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Court Of Chancery Invalidates Deal Protections

Posted In M&A
In re Comverge Inc. Shareholder Litigation, C.A. 7368-VCP (November 25, 2014) Numerous Delaware decisions have upheld deal protection provisions in merger agreements. But, as this decision shows, it is still possible to go too far. When a combination of a termination fee, an expense reimbursement provision, and a convertible note amount to a 13% fee for ending the deal, that is too much protection and unfairly discourages a competing bid. The decision is also very good at explaining when a buyer may be charged with aiding and abetting liability. Just being a hard negotiator is not enough. Share

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