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Court Of Chancery Instructs What Deal Protection Provisions Are Acceptable

Posted In M&A

In re Micromet Inc. Shareholders Litigation, C.A. 7197-VCP (February 29, 2012)

This is an excellent primer on what deal protection provisions are acceptable, particularly when the board must have the right to change its recommendation to stockholders when a superior proposal surfaces.  It is permissible to require a board to wait a short time before changing its recommendation to allow the first acquiror to match a new proposal.  However, once that matching right period passes, the board must be free to act promptly.

This opinion also provides a good analysis of the scope of any pre-deal market check and the board's role in limiting the scope of any effort to shop a deal.

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