M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Friday, February 24, 2012

Paul, Weiss 2011 Review of Selected U.S. Strategic M&A Transactions

Paul, Weiss just released its 2011 Review of Selected U.S. Strategic M&A Transactions. The report:

  • examines the largest 25 such transactions announced during the seventeen-month period from August 1, 2010 through December 31, 2011, and
  • compares the 10 largest transactions in calendar 2011 involving non-U.S. acquirors to those involving U.S. acquirors.

Among other things, the firm makes the following observations regarding the 2011 transactions:

  • Rising equity prices raised dealmakers’ tolerance for risk
  • Private equity-like treatment of financing risk declined substantially
  • The strength of credit markets led to cash being used as the exclusive consideration in over half of the surveyed transactions
  • Only one of the surveyed transactions was priced as a merger-of-equals ("MOE")—i.e., by offering no premium to either party’s shareholders—but many more included MOE-like post-closing governance provisions
  • Despite an increase in cash-only transactions, the use of two-step (i.e., tender offer) structures declined
  • The sizes of termination fees and reverse termination fees (in the few cases they were used) declined slightly
  • Few non-U.S. acquiror transactions used stock consideration, likely reflecting the regulatory burden of listing securities in the U.S.
  • Antitrust and other regulatory issues were less common among non-U.S. acquiror transactions, leading to the more frequent use of tender offer structures than in U.S. acquiror transactions
  • None of the non-U.S. acquiror transactions limited the acquiror’s financing risk
  • Non-U.S. acquirors gave more flexibility to target boards to change their recommendations




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