Monday, March 5, 2012
K&L Gates has posted a nice overview of the general issues one needs to consider when negotiating non-disclosure agreements and standstills (here), inclduing the limits on their enforceability. The authors of the memo also point out the hole in the indirect protection argument that Vulcan is attempting to make in front of the Chancery Court when they advise targets not to fall for the indirect protection argument when negotiating standstills:
When negotiating a standstill, the acquiror may argue that the target company does not need a lengthy standstill because it is already indirectly protected by the confidentiality agreement providing that the proprietary information to be provided to the acquiror may only be used in connection with the currently negotiated transaction and not for any other purpose. Targets should resist such argument—the target’s board wants certainty that the acquiror cannot launch a hostile bid and does not want to get into an argument about whether the acquirer is misusing the proprietary information.
If you want a standstill, ask for a standstill.