US and EU Requirements for Pre-Merger Notification of an Acquisition of a Minority Shareholding Interest
In May, the Federal Trade Commission (FTC) required Hikma Pharmaceuticals PLC to divest its 23 percent interest in Unimark Remedies, Ltd. and its US marketing rights to a generic drug under manufacture by Unimark as a condition to allowing Hikma to complete its acquisition of Roxane Laboratories. The FTC was concerned that Hikma’s continued holding of a 23 percent interest in Unimark after consummation of its proposed acquisition of Roxane would create the incentive and ability for Hikma to eliminate future competition between Roxane and Hikma/Unimark in the sale of generic flecainide tablets (a drug used to treat abnormally fast heart rhythms) in the United States.
In the European Union (EU), at the inception of a joint venture (JV), parent companies must determine whether the newly created structure presents a full-functionality nature, which depends on its degree of autonomy. The answer to this question will determine the legal framework applicable to it.
In the last two years, the Federal Trade Commission (FTC) and the Antitrust Division of the US Department of Justice (DOJ) brought, and won, several litigated merger cases by establishing narrow markets comprised of a subset of customers for a product. This narrow market theory, known as price discrimination market definition, allowed the agencies to allege markets in which the merging parties faced few rivals and, therefore, estimate high post-merger market shares.
The Federal Trade Commission (FTC) and US Department of Justice’s (DOJ) Antitrust Division have been actively challenging mergers and acquisitions (M&A) across a variety of industries where there is not a viable or acceptable remedy to mitigate the agencies’ competitive concerns. Parties to M&A transactions that the FTC or the DOJ believe are likely to harm competition may remedy those concerns by divesting certain businesses or assets.
McDermott Will & Emery has released the October 2015 issue of Inside M&A, which focuses on current issues surrounding special-purpose acquisition companies. Articles in this issue include:
Overview of SPACs and Latest Trends
A number of recent successful business combination transactions involving special-purpose acquisition companies (SPACs) led by prominent sponsors have driven a resurgence in the SPAC inital public offering (IPO) market and an evolution in some SPAC terms. In this article, we provide an overview of SPACs and discuss the latest trends in SPAC structures and terms.
Creative Business Combination Structures Allow SPACs to Successfully Compete with Non-SPAC Bidders
Certain structural features of SPACs that offer benefits to their public investors often put SPACs at a competitive dis-advantage when they are among multiple bidders for a target company. Recent SPAC business combination transactions demonstrate, however, that careful structuring of a transaction to meet the needs of the target’s owners can overcome these structural challenges and level the playing field for SPACs in a competitive bidding process.
SPAC Directors Cannot Take the Protection of the Business Judgment Rule for Granted
A recent decision by the New York State Supreme Court’s Commercial Division—in AP Services, LLP v. Lobell, et al., No. 651613/12—suggests that certain structural terms of SPACs may make it more challenging for the business judgment rule to apply to decisions by SPAC directors to enter into agreements for business combination transactions.
The latest analysis by PitchBook would indicate buyout activity is trending down as deal volume and values continue to slide from recent quarters. In the latest report, the triggers for the current market is discussed covering EBITA multiples, debt levels and valuations, as well as where opportunities exist based on the transactional activities of private equity funds.
From PitchBook, the analysis of global M&A activity in the third quarter for 2015 has been released. Around the world M&A activity, in comparison, is below 2014 YTD and 3Q saw the fewest deals completed in a quarter since 2Q 2013.
To learn more and see the infographic on 3Q activity, here.
McDermott Will & Emery recently published its latest issue of International News, which covers a range of legal developments of interest to those operating internationally. This issue focuses on Private Equity.
Focus on Private Equity
Independent Contractor and Exempt Employee Classification Review Should Include Joint-Employer Status
Private equity often looks to control costs in its portfolio companies through the utilization of joint employees. This On The Subject provides tips and guidelines for private equity firms and their operating companies during a review of its employee classification.