Mergers

Question 1

If there’s bad faith/inaction then the defendants must show _____

Answer 1

monitoring system to keep BJR

Question 2

If duty of care is implicated then plaintiffs then ___ is the standard and __ duty to rebut

Answer 2

BJR, plaintiffs

Question 3

If breach of loyalty then ___

Answer 3

entire fairness, burden on defendants

Question 4

If a loyalty issue is cleansed then ___

Answer 4

burden on plaintiffs or BJR

Question 5

If there is a controlled transaction then ___ is the standard unless -_

Answer 5

entire fairness, MFW

Question 6

What is an asset sale?

Answer 6

A sells to B all assets

Question 7

An asset sale requires __

Answer 7

BOD and SH vote

Question 8

Asset sales have a high transaction cost because ___

Answer 8

sell each asset according to each asset class rules

Question 9

Asset sales ____ appraisal remedy

Answer 9

do not require

Question 10

Asset sales are covered under DGCL __

Answer 10

271

Question 11

Mergers are covered under DGCL ___

Answer 11

251

Question 12

A merger is ___

Answer 12

A + B = AB`

Question 13

The benefit of mergers as opposed to asset sales is that ___

Answer 13

don’t have to transfer each asset class

Question 14

Tender offer rules are covered under ___

Answer 14

SEC Rule 14(d)

Question 15

In a tender offer, SHs are able to bring direct suit if ___

Answer 15

target violates SH rights

Question 16

If you ____ you must file with the SEC

Answer 16

acquire or hold 5% or more of shares

Question 17

What does an SEC disclosure for meeting share threshold require?

Answer 17

• who are you
• say want between X - Y% of shares

Question 18

A tender offer must ___ AND ___

Answer 18

treat all SH equally, open for 20 days

Question 19

What is the rationale for keeping tender offer open?

Answer 19

prevent using speed (Saturday night special) to sell at bad price

Question 20

If hostile tender offer, BOD must ___

Answer 20

give their opinion (normally say undervalued)

Question 21

If a company only able to tender less than X% then ___

Answer 21

can choose not to buy any (offer not a deal)

Question 22

If more than Y% of shares tender, company must ___

Answer 22

fulfill offers pro rata

Question 23

Martin holding

Answer 23

Legal to effectively merge corporations through an asset sale

Question 24

How do companies get treasury stock?

Answer 24

SH authorize charter change, BOD can sit on that and decide when to use

Question 25

Plaintiff argument in Martin

Answer 25

Arco is using asset sale law to do de facto merger and avoid appraisal

Question 26

Martin takeaway

Answer 26

Asset sales that look like mergers are still not under merger law

Question 27

Under 251(b), the BOD ___

Answer 27

adopts resolution approving MA

Question 28

Under 251(c), the MA ___

Answer 28

is submitted to the SH of each company

Question 29

Under 251(f), the corporation surviving the merger ___ unless exception

Answer 29

doesn’t require SH approval (acquiring company)

Question 30

What are the exceptions to 151(f)

Answer 30

• change in charter is required (status changes)
• SHs must exchange their shares
• More than 20% new stock issues (rights diluted)

Question 31

251(g) means that you can ___

Answer 31

squeeze out SHs

Question 32

251(g) states that no SH vote required to ___

Answer 32

authorize merger into single indirect wholly owned subsidiary

Question 33

251(h) is about a ___

Answer 33

back-end squeeze out

Question 34

Under 251(h) SH vote of target not required if ___

Answer 34

• target is public corp (>2000 SH)
• tender offer to all SHs + get >50% shares can close without vote
• merger consideration = tender consideration

Question 35

If there is a tender offer and >50% of shares acquired a company must still ___

Answer 35

tender for remaining shares

Question 36

251(h) is evidence that DE is __ NOT ___

Answer 36

managerial, SH democracy

Question 37

DGCL 253 is about ___

Answer 37

short form merger

Question 38

Under 253, if a company owns ____ of shares in another company they can merge ___

Answer 38

90%, just by filing and BOD resolution

Question 39

Under 253, the approval of parent company SH is not required if ___

Answer 39

parent surviving corporation + no change in charter

Question 40

Under a short form merger, the minority can __ but not ___

Answer 40

fight for appraisal, challenge the transaction

Question 41

There is no need for ___ in a short form merger

Answer 41

entire fairness

Question 42

To get an appraisal you must ___ AND __

Answer 42

having voting stock, vote against or abstain

Question 43

An appraisal is a protection against ___

Answer 43

being squeezed out

Question 44

Most people don’t do appraisals unless ___

Answer 44

lot of shares with high margins

Question 45

Why is appraisal generally undesirable?

Answer 45

• must pursue action at own cost (resource intensive)
• attorneys would rather take fiduciary duty cases

Question 46

You cannot an appraisal in a ____ under DGCL ___

Answer 46

stock for stock merger, 262(b)

Question 47

What is appraisal>

Answer 47

Go to Chancery Court for fair value - future expected value of the merger (if old company continued without a merger)

Question 48

What are the two steps in a two step merger?

Answer 48

1. Acquirer makes tender offer on terms agreed in MA.
2. Acquirer and target execute MA

Question 49

In a two step merger the SHs who didn’t tender get __

Answer 49

same terms as ones who did