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7/23/2019 m&a Legal and Regulatory Framework Fall 2015 n
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LECTURE NOTES
THE LEGAL / REGULATORY FRAMEWORK
HARVEY PONIACHEK, Ph.D.
MERGERS & ACQUISITIONS
SPRING 2015
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THE LEGAL / REGULATORY FRAMEWORK
THE M&A LEGAL ENVIRONMENT IS COMPLEX, IT EVOLVED
OVER EXTENDED TIME PERIODS AT DIFFERENT LEVELS
OF GOVERNMENT, AND ITS DESIGNED TO ACHIEVE
VARIOUS OBJECTIVES THE SECURITIES ACT OF 1933--REGULATES THE SALE OF
SECURITIES TO THE PUBLIC, AND REQUIRES
REGISTRATION OF PUBLIC OFFERINGS
THE SECURITIES EXCHANGE ACT OF 1934 ESTABLISHED
THE SECTO ADMINISTER THE SECURITIES LAS AND TOREGULATE SECURITIES PRACTICES
WILLIAMS ACT OF 1968 !AS AMENDED IN 19"#$
REGULATES TENDER OFFERS
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LEGAL / REGULATORY FRAMEWORKCONT.
ANTITRUST REGULATIONS--SHERMAN ACT180, CLAYTON ACT 11!, "EDERAL TRADECOMMISSION #FTC$ 11!,CELLER-KE"AUVERACT 150, HART-SCOTT-RODINO #HSR$ ACTO" 1% #AMENDED IN 2001$
STATE CORPORATION LA'S, ANTITAKEOVER LA'S, ANTITRUST LA'S
CORPORATE CHARTER, AND CORPORATE (Y-LA'S
CORPORATE GOVERNANCE
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WILLIAMS ACT--TENDER OFFER REGULATIONS
) REGULATES TENDER O""ERS *(UT'HAT IS A TENDER O""ER+ THERE ARE VARIOUSDE"INITIONS THAT COURTS HAVE ESTA(LISHED
) PROVIDES PROCEDURES &DISCLOSURE REQUIREMENTS "ORACQUISITIONS
) PROVIDES SH 'ITH TIME TO DECIDE'HETHER TO TENDER THEIRSHARES
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'ILLIAMS ACTCONT.) SEC 1/ D--REGULATES SU(STANTIAL SHARE
ACQUISITIONS, 'HETHER PU(LIC OR PRIVATE
5 O'NERSHIP REQUIRES "ILING A SCHEDULE 1/
D 'ITH THE SEC 'ITHIN 10 DAYSTHUS
PROVIDING SH AND MANAGEMENT 'ITH AN
EARLY 'ARNING SYSTEM
) SEC 1! D-- REGULATES #SMALL AND LARGE$
PU(LIC TENDER O""ERS AND REQUIRESDISCLOSURE (Y "ILING SCHEDULE 1! D 'ITH
THE ESC 'ITHIN 5 DAYS O" AN ANNOUNCEMENT
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'ILLIAMS ACTCONT.) SEC 1! DTHE TARGET MUST REPLY
'ITHIN 10 DAYS(Y RECOMMENDINGACCEPTANCE, REECTION, OR NO POSITION
) A TENDER O""ER IS OPEN "OR 20 DAYSAND THE ACQUIRER MUST PURCHASESHARES ON A PRO RATA(ASIS AND PERTHE (EST PRICE RULE
) T'O TIERED TENDER O""ER--EACHSU(ECT TO THE 20 DAY 'AITING PERIOD
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%SECURITIES LA'S IMPLICATIONS ON
TRANSACTIONS
) "RIENDLY MERGER-- CASH "OR STOCK ACQUIRER NEEDSTO ISSUE A PRO3Y STATEMENT TO THE SEC "OR APPROVAL,AND "OR'ARD IT TO TARGET SH, INCLUDING A VOTINGSHEET THAT SH COMPLETE AND RETURN TO THE PRO3Y
SERVICE COMPANY SH COULD VOTE ON THE O""ER EITHERTHROUGH PRO3Y VOTES OR IN PERSON AT A SHAREHOLDERSMEETING *MOST SH VOTE THROUGH PRO3Y
) "RIENDLY MERGER-- STOCK "OR STOCK--ACQUIRER 'HOPLANS ON ISSUING NE' SHARES "ILES 'ITH THE SEC AREGISTRATION "ORM AND PRO3Y STATEMENT *THESE "ORMSARE USUALLY COM(INED AS 'E NOTED IN THE CASE O" CA-STERLING AND INTEL-LEVEL ONE, SHAREHOLDERS O"TARGET VOTE ON THE O""ER VIA PRO3IES OR AT A SHMEETING
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SECURITIES LA'S IMPLICATIONS ON
TRANSACTIONSCONT.
) HOSTILE TAKEOVER USING CASH "OR STOCK--TENDER O""ER IS SU(ECT TO THE 'ILLIAMSACT 5 ACQUISITION "ILING 'ITHIN 5 DAYS 20
'ORKING DAYS (IDDER ISSUES A PROSPECTUSTO SH SOLICITING THEIR SHARES #'ITHOUTO(TAINING SEC COMMENTS DUE TO TIMECONSTRAINT
) HOSTILE STOCK "OR STOCK TENDERREQUIRESSEC STOCK REGISTRATION 'HICH NEEDS TO (EAPPROVED, AND THEN THE E3CHANGE O""ER ISDISSEMINATED TO SH
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HIGHLIGHTS OF
FEDERAL ANTITRUST REGULATIONS) SHERMAN ANTITRUST ACT 180
) CLAYTON ACT--"URTHER DE"INITION O" ANTITRUST
) "EDERAL TRADE COMMISSION #FTC$ 11!RE EN"ORCEMENTO" THE CLAYTON ACT
) CELLER-KE"AUVER ACT O" 150AMENDED AND REIN"ORCEDTHE CLAYTON ACTS
) HART-SCOTT-RODINO #HSR$ ACT O" 1%--PRE MERGERNOTI"ICATION TO DO & "TC
) DO LA' SUITS, "TC--ADMIN LA' UDGE, COMMISSION
REVIE', "EDERAL APPEAL COURT) 12 DO & "TC MERGER GUIDELINES--QUALITATIVE &
QUANTITATIVE, 5 STEP PROCESS, INCLUDING4 HER"INDAHL-HIRSCHMAN INDE3 #HHI$, 5 PRICE E""ECT
) NE' APPROACHESAPPLIED IN 1%
10
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1%
ANTITRUST IN THE EU
) THE PROPOSED ACQUISITION O"
HONEY'ELL (Y GE
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STATE ANTI TAKEOVER LA'S) THE INDIANA ACT'AS DEEMED
CONSTITUTIONAL (Y THE SUPREME COURT IN18%STIPULATES THAT THE TRANS"ER O"
VOTING RIGHTS TO A (IDDER IN A TENDER O""ERIS SU(ECT TO APPROVAL (Y A MAORITY SH,E3CLUDING THE (IDDER AND INSIDERDIRECTORS AND MANAGEMENT
) NE' YORK AND NE' ERSEY LA'S APPLY A "IVE-YEAR MORATORIUM PREVENTING HOSTILE(IDDERS "ROM DOING A SECOND STEPTRANSACTION
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STATE ANTI TAKEOVERCONT.) THE 'ISCONSIN ANTI TAKEOVER LA'--REQUIRES
THE (IDDER 'ITH 10 OR MORE O" THE TARGETSHARES TO O(TAIN APPROVAL "ROM OTHER
SHAREHOLDERS TO PROCEED 'ITH THEMERGER, OR 'AIT / YEARS TO COMPLETE THETRANSACTION
) PENNSYLVANIA HAS THE STRONGEST ANTITAKEOVER LA' IN THE U.S. THAT 'AS PASSED IN10. IT RESTRICTS THE VOTING RIGHTS O" ANYGROUP OR INVESTOR THAT PURCHASES 20 ORMORE O" A TARGETS SHARES
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STATE ANTI TAKEOVERCONT.) DELAWAREIS HOME TO 5 O" "ORTUNE 500, 180,000 COS,
AND 20 O" STATE (UDGET IS DERIVED "ROM
REGISTRATION "EES. THERE"ORE, THE STATE DEVELOPED
E3PERTISE TO SERVICE THESE "IRMS AND ITS
CORPORATION LA'S HAVE (ECOME THE (ENCHMARK "OR
OTHERS
) THE DELA'ARE ANTITRUST LA'AN UN'ANTED (IDDER
#HOSTILE (IDDER$ 'HO ACQUIRES MORE THAN 15 O" THE
TARGET MAY HAVE TO 'AIT / YEARS, UNLESS SEVERAL
OTHER CONDITIONS ARE SATIS"IED #ACQUIRES 85
OUTSTANDING SHARES, O" SHAREHOLDERS APPROVE
THE ACQUISITION, THE (OARD AND SHAREHOLDERS 'AVE
THE ANTI TAKEOVER LA'$
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STATE ANTITRUST LA'S) STATE ANTITRUST REGULATIONS'HICH ARE
INCONSISTENT'ERE "IRST DEVELOPED IN THE
10S AND 1%0S, EMERGED IN RESPONSE TO
PRESSURE TO PROTECT HOME COS UNDERTAKEOVER THREATS
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CORPORATE GOVERNANCE AND M&A
) ADDRESSED IN SEPARATE CLASS NOTES UNDER CORPORATE
GOVERNANCE & M&A