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March 2, 2009 |
Where Have All the Deals Gone?

Orange County partner John M. Williams III and associate Theodore Kim are the authors of "Where Have All the Deals Gone?" [PDF] published in the March 2009 issue of the Orange County Business Journal.

November 18, 2008 |
Department of the Treasury Releases Final Regulations Governing the Committee on Foreign Investment in the United States (“CFIUS”)

On November 14, 2008, the U.S. Department of the Treasury, on behalf of the Committee on Foreign Investment in the United States, issued final regulations governing CFIUS.  This follows Treasury's issuance of proposed regulations on April 21, 2008.  The period for public comment ended on June 9, 2008.

Background

The final regulations implement Section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 ("FINSA").  Section 721, as amended by FINSA, authorizes the President to suspend or prohibit transactions, by or with any foreign person, that may result in control of a U.S. business by a foreign person ("covered transactions") and that threaten to impair national security.  Covered transactions are reviewed by CFIUS, an interagency body created by executive order and chaired by the Secretary of the Treasury.  CFIUS includes representatives from a number of U.S. Government departments and agencies, including, but not limited to, Treasury, Homeland Security, State, Defense, Commerce, Justice, Energy, Labor, the U.S. Trade Representative, the Director of the Office of Science and Technology Policy and intelligence agencies under the coordination of the Director of National Intelligence.

FINSA anticipates that, for each transaction before CFIUS, the Department of the Treasury will appoint a lead agency.  The lead agency, acting on CFIUS's behalf, may negotiate, enter into, and enforce mitigation agreements or conditions with parties to covered transactions that pose a threat to national security.

The Final Regulations

The final regulations, which make some significant changes to the proposed and current regulations, retain many of the basic features of the current regulations, which have been in effect since 1991.  The final regulations continue to be based on voluntary notices to CFIUS by parties to covered transactions, although CFIUS is authorized to review transactions that have not been voluntarily notified.  One of the principal new developments regarding the procedures for filing notices with CFIUS is that the final regulations make explicit CFIUS's current practice of encouraging parties to contact and engage with CFIUS prior to making a formal filing.  Pre-filing consultations are important because they provide CFIUS an opportunity to aid parties in preparing notices and to ensure efficient reviews.

The information required in a voluntary notice has been formally expanded to incorporate requirements to provide information that CFIUS now routinely seeks from notifying parties.  For instance, the final regulations require parties submitting a voluntary notice to provide personal identifier information, which CFIUS uses to examine the backgrounds of members of the boards of directors and senior company officials of entities in the ownership chain of foreign acquirers.  The final regulations also require a notifying party to provide information regarding the ultimate and intermediate parents of the foreign person making the acquisition and other persons with a role in the transaction.  Under the final regulations, each party to a notified transaction must certify the accuracy and completeness of its voluntary notice as to information about the party making the certification, the transaction, and all follow-up information.  A voluntary notice will not be deemed complete without this certification from the notifying party.

The procedure for CFIUS reviews and investigations remains similar to those that were in place under the old regulatory scheme.  Many changes are definitional.  The impact of these changes, however, cannot be understated.  For example, the final regulations authorize CFIUS to review any "merger, acquisition, or takeover," § 800.224, "by or with any foreign person, which could result in control of a U.S. business by a foreign person," § 800.207, to determine its potential impact on national security.  "Control" is defined as the "power, direct or indirect, whether or not exercised, through the ownership of a majority or a dominant minority of the total outstanding voting interest in an entity, board representation, proxy voting, a special share, contractual arrangements, formal or informal arrangements to act in concert, or other means, to determine, direct, or decide important matters affecting an entity[.]"  § 800.204(a).  This broad definition, which eschews any bright-line test, has the potential to encompass a wide-range of transactions and creates potential unpredictability for foreign entities interested in investing in U.S. companies.

The final regulations also provide new definitions for the parties to covered transactions.  For instance, a "foreign person" is "[a]ny foreign national, foreign government, or foreign entity" or "[a]ny entity over which control is exercised or exercisable by a foreign national, foreign government, or foreign entity."  § 800.216.  A "U.S. business" is defined as "any entity, irrespective of the nationality of the person that controls it, engaged in interstate commerce in the United States, but only to the extent of its activities in interstate commerce."  § 800.226.  Under the new definitions, it is possible for a party to be both a "foreign person" and a "U.S. business."

The final regulations amend the proposed text of § 800.601 to delete the description of circumstances in which CFIUS may reopen a review of a covered transaction on which CFIUS previously had concluded all action.  Pursuant to Executive Order 11858 of May 7, 1975, which was amended by Executive Order 13456 on January 23, 2008, CFIUS may reopen a review of a covered transaction on which CFIUS previously had concluded all action only in the extraordinary circumstances authorized under Section 721 of the Defense Production Act of 1950.  These circumstances include when a party has submitted false or misleading material information to CFIUS, omitted material information from CFIUS, or intentionally materially breached a mitigation agreement.

FINSA continues to govern CFIUS's reporting to Congress.  FINSA requires that a senior-level official of the Department of the Treasury and of the lead agency certify to Congress, for all covered transactions on which CFIUS has concluded action under Section 721, that CFIUS has concluded that there are no unresolved national security concerns.  FINSA also requires that CFIUS provide Congress with annual reports on its work, including a list of the transactions it has reviewed or investigated in the preceding year, analysis related to foreign direct investment and critical technologies, and a report on foreign direct investment from certain countries.

The finalized regulations will become effective thirty days after their publication in the Federal Register.  § 800.210.  Guidance regarding the types of transactions that CFIUS has reviewed and that have presented national security concerns will be published soon in the Federal Register.

 Gibson, Dunn & Crutcher LLP

Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work, or any of the following:

International Trade Regulation and Compliance Practice Group
Daniel J. Plaine (202-955-8286, dplaine@gibsondunn.com)
Judith A. Lee (202-887-3591, jalee@gibsondunn.com)
Jim Slear (202-955-8578, jslear@gibsondunn.com)
Andrea Farr (202-955-8680, afarr@gibsondunn.com)
Patrick F. Speice, Jr. (202-887-3776, pspeicejr@gibsondunn.com)
Dave M.Wharwood (202-887-3579, dwharwood@gibsondunn.com)

Public Policy Practice Group
Mel Levine (310-557-8098, mlevine@gibsondunn.com)
Alan Platt (202-887-3660, aplatt@gibsondunn.com

Government and Commercial Contracts Practice Group
Joseph D. West (202-955-8658, jwest@gibsondunn.com)
Christyne K. Brennan (202-955-8685, cbrennan@gibsondunn.com)

© 2008 Gibson, Dunn & Crutcher LLP

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

September 19, 2008 |
Top Washington Lawyers – Corporate M&A

Washington, D.C. partner Stephanie Tsacoumis was featured in "Top Washington Lawyers - Corporate M&A" [PDF] published in the September 19-25, 2008 issue of Washington Business Journal.

July 22, 2008 |
The “Risk Limitation Act” – New Rules for Investors in German Listed Companies

A few days ago, the German legislature adopted the Risk Limitation Act (Risikobegrenzungsgesetz, the "Act") aimed at the limitation of perceived risks deriving from financial investors. Following the notorious "locust debate" in Germany, the new law is the result of the still ongoing discussions about the impact of foreign hedge funds and private equity investors. It provides for a number of amendments to securities law and corporate law applicable to domestic and international investors in public companies. The Act is scheduled to be formally announced later this summer or fall.

Acting in Concert

The Act will modify the existing rules on "acting in concert", i.e., the rules under which the shareholdings of investors forming a "group" must be aggregated. This is relevant in two areas, namely (i) the reporting thresholds for shareholdings in German listed companies and (ii) the rules on public offers:

  • Regarding the former, an investor reaching, exceeding or falling short of 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75% of the voting rights attached to shares must notify the company and the German financial supervisory authority within four trading days at the latest. Otherwise the shareholder's rights are suspended and it can be fined. The company is required to publish such notification within three trading days.
  • The rules on public offers also refer to an important threshold: An investor holding less than 30% of the voting rights must launch a public takeover offer once it decides to acquire (additional) shares aimed at reaching or exceeding the 30% threshold. An investor who reaches the 30% threshold other than in the course of a takeover offer must launch a mandatory public offer to acquire all outstanding shares in the target.

When several shareholders are found to be "acting in concert", their shareholdings are mutually attributed; therefore, each of them is subject to notification and offer duties if the aggregate of their shareholdings reaches, exceeds or falls short of one of the above thresholds. Until now, the Federal Supreme Court held that only investors who coordinate their voting within the general meetings of the company were acting in concert.

The Act will broaden the scope of the rules on acting in concert. The new rules will also apply to cooperating in a way that aims at a steady and substantial change of the strategic orientation (unternehmerische Ausrichtung) of the company. Thus, the scope of application will no longer be limited to coordination with regard to the exercise of voting rights, but will also include cooperation on the level of the supervisory board or even outside any corporate bodies, provided that the investors concerned intend to steadily and substantially change the business of the company. Fortunately, the German legislature abstained from further extensions of the rules: Pursuant to initial draft bills of the Act, the mere cooperation of investors with respect to the acquisition of shares would have been considered acting in concert, too. What is more, it would have been sufficient if the coordination referred to an individual case or had an either steady or substantial influence on the business of the company. The German legislature changed its opinion after harsh criticism from legal scholars and international investors.

As a result, the impact of the changes will be limited. For example, investors will generally still be able to initiate public takeovers by agreeing on standstill agreements with shareholders or accepting irrevocable undertakings from them. Until German courts begin to interpret the new rules, however, there will be legal uncertainty for some time about what shareholders may agree on regarding the business and strategy of the company without triggering a mutual attribution of voting rights.

Aggregation of Voting Shares and other Securities giving the Right to Acquire Shares

Holders of marketable securities giving the right to acquire voting shares (e.g., marketable call options) have similar notification duties if their securities refer to a shareholding which reaches, exceeds or falls short of the above thresholds (except for the 3% threshold). Under the current rules, the positions in voting shares and other financial instruments are not aggregated. Presently, an investor who acquires (i) up to 2.99% of voting shares of the company and (ii) other securities giving the right to acquire up to 4.99% of the voting shares does not need to make any notification.

The Act provides for the aggregation of these two positions with the effect that in the above example, the investor will be obligated to report the excess of the 3% and the 5% threshold. Nonetheless, the 3% threshold will still be irrelevant for an investor who only holds marketable securities other than voting shares.

Extension of Sanctions in Case of Violation of Notification Duties

In the past, non-compliance with the aforementioned notification requirements, apart from the risk of administrative fines, has only led to a suspension of the shareholder rights (in particular, voting rights and rights to dividends) until the missing or wrongful notification was made or corrected. Hence, verifying compliance with the notification duties immediately prior to a general meeting was sufficient to avoid any impact on these rights. Under the Act, the suspension of shareholder rights would only be lifted six months after the late or corrected notification, provided the violation (i) was due to gross negligence or intent and (ii) reached a certain degree of non-compliance: If the investor did not completely fail to make a required notification and the deviation of the notified shareholding from the actual shareholding was less than 10% of the actual shareholding, the six months period will not apply.

New Disclosure Duties Relating to Significant Shareholdings

Further, the Act will implement new disclosure duties for investors holding at least 10% of the voting rights in a German listed company. Such significant shareholders will be required to disclose to the company their intentions with respect to the shares and the origin of the funds used to purchase the shares. These duties (as well as the existing notification duties) will not only apply to direct shareholders but also to investors to which the shares of third parties are attributed due to certain circumstances. Examples of such attribution are: (i) controlling influence over the direct shareholder, (ii) holding shares of a third party in trust without further instructions of the third party with regard to the exercise of voting rights, and (iii) acting in concert (see above). The new disclosure duties also apply to investors who already hold 10% or more of the voting rights in a German listed company once they reach or exceed another threshold.

These significant shareholders will be required to disclose their intentions with respect to the shares and the origin of the funds within 20 trading days unless the articles of association of the company waive such duty. Significant shareholders must also disclose all changes to their intentions.

With regard to its intentions each requested investor will be required to disclose whether:

  • the investment aims to attain strategic goals or to achieve trading profits,
  • it plans to obtain further voting rights within the next 12 months by way of purchase or otherwise,
  • it strives for representation in corporate bodies of the company, and
  • it strives for substantial changes of the capital structure of the company, in particular with regard to the ratio of equity financing and debt financing as well as to the dividend policy.

When disclosing the origin of the funds, the investor will be obliged to indicate whether and to what extent it has used equity or debt.

The company will be required to publish (i) the information received from the investor or (ii), if applicable, non-compliance of the investor with the disclosure duties. The Act does not provide for any additional consequences in case of non-compliance and the above mentioned suspension of shareholder rights will not apply. Please note, however, that non-compliance with these duties may, under certain circumstances, violate the prohibitions on market manipulation and insider trading.

Further Amendments by the Act

The Act also stipulates that under certain circumstances, the shareholder rights attached to registered shares (Namensaktien) - irrespective of any listing - will be suspended as long as the shareholder has not yet effected its registration in the share register of the company. The registration of an agent or street holder instead of the shareholder will be subject to restrictions in the company's articles of association. Up to now, the registration of the actual shareholder has not been enforceable and the registration of an agent has not had any adverse consequences.

Moreover, pursuant to the Act, German companies - irrespective of any listing - with more than 100 employees will be obligated to notify the employees' representation (either the works council (Betriebsrat) or the economic committee (Wirtschaftsausschuss)) of a contemplated takeover offer by a third party.

Finally, the Act will increase the rights of borrowers with respect to the sale and assignment of credit portfolios by banks to investors. The German parliament included these changes following complaints from home owners who were confronted with (mostly Anglo-Saxon) distressed debt investors.

Transitional Provisions

Most provisions of the Act will enter into force immediately following the formal announcement in the Federal Gazette; the remaining provisions will become effective approximately six months after the announcement.

Contrary to initial draft bills, the Act now contains transitional provisions. Investors who would become subject to notification duties only because of the change in the law on the effective date of the Act will not need to make any notifications. The new, tightened sanctions will apply, however, if such investors have not complied with their notification duties as in effect prior to the Act becoming effective.

Gibson, Dunn & Crutcher LLP 

Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work or Philip Martinius  (+49 89 189 33-121, pmartinius@gibsondunn.com),  Jan Querfurth  (+49 89 189 33-121, jquerfurth@gibsondunn.com) or Markus Nauheim (+49 89 189 33-122, mnauheim@gibsondunn.com) in the firm's Munich office.

© 2008 Gibson, Dunn & Crutcher LLP

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

May 27, 2008 |
Recent Developments Highlight the Need to Review Advance Notice Bylaws

In the past two months, the Delaware courts have decided two cases addressing the scope of advance notice bylaws, in both cases holding that stockholders did not have to comply with the companies’ advance notice provisions in order to nominate directors.  Advance notice bylaw provisions require a stockholder who wants to propose nominations or have other business considered at a meeting of stockholders to submit information to the company about the nominations or business by a specified date prior to the meeting.  These provisions implicate the complex interaction of state corporate law and federal securities laws, serving the important objective of providing adequate notice of matters that a stockholder intends to present at a meeting so that a company and its other stockholders have a fair opportunity to evaluate all the matters to be voted upon and the company can address those matters in its own proxy statement.

In addition to the recent Delaware court decisions, a number of other significant developments highlight the need for companies to review their advance notice bylaws to assess whether they are appropriately drafted to minimize any potential ambiguity and clearly outline the processes that stockholders must follow and the information they must provide when proposing director nominations or other business.

Recent Case Law Developments Affecting Advance Notice Bylaws

On March 13, 2008, in JANA Master Fund, Ltd. v. CNET Networks, Inc.,[1] the Delaware Court of Chancery found that the advance notice provision in the bylaws of CNET Networks, Inc. applied only to matters that stockholders seek to include in company proxy statements pursuant to the Securities and Exchange Commission’s Rule 14a-8 stockholder proposal process.  The bylaw at issue contained the same timing and stock ownership requirements as Rule 14a-8, and stated that proposals had to comply with the federal securities laws establishing the requirements for proposals required to be included in the company’s proxy statement, but the bylaw was not expressly limited to proposals submitted pursuant to Rule 14a-8.  Instead of addressing whether the ownership, timing and other conditions set forth in the bylaw were enforceable, the court held that the bylaw did not apply to nominations or other business that stockholders might seek to put forth in their own proxy materials.  As a result, the Court further held that the plaintiff stockholder did not need to comply with the requirements of the advance notice bylaw in order to nominate directors or propose other business at CNET’s annual meeting.  On May 13, 2008, in a one-page memorandum decision, the Delaware Supreme Court affirmed the Court of Chancery’s decision.[2] 

In April 2008, in Levitt Corp. v. Office Depot, Inc.,[3] the Delaware Court of Chancery ruled that a stockholder of Office Depot, Inc. who failed to comply with the company’s advance notice bylaw nevertheless could nominate a short slate of two directors at the annual meeting.  Office Depot’s bylaws contained a provision stating that to be properly brought before an annual meeting, business must be specified in the company’s notice of meeting, otherwise properly brought before the meeting by or at the direction of the Board, or properly brought before the meeting by a stockholder who complied with the advance notice provisions in the bylaws.  The bylaw did not otherwise expressly address director nominations.  The Court first rejected the argument that the advance notice bylaw did not apply to director nominations because the bylaw referred only to “business” and concluded that the term “business” was sufficiently broad to encompass director nominations.  In reaching this conclusion, the Court relied in part on the language of Section 211(b) of the Delaware General Corporation Law, which states that “an annual meeting of stockholders shall be held for the election of directors” and that “[a]ny other proper business may be transacted at the annual meeting.”  However, the Court then ruled that the plaintiff stockholder did not need to comply with the advance notice bylaw because the company’s notice of meeting included with its proxy statement indicated that director elections would be an item of business at the annual meeting.  

Other Recent Developments Affecting Advance Notice Bylaws

The CNET and Office Depot decisions are but two recent developments affecting advance notice bylaw provisions.  Other recent developments include:

  • The growing frequency of hedges, short positions and other arrangements that affect a stockholder’s voting power or economic interest in a company’s shares.  Increasingly, activist stockholders, particularly hedge funds, are using economic vehicles such as cash-settled equity swaps, hedges and short positions to: (a) take large economic stakes in companies without formal voting power in order to avoid being subject to SEC beneficial ownership reporting requirements, which are based on voting and investment power; or (b) gain voting power that is disproportionately large relative to the true economic risk associated with their ownership in a company’s stock.  These actions make it difficult for a company and its stockholders to ascertain the nature and extent of a stockholder’s interest in the company when the stockholder seeks to nominate directors or propose other business.  In order to provide greater transparency about stockholder interests, some companies are beginning to address disclosure of hedges, short positions and other arrangements in their advance notice bylaws.

     
  • The interaction of notice provisions with earlier proxy distribution timeframes under the SEC’s new “e-proxy” rules.  The SEC’s new e-proxy rules provide an alternative, optional method for furnishing proxy materials to stockholders based on a “notice and access” model.  Under SEC Rule 14a-16, a company can post its proxy materials on an internet website (other than EDGAR) and provide stockholders with a plain-English notice of electronic availability of proxy materials at least 40 days in advance of the annual meeting informing them that the proxy materials are available and explaining how to access the materials.  Particularly in light of the fact that the exact date of the annual meeting can vary by a few days or weeks from year to year, companies electing to use e-proxy should set their advance notice deadlines in a manner that allows the company to receive any nominations or other business submitted under an advance notice bylaw well in advance of the 40-day deadline for distributing the notice of electronic availability of proxy materials.  If a company wishes to solicit proxies with respect to properly noticed nominations or other business submitted under an advance notice bylaw, the company must include the nominations or business in its proxy statement.  Accordingly, the advance notice deadline should allow the company sufficient time in advance of the 40-day deadline to prepare disclosure relating to the nominations or business. 

In considering the appropriate time frames for inclusion in an advance notice bylaw, companies should bear in mind that Delaware courts generally have upheld the validity of advance notice bylaws, except in egregious circumstances (for example, in situations where a company provides notice of a meeting after the advance notice deadline has already passed).  Typically, time frames range from 45 to 120 days.[4]  A different deadline, tied to the public announcement of the meeting, generally applies when a company moves its annual meeting date more than a certain number of days (typically, more than 30 days) from the anniversary of the prior year’s meeting.  In CNET, the Delaware Court of Chancery concluded that the fact that CNET’s advance notice bylaw provision tied the deadlines to the mailing date of the company’s prior-year proxy statement suggested that the bylaw was designed to govern stockholder proposals under Rule 14a-8 rather than to operate as an advance notice bylaw.  In light of this, it may be preferable for advance notice bylaws to require notice to the company by a specified deadline before the anniversary date of the prior year’s annual meeting.

  • The interaction of advance notice provisions with special meeting and majority vote provisions.  In the past few years, some companies have amended their bylaws to allow a specified percentage of stockholders (typically 20% or 25%) to call special meetings.  If a company allows stockholders to call special meetings, the company’s special meeting provisions should be clear that only the company and the stockholders requesting the meeting may propose business at the meeting. 

In addition, many companies over the past several years have adopted bylaw provisions that provide for majority voting in uncontested elections of directors, while plurality voting continues to apply in contested elections.  Majority voting bylaw provisions typically have a cut-off date for determining whether an election is contested or not.  Cut-off dates vary, with many companies using the record date or a specified number of days before the filing or printing of the proxy statement.  A company’s advance notice bylaw should include deadlines that precede, or fall on the same date as, the deadline for determining whether an election will be contested or uncontested.  That way, the company will have notice of any nominations that stockholders timely submitted through the advance notice process before the company must determine whether or not an election will be contested.

What Companies Should Do Now

Both the CNET and Office Depot cases illustrate that Delaware courts will construe ambiguous advance notice bylaws in a manner favoring stockholders’ ability to make nominations and introduce matters at an annual meeting.  Accordingly, companies should review their bylaws in light of the considerations outlined below. Specifically, companies should: 

  1. Assess whether their advance notice bylaws make clear that the advance notice bylaw process is separate from the SEC’s Rule 14a-8 stockholder proposal process.  It is unsettled whether, or to what extent, the eligibility requirements that apply under Rule 14a-8 for determining when a stockholder can require a company to include a proposal and supporting statement in its proxy statement could be applied to other proposals under an advance notice bylaw provision or whether such a bylaw provision can impose additional requirements on proposals submitted under Rule 14a-8.  In light of this uncertainty and the result in CNET, an advance notice bylaw should explicitly state that a stockholder seeking to nominate directors or propose business at a meeting must comply with the company’s advance notice bylaw, while a stockholder seeking to include business in a proxy statement prepared by the company must comply with Rule 14a-8.
  2. Assess whether their advance notice bylaws explicitly address both director nominations and other business.  In light of the result in Office Depot, companies should make sure that their advance notice bylaws expressly apply to both director nominations and other business.  Because the information that stockholders must provide about director nominations under advance notice bylaws typically differs from that required about other business, many advance notice bylaws address director nominations and other business in separate provisions that outline the information and time frames applicable to each.  The provisions should clearly state exactly what information is required to be contained in a stockholder’s notice.
  3. Consider whether it is appropriate to address the decoupling of economic risk or voting power from share ownership.  Companies should consider including provisions directed at disclosure of hedging, short positions and other similar arrangements in their advance notice bylaws so that stockholders must provide information about these arrangements in making a nomination or proposing other business through the advance notice process.  
  4. Review advance notice deadlines to assess how they interact with other bylaw provisions, including special meeting provisions and majority voting provisions.  Companies should take a holistic approach in reviewing the various deadlines included in their bylaws and assess whether these deadlines work together and are consistent.  In light of the 40-day notice requirements for e-proxy and the common allowance for meeting dates to move by up to 30 days, we expect that companies will move toward a minimum advance notice deadline that is set 70 or 75 days before the anniversary of the prior year’s meeting date.
  5. Consider adopting an advance notice bylaw that applies in the context of special meetings.  Although some companies’ advance notice bylaws apply to special as well as annual meetings, many advance notice bylaws cover only annual meetings.  Given the current environment of greater stockholder activism, and the increase in the number of companies giving stockholders the right to call special meetings, companies should consider whether their bylaws are clear that the items to voted on at special meetings that are called by stockholders are limited to the business and/or nominations specified by the stockholder who requested the company to call the special meeting and to matters proposed by the company.
  6. Review proxy disclosures about the mechanisms available for stockholders to propose director candidates and other business.  SEC rules require that companies disclose in their annual proxy statements the deadlines for submitting stockholder proposals under Rule 14a-8 and any deadlines for providing notice of director nominations and other business under advance notice bylaws.  Companies should review their disclosures about these deadlines and consider in particular whether the disclosures clearly distinguish between the advance notice process that applies to proposals submitted under Rule 14a-8 and the requirements that apply to any nominations and any other business that a stockholder wishes to present directly at an annual meeting.  To the extent that a company has adopted procedures that allow stockholders to submit director candidates for consideration by the company’s nominating/governance committee, companies should take care to see that their proxy disclosures clearly distinguish between these processes – which permit stockholders to “recommend” candidates – and the advance notice procedures, which apply when stockholders nominate candidates directly.

__________________ 

   [1]   C.A. No. 3447-CC, 2008 WL 660556 (Del. Ch. Mar. 13, 2008).

   [2]   JANA Master Fund, Ltd. v. CNET Networks, Inc C.A. No. 3447 (Del. May 13, 2008).

   [3]   C.A. No. 3622-VCN, 2008 WL 1724244 (Del. Ch. Apr. 14, 2008).

   [4]   According to sharkrepellent.net, as of April 30, 2008, approximately 60% of S&P 500 companies and approximately 47% of S&P 1500 companies used deadlines of at least 90 days. 

Gibson, Dunn & Crutcher LLP

Gibson, Dunn & Crutcher’s Securities Regulation and Corporate Governance Practice Group and its Mergers and Acquisitions Practice Group are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work, or any of the following:

John F. Olson (202-955-8522, jolson@gibsondunn.com), 
Brian J. Lane (202-887-3646, blane@gibsondunn.com), 
Ronald O. Mueller (202-955-8671, rmueller@gibsondunn.com), 
Amy L. Goodman (202-955-8653, agoodman@gibsondunn.com), 
Dennis J. Friedman
(212-351-3900, dfriedman@gibsondunn.com), 
Jonathan K. Layne
(310-552-8641, jlayne@gibsondunn.com), 
David M. Hernand
(310-552-8559, dhernand@gibsondunn.com), 
Eduardo Gallardo
(212-351-3847, egallardo@gibsondunn.com) or 
Gillian McPhee
(202-955-8230, gmcphee@gibsondunn.com). 

© 2008 Gibson, Dunn & Crutcher LLP

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

January 2, 2008 |
German Aspects of Acquisition Financing

Munich office lawyers Birgit Friedl and Marcus Geiss are the authors of  "German Aspects of Acquisition Financing" [PDF] which appears in Financial Yearbook Germany 2008.   Reprinted by permission.

December 7, 2007 |
Deal Note: Gibson Dunn Represents Apria Healthcare in Acquisition of Coram Healthcare

Gibson, Dunn & Crutcher LLP's Health Care and Life Sciences Group is pleased to announce its representation of Apria Healthcare Group Inc. in connection with its acquisition of Coram, Inc., a provider of home infusion and specialty pharmaceutical services.  The cash transaction is valued at $350 million.  The combined infusion division, to be headquartered in Denver, Colorado, will provide care for more than 100,000 patients annually in all 50 states. Gibson Dunn's team is led by Andrew Bogen, a partner in the firm's Corporate Transactions Practice Group, and Jeffrey Le Sage, a partner in the firm's Corporate Transactions and Health Care and Life Sciences Practice Groups, and includes Scott Davies, Candice Choh, Robyn Zolman, Kristin Blazewicz and Hari Raman on corporate, Jeff Hudson and Scott Jacobs on finance, Dora Arash on tax, Sean Feller on benefits, Sam Newman on bankruptcy and Sean Royall, Sandy Pfunder and Adam Di Vincenzo on antitrust. Details of this transaction are available on the Apria Healthcare website.


Gibson Dunn's Health Care and Life Sciences Group represents a broad array of companies involved in health care and the life sciences, including hospital and nursing home operators, pharmaceutical companies, medical device manufacturers, payors, and biotechnology companies, as well as investors in and advisors to such companies. Our corporate and transactional lawyers assist clients in connection with domestic and international public and private mergers and acquisitions, financings, securities offerings, corporate governance, licensing, development and distributorship arrangements, among other transactions.

For additional information on this matter, please contact the Gibson Dunn attorney with whom you work, Jeffrey Le Sage (213-229-7504, jlesage@gibsondunn.com) in Gibson Dunn's Los Angeles office, or any member of the firm's Health Care and Life Sciences Practice Group.

© 2007 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.  

December 5, 2007 |
Deal Note: Gibson Dunn’s Media & Entertainment Group Represents Vivendi in Proposed Combination of the Businesses of Vivendi Games and Activision

Gibson, Dunn & Crutcher LLP's Media & Entertainment Group is pleased to announce its representation of Vivendi in connection with the proposed combination of the businesses of Vivendi Games and Activision which will create Activision Blizzard, which will be the largest pure-play video game publisher. The transaction is valued at $18.9 billion. Upon consummation of the transaction, Vivendi will hold a 52% ownership interest in the combined business, which percentage could increase to as much as 68% depending on the results of a post-closing self-tender offer by Activision Blizzard.

The management of both companies hosted a joint conference call and live webcast on Monday, December 3, 2007. An audio replay of the call will be available through December 17, 2007 by calling (888) 203-1112 in the U.S. or (719) 457-0820 outside the U.S. and entering the pass-code: 5648597. In addition, a webcast replay also will be archived on the Investor Relations section of each company's website. Gibson Dunn's team is led by Ruth Fisher, Co-Chair of the firm's Media & Entertainment Practice Group, and includes Mark Lahive, Mary Ruth Hughes, Kristin Blazewicz and Ciara Stephens for corporate, Hatef Behnia and Afshin Beyzaee for tax, Ron Ben-Yehuda for intellectual property, Sean Feller for employment and employee benefits, and Sandy Pfunder, Joel Sanders and Rebecca Justice Lazarus for antitrust. Details of this transaction are available on the Vivendi website.

Gibson Dunn's Media & Entertainment Group comprises talented lawyers across our firm and practice areas who are among the most highly regarded in the converging media, entertainment and technology industries, offering a single "new media" platform that is unmatched in depth and scope among large law firms.

For additional information on this matter, please contact the Gibson Dunn attorney with whom you work, Ruth Fisher (310-557-8057, rfisher@gibsondunn.com) or Mark Lahive (310-552-8580, mlahive@gibsondunn.com) in Gibson Dunn's Century City office, or any member of the firm's Media & Entertainment Practice Group.

© 2007 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

December 1, 2007 |
Cashing out company stock options in M&A transactions

Century City Partner Jonathan K. Layne and Associate Ari B. Lanin are authors of "Cashing out company stock options in M&A transactions" [PDF] in the December 2007 issue of Financier Worldwide.

October 31, 2007 |
Studying Schneider

Brussels Partner Peter Alexiadis & Associate Vassili Moussis, are authors of "Studying Schneider," [PDF] published in the October 2007 issue of the European Lawyer.

This article appeared in issue 72 of the European Lawyer magazine www.europeanlawyer.co.uk. 

October 15, 2007 |
LBO – Le Leveraged Buy Out, une pratique en constante évolution

Paris Partner Sophie Resplandy-Bernard is the author of "LBO - Le Leveraged Buy Out, une pratique en constante évolution" [PDF--the article is in French, the title roughly translates as: "Leveraged Buy-Outs, A Practice in Constant Evolution"] published in Target Carrières Juridiques 2008.

Reprinted with permission of Target Carrières Juridiques 2008. These articles are also available on www.target-carrieres.fr

April 26, 2007 |
2007 M&A Hot Topics Briefing

The Ritz-Carlton, McLean, VA OVERVIEW:  This briefing included a comprehensive review of pressing market, diligence and tactical decisions required to complete a transaction. Topics discussed include:

  • State of the M&A Markets
  • Trends in Valuation, Deal Pricing and Financing
  • Sell-side Strategies
  • Buy-side Strategies
  • Special Public Company Issues
  • Structuring and Papering the Deal
Materials from the briefing are available: WHO SHOULD VIEW: All C-level deal makers, financial sponsors and those whose growth is dependent upon doing deals. PANELISTS: Our distinguished panelists have extensive experience conducting billions of dollars in deals - Walter A. Maull, Jr., Moderator, Director, Ernst & Young -  Tony has over 20 years of finance experience with the world's largest financial institutions.  Prior to joining E&Y, Tony was the VP of Marketing for Experian-Scorex Americas. Experian-Scorex, the technology and risk analytics arm of Experian, is a worldwide provider of software and professional services to over 2,000 financial services companies across 63 countries.  Tony was responsible for the identification and integration of acquisitions and the comprehensive go to market strategy of the combined organizations.  Prior to Experian-Scorex, Tony was with CIBC World Markets in their Technology Investment Banking Group where he led CIBC's expansion into the Southeast.  He focused on mid to late stage enterprise software and outsourced business services equity financing and mergers and acquisitions. Tony earned his BS in Accounting from George Mason University. Greg Ager, Partner, Updata Advisors - Greg has 17 years of investment banking experience, having completed approximately 60 transactions aggregating over $7 billion in value for emerging and middle market technology companies.  Prior to joining Updata Advisors, Greg was the senior East Coast Technology Investment Banker at Wachovia Securities, Managing Director and Head of East Coast Software, where he completed transactions for clients such as Computer Associates, INFOR Global Solutions, Aspen Technology, Safeguard, Unica, Blackbaud and Vocus.  Previously, Greg spent ten years in Silicon Valley where he completed transactions for many industry leaders including Oracle, Novell, Silicon Graphics and AnswerThink.  Prior to joining TWP, Greg held various roles with the Business Services Investment Banking Group at Montgomery Securities, and with the technology investment banking groups at Smith Barney and Morgan Stanley.  Greg received an M.B.A. from the J.L. Kellogg Graduate School of Management at Northwestern University and a B.A. in economics and political science from Yale University. Anita M. Antenucci, Managing Director Washington, D.C. office, Houlihan Lokey - Anita is co-head of  the AerospaceoDefenseoGovernment (ADG) industry group and head of its Aerospace and Defense segment.  Over the past thirteen years, a period of significant consolidation in the aerospace and defense industries, she has grown a leading middle-market practice in aerospace and defense mergers and acquisitions.  Her transactional experience has spanned the industry's diverse makeup, with multiple transactions in such segments as defense electronics, aircraft systems, combat vehicles, satellite manufacturing, and engineering services.  Her client base has included the industry's leading prime contractors, as well as dozens of small and mid-sized companies in the industry's second and third tiers.  Prior to joining Houlihan Lokey, Anita served as co-President and Managing Director of Quarterdeck Investment Partners, LLC.  Anita holds degrees from the School of Advanced International Studies (SAIS) of The Johns Hopkins University and from Northwestern University in the United States and studied at the Institut d'Etudes Politiques in France. Scott Gilbert, Transaction Advisory Services Partner, Ernst & Young - Over the last 20 years, Scott has advised corporate buyers, mid -sized to large scale private equity firms and international enterprises on cross boarder transactions, strategic mergers, joint ventures, public to private transactions, carve outs and management buy-outs.  Scott assists his client's by developing and executing upon detailed financial and operational due diligence plans. This includes assessments of financial systems and information, financial analysis, general financial risk analysis, synergy and dis-synergy identification, transactions structuring and pre -closing integration analysis.  Scott has advised on over 150 transactions ranging in values up to $15 billion and covering aerospace and defense, technology, transportation, retail and consumer products sectors. Stephen I. Glover, Partner, Gibson, Dunn & Crutcher LLP - Steve has an extensive practice representing public and private companies in complex mergers and acquisitions, joint ventures and other corporate transactions.  His clients include large, nationally recognized public companies; locally based companies that are active participants in the mergers and acquisitions market; and private equity groups.  The transactions involve many different industries and include both domestic and cross-border deals.  Steve was named by the 2006 International Financial Law Review as a Leading Lawyer in US Mergers & Acquisitions.  He was also identified among "Ten of the D.C. Area's Top Deal-Making Attorneys" by Legal Times in 2006, was selected as the top Commercial/Corporate Transactions attorney in Washington, D.C. by The Washington Business Journal in 2004, and was ranked one of the top three corporate/commercial transactions attorneys in the District of Columbia by Chambers USA America's Leading Business Lawyers in both 2006 and 2005.  Steve served as a law clerk to Justice Thurgood Marshall in the United States Supreme Court and to J. Skelly Wright, Chief Judge of the U.S. Court of Appeals for the District of Columbia Circuit.  He earned his law degree cum laude from Harvard Law School, and received his undergraduate degree summa cum laude from Amherst College.

October 18, 2006 |
Joint venture review under the new EC Merger Regulation

Munich Partner Michael Walther and Associate Ulrich Baumgartner are authors of "Joint venture review under the new EC Merger Regulation" [PDF] published in the The European Antitrust Review 2007.


An extract from The European Antitrust Review 2007, a Global Competition Review special report - www.globalcompetitionreview.com

January 31, 2006 |
Stapled Financing – Ein US-Import mit Zukunft?

Munich Partner Philip Martinius is the author of "Stapled Financing - Ein US-Import mit Zukunft?" [PDF in German] in the February 2006 issue of Going Public on the possibility of stapled financing becoming the new trend in M&A and private equity activities in Germany, pointing out strength and weaknesses, opportunities and threats for sellers, buyers and banks.


Reprinted with permission