Prepayment of Merger Consideration

A new piece by Skadden focuses on some old, and some new factors regarding prepayment. Since the 2016 appraisal amendments, respondents in an appraisal proceeding have had the right to ‘prepay’ some or all of the merger consideration.  The mechanics of this are basic, but deserve a moment of explanation.  In appraisal proceedings, unlike in

Law360 [$$] recently carried an analysis by a trio of Delaware attorneys regarding the impact of 2016’s prepayment amendment to Delaware appraisal law.  Part of the August 2016 amendments allowed M&A targets to prepay dissenting shareholders an amount of their choosing, thereby stopping the accrual of interest on that portion of the merger price/amount at

A key aspect of the August 1 changes to Delaware appraisal law permits companies to unilaterally prepay some or all of the merger consideration, thereby stopping the interest accrual on such prepaid amounts.  A recent article by Bloomberg discusses prepayment strategies under this new rule and echoes the point posted to this blog repeatedly: the

As reported in The Hedge Fund Law Report‘s article, “Recent Legislative and Judicial Developments Fail to Diminish Appeal of Stockholder Appraisal Actions As Strategy for Hedge Fund Managers” [$$$], the recent statutory amendments have failed to diminish the appeal of stockholder appraisal actions as a strategy for hedge fund managers.  According to this article,

Now that the amendments to the Delaware appraisal statute have been signed into law, the new provisions will apply to all M&A agreements entered into on or after August 1.  Here is a link to the rule as revised, showing the new terms (only Sections 8-11 relate to appraisal).  As we have posted previously

As we’ve previously covered in this blog, the Delaware Legislature has proposed two changes to its appraisal statute in response to an increasing number of appraisal filings.  The first proposal, the De Minimis Exception, would require that anyone bringing an appraisal action have, at minimum, a $1 million stake in the company or 1 percent

Today’s New York Times ran this piece analyzing the proposed Delaware amendments on appraisal proceedings, which we blogged about last weekThe New York Times shares our own observation that the proposed legislation’s provision allowing for prepayment by the M&A target could have the unintended effect of increasing appraisal filings: “Rather than discourage appraisal