October 2010

Here’s the Davis Polk newsflash on two recent Delaware rulings validating the widespread use of top-up options, so long as the top-up is excluded from the calculation of value for appraisals and is otherwise properly drafted.  When regulatory approvals and other closing conditions are expected to require less than two to three months, tender offers provide speed of execution advantages over one-step mergers.  The top-up option guarantees the ability to close the squeeze-out merger simultaneously with the tender offer closing which provides significant benefits.  In deals (like GTCR’s acquisition of Protection One earlier this year) where the top-up option does not require any increase in the minimum tender condition, there is also the possibility of more attractive financing commitments due to their shorter duration.

Contact Phillip Mills.  

The SEC has stayed implementation of its newly-adopted proxy access rules, including the amendments to Rule 14a-8, pending resolution of a legal challenge to the rule brought by the Business Roundtable and the US Chamber of Commerce.  These controversial rules will likely not be applicable before the 2012 proxy season, at the earliest. Click here to view the SEC order.

Contact Phillip Mills.