Paul J. Shim, David I. Gelfand, and Mark E. McDonald are partners at Cleary Gottlieb Steen & Hamilton LLP. This post is based on their Cleary memorandum and is part of the Delaware law series; links to other posts in the series are available here. Related research from the Program on Corporate Governance includes Allocating Risk Through Contract: Evidence from M&A and Policy Implications (discussed on the Forum here) and M&A Contracts: Purposes, Types, Regulation, and Patterns of Practice, both by John C. Coates, IV.
[On March 14, 2019], the Delaware Court of Chancery found that a target company in an agreed merger properly terminated the merger agreement following the passage of the specified “end date” where the buyer failed to exercise its right under the agreement to extend the end date. See Vintage Rodeo Parent, LLC v. Rent-a-Center, Inc., C.A. No. 2018-0927-SG (Del. Ch. Mar. 14, 2019). The decision is a stark reminder that courts will enforce the terms of a merger agreement as written, and that the failure to comply with seemingly ministerial formalities can have severe consequences.
Background
Vintage Capital Management, LLC and its affiliates (collectively, “Vintage”) entered into a merger agreement to acquire Rent-a-Center, Inc. (“Rent-a-Center”). As is customary, the merger agreement provided that if the merger were not consummated on or before a prescribed “end date,” either party would have the unilateral right to terminate the merger agreement. The parties agreed that the end date would occur six months from the signing date.
Comment Letter on Earnings Releases and Quarterly Reports
More from: Jeffrey Mahoney, Council of Institutional Investors
Jeff Mahoney is General Counsel of the Council of Institutional Investors. This post is based on a comment letter from CII to the U.S. Securities and Exchange Commission.
I am writing in response to the Securities and Exchange Commission’s (SEC or Commission) request for comment on earnings releases and quarterly reports (RFC).
The Council of Institutional Investors (CII) is a nonprofit, nonpartisan association of public, corporate and union employee benefit funds, other employee benefit plans, state and local entities charged with investing public assets, and foundations and endowments with combined assets under management of approximately $4 trillion. Our member funds include major long-term shareowners with a duty to protect the retirement savings of millions of workers and their
families. Our associate members include a range of asset managers with more than $35 trillion in assets under management.
Quarterly Reports
CII believes that investors, companies, and other market participants benefit from the current reporting frequency model, which requires from domestic issuers filing quarterly reports on Form 10–Q. In our view, the requirement to report historical earnings on a quarterly basis is a key element of the timely and accurate information flow that underpins the quality and efficiency of our capital markets. The requirement helps ensure that important information is promptly and transparently provided to the marketplace allowing investors to assess concrete progress against strategic goals.
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