M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Sunday, October 4, 2009

Federal Judge Reviewing Diebold Sale

Early last month Diebold announced that it had sold its Premier Election Solutions, Inc. sub to Election Systems & Software (links are to their respective press releases announcing that the transaction had closed).  The sale was small - $5 million plus 70% of receivables from sales as of August 31, 2009.  Given that the sale was well under the HSR filing thresholds, the parties likely did not seek pre-merger approval from the FTC.  Now comes word that ES&S's competitors are seeking an injunction from a federal judge in NJ to "unscramble the eggs" and order ES&S to undo the transaction.  McClatchy reports:

A federal judge in Camden, N.J., agreed late Friday to hear a request for an emergency injuction that could halt Election Systems & Software's announced acquisition of Diebold Inc.'s Premier Election Solutions.

The quietly arranged shotgun wedding between the two voting-machine giants would give ES&S control of election systems in use in almost 70 percent of the nation's voting precincts. Federal Judge Robert Kugler agreed to hear Tuesday the request for immediate injunction brought by a small competitorm, Hart InterCivic Inc. 

The basic contention is that ES&S did a "stealth" transaction - as if by not voluntarily making an HSR filing one might impute some sort of bad faith.  That's a tough bet.  I wouldn't take it.   In any event, it's worth noting that ES&S's competitors - and not local governments (customers) - are the ones seeking the injunction.  This might well color the outcome.  

-bjmq

http://lawprofessors.typepad.com/mergers/2009/10/federal-judge-reviewing-diebold-sale.html

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