger, (MBCASS11.05): i. Parent company merges w/ 90% or more owned subsidiary ii. Parent may buy them out, w/out needing a shareholder vote iii. Appraisal Rights, (MBCASS13.02):

1. Minority shareholders have right to an appraisal if they

disagree with the price offered in a short-form merger iv. Shareholders of acquirer

1. Get to vote if: a. Charter of the merged company will be changed

by the merger b. If the rights in their shares will be affected

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