Tag: Mergers & acquisitions


Top M&A Developments and Trends for 2016

Barbara L. Borden is a partner in the business department and head of the Mergers & Acquisitions practice at Cooley LLP. This post is based on a Cooley publication by Ms. Borden, Jamie LeighCraig MendenAl Browne, and Mutya Harsch.

2015 witnessed an all-time high in M&A deal value at over $5 trillion, according to Dealogic. The high volume was primarily attributable to strategic megadeals that used stock as full or partial consideration, with healthcare and technology as the two most targeted industries.

In 2016, we continue to expect to see heavy M&A volume in healthcare with similar drivers. Big pharma will likely continue to try to fill product pipelines as high-revenue drugs go off patent (they seem to favor orphan, specialty and cancer drugs for hard to cure indications or for patient populations that are refractory to first line therapy). Specialty pharma may continue to compete for approved drugs that are underperforming where commercial execution can be improved. And development-stage life science companies will continue to consider M&A among its strategic alternatives in light of the challenges involved with transitioning from a development-stage company to a commercial drug company. Inverted pharma companies are likely to continue to use tax rate differences to create synergies that drive acquisitions.

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Mergers and Acquisitions—2016

Andrew R. Brownstein is a partner in the corporate group at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton memorandum.

2015 was a record year for M&A. Global M&A volume hit an all-time high of over $5 trillion, surpassing the previous record of $4.6 trillion set in 2007. U.S. M&A made up nearly 50% of the total. The “mega-deal” made a big comeback, with a record 69 deals over $10 billion, and 10 deals over $50 billion, including two of the largest on record: Pfizer’s $160 billion agreement to acquire Allergan and Anheuser-Busch InBev’s $117 billion bid for SABMiller. Cross-border M&A reached $1.56 trillion in 2015, the second highest volume ever.

A number of factors provided directors and officers with confidence to pursue large, and frequently transformative, merger transactions in 2015. The economic outlook had become more stable, particularly in the United States. Many companies had trimmed costs in the years following the financial crisis, but still faced challenges generating organic revenue growth. M&A offered a powerful lever for value creation through synergies. In a number of cases, the price of a buyer’s stock rose on announcement of an acquisition, as investors rewarded transactions with strong commercial logic, bucking historical trends. Equity prices in 2015 were strong, if flat, providing companies with valuable acquisition currency. For at least the first half of the year, strong appetite from debt investors (particularly for quality credits) and low interest rates enabled acquirors to obtain financing on attractive terms.

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Securities Class Action Filings: 2015 Year in Review

John Gould is senior vice president at Cornerstone Research. This post is based on a Cornerstone Research report. The complete publication is available here.

Number and Size of Filings

  • Plaintiffs filed 189 new federal class action securities cases (filings) in 2015—the most since 2008, and an 11 percent increase compared with 2014. The number of filings in 2015 was in line with the average number of filings observed annually between 1997 and 2014.
  • The total Disclosure Dollar Loss (DDL) of cases filed in 2015 jumped to $106 billion from $57 billion in 2014—an 86 percent increase. DDL remained below its historical average of $121 billion.
  • The total Maximum Dollar Loss (MDL) increased by 73 percent—from $215 billion in 2014 to $371 billion in 2015. MDL was approximately 61 percent of the historical average of $607 billion.
  • The number of mega filings in 2015 increased substantially from 2014. There were five mega DDL cases (those with a DDL of at least $5 billion) and eight mega MDL cases (those with an MDL of at least $10 billion)—compared to zero and two in 2014, respectively.

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2015 Year-End Activism Update

Barbara L. Becker is partner and co-chair of the Mergers and Acquisitions Practice Group at Gibson, Dunn & Crutcher LLP, and Eduardo Gallardo is a partner focusing on mergers and acquisitions, also at Gibson Dunn. The following post is based on a Gibson Dunn M&A Client Alert. The full publication, including charts and survey of settlement agreements, is available here.

This post provides an update on shareholder activism activity involving domestically traded public companies with market capitalizations above $1 billion during the second half of 2015, together with a look back at shareholder activism throughout 2015. While many pundits have suggested shareholder activism peaked in 2015, shareholder activism continues to be a major factor in the marketplace, involving companies of all sizes and activists new and old. Activist funds managed approximately $122 billion as of September 30, 2015 (vs. approximately $32 billion as at December 31, 2008). [1] In 2015 as compared to 2014, we saw a significant uptick in the total number of public activist actions (94 vs. 64), involving both a higher number of companies targeted (80 vs. 59) and a higher number of activist investors (56 vs. 34). [2]

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2015 Year-End Securities Litigation Update

Jonathan C. Dickey is partner and Co-Chair of the National Securities Litigation Practice Group at Gibson, Dunn & Crutcher LLP. This post is based on a Gibson Dunn publication.

The year was yet another eventful one in securities litigation, from the Supreme Court’s game-changing opinion in Omnicare regarding liability for opinion statements, to several significant opinions out of the Delaware courts regarding, among other things, financial advisor liability and the apparent end to disclosure-only settlements. This post highlights what you most need to know in securities litigation developments and trends for the last half of 2015:

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Chancery Court on Disclosure-Only Settlements

Jason M. Halper is a partner in the Securities Litigation & Regulatory Enforcement Practice Group at Orrick, Herrington & Sutcliffe LLP. This post is based on an Orrick publication by Mr. Halper, Peter J. Rooney, and Gregory Beaman. This post is part of the Delaware law series; links to other posts in the series are available here.

It’s a familiar story in M&A transactions. A merger is announced and, within days, the plaintiffs’ bar scrambles to file suits on behalf of the selling company’s stockholders, alleging that the seller’s board agreed to an inadequate price and made misleading disclosures about the deal. After going through “the motions”—the plaintiffs file a motion for preliminary injunction and the defendants produce certain agreed-upon documents—a settlement is reached whereby the plaintiffs give defendants a broad release in exchange for (often immaterial and unhelpful) supplemental disclosures and the defendants’ agreement to pay (and not to oppose court approval of) a “six-figure” fee award to plaintiffs’ counsel. According to the Trulia Court, the result is tantamount to a deal “tax” on M&A transactions.

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M&A at a Glance: 2015 Year-End Roundup

Ariel J. Deckelbaum is a partner and deputy chair of the Corporate Department at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on a Paul Weiss client memorandum by Mr. Deckelbaum. The complete publication, including figures, is available here.

Continuing the upward trend started in 2013, 2015 was a record-breaking year for M&A activity. Almost every measure tracked in our Year-End Roundup increased sharply both globally and in the U.S.

Globally, overall deal volume as measured by total deal value was $4,741 billion, which is 63.7% greater than in 2014 ($3,506 billion), and 83% greater than in 2013 ($2,591 billion). In the U.S., overall deal volume was $2,285 billion, which is 56% greater than in 2014 ($1,465 billion), and 133.4% greater than in 2013 ($979 billion). Strategic deal volume in 2015 increased from 2014 by 41.8% globally (from $2,620 billion to $3,715 billion), and by 63.9% in the U.S (from $1,040 billion to $1,705 billion). As a result of this growth, the ratio of strategic to sponsor-related deal volume in the U.S. increased from approximately 2:1 in both 2013 and 2014 to approximately 3:1 in 2015. (Figure 1 of the complete publication, available here). Average deal value in the U.S. was 12.1% higher in 2015 than in 2014. The average value of the ten largest “megadeals” in 2015 was approximately $44 billion, which is consistent with 2014, but more than 160% greater than the average value in 2013. (Figure 2.)
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Inversions: Recent Developments

Peter J. Connors is a tax partner at Orrick, Herrington & Sutcliffe LLP. Jason M. Halper is a partner in the Securities Litigation & Regulatory Enforcement Practice Group. This post is based on an article authored by Mr. Connors and Mr. Halper, that was previously published in Law360.

In October 2015, press reports began appearing suggesting that Pfizer Inc., one of the world’s largest pharmaceutical companies, and Allergan, an Irish publicly traded pharmaceutical company, were considering entering into the largest inversion in history. Within weeks, the IRS launched its latest missive against inversion transactions. It also put the tax community on notice that more regulatory activity was yet to come.

Companies invert primarily because of perceived disadvantages associated with the U.S. corporate tax system, which has one of the world’s highest tax rates and levies taxes on worldwide income, including income earned by foreign subsidiaries (generally referred to as “controlled foreign corporations”) when repatriated and, at times, prior to repatriation. In its broadest terms, an inversion is the acquisition of substantially all the assets of a U.S. corporation or partnership by a foreign corporation. If a transaction triggers Internal Revenue Code Section 7874, the post-transaction foreign corporation will be treated as a U.S. corporation, and gain that is otherwise recognized on the transaction will not be offset by tax attributes of the U.S. entity, such as net operating losses (NOLs).

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Negotiation in Good Faith—SIGA v. PharmAthene

Philip Richter is a partner and Co-Head of the Mergers & Acquisitions Practice at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank publication by Mr. Richter, Peter Simmons, and Gail Weinstein. This post is part of the Delaware law series; links to other posts in the series are available here.

The Delaware Supreme Court’s decision in SIGA Technologies Inc. v. PharmAthene Inc. (Dec. 23, 2015) has increased the risk associated with entering into a “preliminary agreement”—i.e., an agreement to negotiate in good faith a definitive agreement based on, for example, a term sheet or letter of intent, where some material terms have been set forth and others remain to be negotiated.

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Delaware Court Guidance on Merger Litigation Settlements

Theodore N. Mirvis is a partner in the Litigation Department at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton publication by Mr. Mirvis, William Savitt, and Ryan A. McLeod. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

In an opinion last week, the Delaware Court of Chancery rejected a disclosure-only settlement of a putative stockholder class-action lawsuit challenging a merger. In re Trulia, Inc. Stockholder Litig., C.A. No. 10020-CB (Del. Ch. Jan. 22, 2016). Continuing and perhaps completing its recent reevaluation of merger litigation settlement practice, the Court made clear that it “will be increasingly vigilant in scrutinizing” such settlements in the future and that disclosure claims should be litigated (if at all) outside the settlement context.

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