Client Alert
| April 22, 2011
Delaware Court Decision Complicates Due Diligence in Reverse Triangular Mergers
On April 8, 2011, Vice Chancellor Parsons of the Delaware Court of Chancery issued an opinion of potentially wide-ranging significance in determining whether third-party consents are required in acquisition transactions structured as reverse triangular mergers (“RTMs”). The court rejected the defendant’s motion to dismiss on, among other things, the issue of whether an RTM constituted an assignment that required consent under an agreement containing a typical anti-assignment clause but no “change in control” provision. In doing so, Vice Chancellor Parsons suggested that consent might be required depending on (a) what the parties intended the phrase “by operation of law” in the anti-assignment clause to mean, and (b) what the acquiror did with the acquired entity after the RTM.
This memorandum is intended only as a general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this important topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.
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