Antitrust in M&A: Allocating Risk and Responsibility in Merger Agreements
Efforts Clauses, End Dates, Termination Fees, MAC Clauses, Control of Investigation Strategy
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Commercial Law
- event Date
Wednesday, February 12, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine provisions that are commonly used to allocate antitrust risk in M&As and how to ensure compliance with those provisions. The panel will provide some real world examples of how these provisions have played out in recent high profile cases when a deal fails to close.
Mr. Ingrassia advises on the full range of antitrust matters in diverse industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services and health care, among others. His practice focuses on the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger notification requirements. Mr. Ingrassia has extensive experience with the legal, practical, and technical requirements of merger clearance and is regularly invited to participate in Federal Trade Commission and bar association meetings regarding Hart-Scott-Rodino practice issues.
Ms. Desai earned her J.D. from New York University School of Law, where she was a staff editor for Moot Court and co-chair of the South Asian Law Students Association. While at NYU, she worked as a research assistant to the esteemed Professor Adam M. Samaha.
Mr. Buchert is Vice President and head of M&A and Corporate Strategy for Church & Dwight, a $4.3 Billion revenue and $19 Billion market cap S&P 500 consumer goods business based out of Ewing, NJ. He focuses on M&A, Divestitures, Business Development and overall corporate strategy initiatives, completing at least 16 acquisitions for an aggregate value of $4.4 billion since 2006. Acquisitions include: Flawless women's hair removal devices, Waterpik oral flossing, Passport Food Safety, Agro Biosciences animal probiotics, Anusol hemorrhoid business, RepHresh and Replens women's health brands from L'il Drugstore, Vi-Cor Animal Nutrition business, Avid Health (Vitafusion and L'il Critters gummy vitamins), Orange Glo International (OxiClean, Kaboom and OrangeGlo), Del Pharmaceuticals (Orajel), Simply Saline nasal saline solution, Toothtunes, Batiste dry shampoo (UK) and Feline Pine cat litter. Divestitures include: Del Minor Products (Gentle Naturals, Dermarest, Boileze, Pronto, Stye, Auro), Lambert-Kay Pet Products Division, Brillo and Specialty Products JV in the UK. Mr. Buchert is a Board Member for the Armand Specialty Chemical JV.
Mr. Ellis is a partner in Proskauer Rose LLP’s Corporate Department. He is a general corporate lawyer with a focus on public and private mergers and acquisitions and securities. He has participated in multiple buy- and sell-side representations in a variety of transaction structures, including tender offers, stock and asset purchases and sales, mergers and joint ventures. Mr. Ellis has represented public companies in their ongoing corporate and securities law matters, including providing advice on corporate governance matters and drafting various types of documents required to be filed under the Securities Exchange Act of 1934, such as periodic reports and proxy statements. Clients he regularly represents include Bed Bath & Beyond Inc., Henry Schein, Inc. and Ascena Retail Group, Inc.
Determining how antitrust risk is shared can be critical in negotiations of a merger agreement. Many tools are commonplace for addressing antitrust risk. Because provisions may determine who takes on the cost of the failed deal, they must be drafted with care.
Efforts clauses govern what the parties have agreed to do to obtain antitrust clearance for the transaction. Clauses typically include a "best efforts," "reasonable best efforts" or "commercially reasonable best efforts" provision, or, where the buyer is obligated to undertake any actions necessary to gain antitrust clearance, a "hell-or-highwater" provision.
Extended investigations can impact financing and the ongoing business of the parties. End-date provisions put a limit on how long the parties must pursue approval, but which party has the right to terminate at the end of a prescribed period, and on what basis, must be negotiated. Reverse termination fees--where a buyer agrees to pay the seller a fixed fee if the deal terminates because of the failure to obtain antitrust approvals--can also come into play.
A buyer will typically want full control and final decisionmaking authority to the extent the buyer is assuming all or substantial antitrust risk. Where the risk is more evenly shared, parties typically agree to share control of the antitrust strategy. In each case, parties will usually agree to work cooperatively towards the end goal of securing antitrust clearance. Material adverse effect thresholds may be employed to limit the level of divestitures a buyer is required to make to gain antitrust clearance.
Listen as our authoritative panel discusses the provisions used in M&A agreements to allocate antitrust risk between the parties, and some recent cases ruling on the enforceability of these provisions.
- How antitrust issues can derail an M&A transaction
- Efforts clauses
- End dates and break or termination fees
- Material adverse effect/change (MAC) clauses
- Control of investigation strategy
- Cooperation provisions, clean teams, joint defense agreements
The panel will review these and other noteworthy topics:
- What antitrust risks should be addressed in a merger agreement?
- How should the parties determine the level of "efforts" each is obligated to exercise to gain antitrust approval?
- How are end date provisions and termination fees used to allocate risk?
- What factors should be considered in deciding who should control the antitrust investigation strategy?
- What level of cooperation should be required, and when is joint defense agreeement appropriate?
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