TAKEOVERS, MERGERS AND ACQUISITIONS LAWG/J Georgetown University Law Center Professors Daniel F. Duchovny and Joseph E.

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1 TAKEOVERS, MERGERS AND ACQUISITIONS LAWG/J Georgetown University Law Center Professors Daniel F. Duchovny and Joseph E. Gilligan Spring Semester 2017 TIME/LOCATION: Tuesdays 7:55-9:55 pm, McDonough 200 COURSE MATERIALS: 1. Reading Materials (provided on Courseware) 2. Federal Securities Law, Selected Statutes, Rules & Forms, Coffee and Seligman (Rulebook only) 3. Delaware General Corporation Law 4. Mergers and Acquisitions: Cases and Materials, Third Edition, by Therese Maynard, Aspen Publishers (ISBN: ) Optional Additional Reading; Not Required READING ASSIGNMENTS: Each section of the course outline has assigned reading material. Announcements will be made during each class on the materials we expect to cover the following week. Every effort should be made to read the assignments before class. We will be discussing current transactions and news relating to the course during each class session. We strongly encourage reading the Wall Street Journal, the New York Times, or the Financial Times on a regular basis during the semester. We also encourage you to keep up with related blogs (e.g., and EXAM: The exam will be in class and approximately 2-3 hours. Students will be allowed to bring into the exam only their personal copies of #1, #2 and #3 from the Course Materials list above (i.e., class Reading Materials, Federal Securities Law, Selected Statutes, Rules & Forms, Coffee & Seligman and the Delaware General Corporation Law) and his/her personal notes and outlines in printed form (i.e., no electronic copies or materials). These materials may be marked with the student s notes, cross-references and other comments as well as highlighting, tabbing and similar notations. No other documents, literature, materials or aids will be permitted in the exam. Students

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3 Course Schedule Class Topic 1. January 17 Course Introduction; M&A Overview and History, M&A Mechanics 2. January 24 M&A Mechanics (cont d); Disclosure of Preliminary Merger Negotiations 3. January 31 The Williams Act: Beneficial Ownership Reporting 4. February 7 The Williams Act: Tender Offers 5. February 14 The Williams Act: Tender Offers * February 21 No Class 6. February 28 Proxy Contests to Influence Control 7. March 7 Proxy Contests to Influence Control * March 14 Spring Break No Class 8. March 21 Defending Against a Hostile Takeover 9. March 28 State Corporate Law Considerations 10. April 4 State Corporate Law Considerations 11. April 11 Going Private Transactions 12. April 18 Going Private Transactions 13. April 25 Cross-Border Business Combination Transactions; Semester Review * Final Exam Week (May 2 May 16) 3

4 Course Outline I. Course Introduction; M&A Overview and History (Class 1) A. History 1. Takeover/Consolidation Waves 2. Stock Market Correlation B. Legal Overview 1. State corporate law 2. Federal securities laws i. Securities Exchange Act of 1934 ii. Securities Act of 1933 iii. Regulation M-A 3. Stock exchange listing standards and NASD rules 4. Tax 5. Antitrust 6. Regulated Industries (e.g., banking) 7. Accounting C. Regulators 1. U.S. Securities and Exchange Commission 2. New York Stock Exchange/NASDAQ. 3. Financial Industry Regulatory Authority (FINRA) II. M&A Mechanics (Classes 1 & 2) A. Overview of Acquisition Methods 1. Open Market/Privately Negotiated Stock Purchases 2. Merger 3. Tender Offer i. Third party ii. Issuer 4

5 4. Exchange Offer 5. Sale of Assets/Division 6. Spin-offs 7. Going-Private Transactions 8. Hostile v. Friendly B. Documentation 1. The Letter of Intent/Confidentiality Agreements 2. The Merger/Acquisition Agreement 3. Employment and other compensation arrangements 4. Disclosure schedules C. Due Diligence and Market Considerations D. Disclosure of Preliminary Merger Negotiations III. Beneficial Ownership Reporting, Tender Offers and the Williams Act (Classes 3, 4 & 5) A. History of Federal Regulation of Takeovers B. Beneficial Ownership Reporting Provisions 1. The Statute and Rules 2. Group Theory C. Regulation of Tender Offers 1. What is a "Tender Offer?" 2. Disclosure Framework and Procedural Safeguards 3. Trading Practice Rules 4. Other Disclosure Provisions D. Offers Implicating the Proxy Rules and/or the Securities Act 1. Mandated Disclosure to Shareholders 2. Rule 145/Form S-4 3. Registered and Exempt Offers 4. Regulation M-A 5. Rules 801 & 802 5

6 6. Rule 425 & Rule 14a-12 Communications IV. Proxy Contests to Influence Control (Classes 6 & 7) A. Interaction between State and Federal Law B. Action by Consent versus Shareholder Meeting C. Mechanics of a Shareholder Meeting D. Definition of "Solicitation" E. Filing and Dissemination Requirements 1. Information Statements v. Proxy Statements 2. Exemptions F. Shareholder Communication Provisions; Rule 14a-8 Proposals; Proxy Access G. Contested Solicitations 1. Strategy and Tactics 2. Regulatory Parameters: State and Federal 3. Defenses 4. Facilitating a Takeover through a Proxy Contest H. Corporate Governance V. Defending Against a Hostile Takeover (Class 8) A. Pre-Offer Planning B. Tactics During a Takeover C. The Poison Pill / Stockholder Rights Plan D. Regulatory Defenses VI. State Corporate Law Considerations (Classes 9 & 10) A. Overview of Delaware Corporate Law/Other Corporation Codes B. Directors Duties in Applying Defensive Tactics 1. Rights Plans 2. Just Say No Campaigns 3. Other Defenses 6

7 C. Directors Duties in Selling the Company 1. Business Judgment Rule 2. Revlon Duties 3. Validity of No-Shop, Lock-Up and Similar Provisions D. Directors Duties in Conflicted Transactions 1. Types of Conflicted Transactions 2. Entire Fairness Standard E. State Anti-takeover Statutes F. Shareholders Right of Appraisal VII. Going Private Transactions (Classes 11 & 12) A. State Regulatory Scheme B. Federal Regulatory Scheme C. Disclosure Requirements VIII. Cross-Border Business Combination Transactions (Class 13) A. Foreign Bidders; Special Disclosure Issues B. Foreign Target Companies: Extraterritorial Reach of the Williams Act C. Steps Toward Regulatory Harmonization: Cross-Border Tender Offer Exemptions 7

8 Reading Materials M&A Mechanics (Classes 1 and 2) Acquisition Structuring and Process Statutory reading: Securities Act 5 and Rule 145 Form S-4 (briefly review; do not outline) 1. Frankle, Landsman and Greene, The Mergers and Acquisitions Handbook, A Practical Guide to Negotiated Transactions (2007), Chapter 5 Deal Structures (pgs 33-46). 2. R. Franklin Balotti and Jesse A. Finkelstein, The Delaware Law of Corporations & Business Organizations, Third Edition (Section 9.17, pgs 9-34 through 9-37). 3. Sample Confidentiality Agreement (Optional) 4. Gallardo, Little and Souza, Martin Marietta Materials, Inc. v. Vulcan Materials Co: Breaches of Confidentiality Agreements, Insights, Volume 26, Number 5, May Disclosure of Preliminary Merger Negotiations Statutory reading: Form 8-K, Items 1.01, 1.02, 2.01, 5.01 and 5.02 Schedule 14D-9 (Cover page and Item 7 only) Exchange Act 10(b) and Rule 10b-5 Securities Act Rule 165, In the Matter of Carnation Company, Exchange Act Release No (July 8, 1985). 6. Basic v. Levinson, 485 U.S. 224 (1988). 7. Stephen A. Radin, Disclosure of Merger Negotiations: New Rules in Delaware, The New York Law Journal (August 2004). 8. In the Matter of E.ON AG, Exchange Act Release No (September 28, 2000). 9. NYSE Listed Company Manual, Rules Gilluly and Scheick, Rule 10b-5 and Disclosure of Merger Negotiations, Insights, Volume 24 Number 4, April

9 Beneficial Ownership Reporting, Tender Offers and the Williams Act (Classes 3, 4 and 5) Beneficial Ownership Reporting and the Williams Act Statutory Reading: Exchange Act 13(d) and (g) Regulation 13D-G Schedules 13D and 13G 11. Amendments to Beneficial Ownership Reporting Requirements, Exchange Act Release No (January 12, 1998). (Note: Sections I and II and chart in Section III, only) 12. Rondeau v. Mosinee Paper Corp., 422 US 49 (1975). 13. In the Matter of Harvey Katz, Exchange Act Release No (April 25, 1984), Fed. Sec. L. Rep. 83,618 (CCH). 14. In the Matter of Cooper Laboratories, Exchange Act Release No (June 26, 1985), Fed. Sec. L. Rep. 83,618 (CCH). 15. SEC v. First City Financial Corporation Ltd., 890 F.2d 1215 (D.C. Cir. 1989). 16. In the Matter of Tracinda Corp., Exchange Act Release No (September 3, 2008). 17. In the Matter of Perry Corp., Exchange Act Release No (July 21, 2009). 18. SEC Press Release, SEC Announces Charges Against Corporate Insiders for Violating Laws Requiring Prompt Reporting of Transactions and Holdings, September 10, Tender Offers Statutory Reading: Exchange Act 13(e), 14(d) and 14(e) Regulation 14D Regulation 14E Rule 13e-4 Schedule TO Securities Act 5 and Rule Regulation of Takeovers and Security Holder Communications, Securities Act Release No (October 22, 1999). (Note: Parts I and II and related footnotes, only) 20. Commission Guidance on Mini-Tender Offers and Limited Partnership Tender Offers, Exchange Act Release No (July 24, 2000). (Note: Briefly review; do not outline) 21. Wellman v. Dickinson, 475 F. Supp. 783 (S.D.N.Y. 1979). 22. SEC v. Carter Hawley Hale, 760 F.2d 945 (9 th Cir. 1985). 23. Hanson Trust v. SCM Corporation, 774 F.2d 47 (2 nd Cir. 1985). 24. City Capital Associates v. Interco, 860 F.2d 60 (3 rd Cir. 1988). 9

10 25. Hogan Lovells SEC Update, SEC Amends the Tender Offer Best-Price Rule (November 2006). 26. Paul Hastings Client Alert, Tender Offers: Past, Present and Future the Evolution of Section 251(h) (May 2014). Proxy Contests to Influence Control (Classes 6 & 7) Statutory Reading: Exchange Act 14(a) Regulations 14A and 14C Schedules 14A and 14C Delaware 211, 212, 222 and SEC v. Okin, 132 F.2d 784 (2 nd Cir. 1943). 28. Long Island Lighting v. Barbash, 779 F.2d 793 (2 nd Cir. 1985). 29. Blasius Industries, Inc. v. Atlas Corp., 564 A. 2d 651 (Del. Ch. 1988). 30. Regulation of Communications Among Shareholders, Exchange Act Release No (October 16, 1992). (Review Parts I and II and related footnotes) 31. Holly J. Gregory, Lessons from the 2015 Proxy Access Front, PLC The Governance Counselor (May 2015). 32. Zeberkiewicz and Rohrbacher, Dealing with Dissidents: Vote-Buying and Management Slates, Insights, Volume 22, Number 4 (April 2008). 33. Disclosure in Proxy and Information Statements, Exchange Act Release No (October 13, 1978). Defending Against a Hostile Takeover (Class 8) and State Corporate Law Considerations (Classes 9 & 10) Statutory Reading: Delaware 109 Exchange Act Rule 13e-1; Schedule 14D-9 Sample Form 8-A (Handout) 34. Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985). 35. Dechert Memo, Doing Public M&A Deals in Pennsylvania: Minesweeper Required (September 2005). 36. Unocal v. Mesa Petroleum, 493A.2d 946 (Del. 1985). 10

11 37. Moran v. Household International, 500 A.2d 1346 (Del. 1985). 38. Latham & Watkins M&A Commentary, Lessons from the First Triggering of a Modern Poison Pill: Selectica, Inc. v. Versata Enterprises, Inc. (March 2009). 39. Revlon v. MacAndrews & Forbes, 506 A.2d 173 (Del. 1986). 40. Paramount v. Time, 571 A.2d 1140 (Del. 1990). 41. Unitrin v. American General, 651A.2d 1361 (Del. 1995). 42. Cinerama v. Technicolor, 663 A.2d 1156 (Del. 1995). 43. Paramount v. QVC, 637 A.2d 34 (Del. 1994). 44. Arnold v. Society for Savings Bancorp, 650 A.2d 1270 (Del. 1994). 45. Johnson and Zapata, Optima is Optimal: Sidestepping Omnicare in Private Company M&A Transactions Deal Points: The Newsletter of the Committee on Mergers and Acquisitions of the Business Law Section of the American Bar Association (Summer 2009). 46. Richards, Layton & Finger Memorandum, In re OPENLANE, Inc. Shareholder Litigation: Court of Chancery Denies Injunction Where Merger Agreement Lacks Fiduciary Out (October 31, 2011). 47. In re Netsmart Technologies, Inc. Shareholders Litigation, 924 A.2d 171 (Del. Ch. 2007). 48. Milbank, Tweed, Hadley & McCloy Client Alert, Hexion v. Huntsman: Delaware Court Offers Interpretive Guidance on Key Terms of Disputed Merger Agreement (October 13, 2008). 49. Lyondell v. Ryan, 970 A.2d 235 (Del. 2009). 50. Zeberkiewicz and Rohrbacher, Commanding Officers: The Fiduciary Duties of Officers under Delaware Law, Insights, Volume 22, Number 6 (June 2008). 51. Richards, Layton & Finger Memorandum, In re Smurfit-Stone Container Corp. Shareholder Litigation: Court of Chancery Considers Applicability of Revlon in Cash/Stock Transaction (August 1, 2011). Going Private Transactions (Classes 11 & 12) Statutory Reading: Exchange Act Rule 13e-3 Delaware Weinberger v. UOP, 457 A.2d 701 (Del. 1983). 53. Kahn v. Lynch Communication, 638 A.2d 1110 (1994). 54. In Re Pure Resources, 808 A.2d 421 (Del. Ch. 2002). 55. In re CNX Gas Corporation Shareholders Litigation, C.A. No VCL, 2010 WL 11

12 (Del. Ch. May 25, 2010). 56. Green, Freedman and Smith, In re MFW Shareholder Litigation A New Blueprint for Controlling Shareholder Transactions? Insights, Volume 28, Number 4 (April 2014). 57. Grossbauer and Reilly, Special Committees: A Primer, Corporate Governance Advisor, Volume 15, Number 2 (March/April 2007). 58. In the Matter of William A. Wilkerson, et al., Exchange Act Release No (October 27, 2003). Cross-Border Business Combination Transactions (Class 13) Statutory Reading: Securities Act Rules 801 and 802 Exchange Act Rules 14d-1(c), (d) and (e); Rule 13e-4(h)(8) and (h)(i); Rule 13e-3(g)(6) 59. Commission Guidance and Revisions to the Cross-Border Tender Offer, Exchange Offer, Rights Offerings, and Business Combination Rules and Beneficial Ownership Reporting Rules for Certain Foreign Institutions, Securities Act Release No (September 19, 2008). (Briefly review; do not outline.) 60. Cross-Border Tender and Exchange Offers, Business Combinations and Rights Offerings, Securities Act Release No (October 22, 1999). (Briefly review; do not outline.) 61. McKinney, Doing Deals Under the SEC s Revised Cross-Border Tender Offer, Exchange Offer and Business Combination Rules, Securities Regulation Law Journal, Volume 37, Number 3 (Fall 2009). 62. Plessey v. General Electric, 628 F. Supp 477 (D. Del. 1986). (Briefly review; do not outline.) 63. Consolidated Gold Fields v. Minorco, 871 F.2d 252 (2 nd Cir. 1989). (Briefly review; do not outline.) * * * * * 12