It is interesting to note that only one of the 21 control agreements discussed above included an agreement called “Force-the-Offer,” which is akin to a force-vote regime in a one-stage merger. Among the one-stage mergers in which shareholders participated after Omnicare, an accepted practice of contract structuring was to maintain a force-vote regime, as in the case of Omnicare itself, but to lower the level of guaranteed aid from more than 50% to about 33%, after a change in the Council`s recommendation. The agreement avoids the fait accompli in the final vote, but nevertheless gives a clear vote to a buyer on its proposed agreement, regardless of all invaders. The only two-step merger between the control agreements, which appears to have applied this logic to an exchange or acquisition offer, was Liberty Interactive Corporation`s 2015 acquisition of Zulily, Inc. for approximately $2.3 billion. A support agreement was reached by zulily shareholders, representing 87.5% of the outstanding voting rights, and included a 34.99% diversion of aid, particularly when the board`s subsequent recommendation was made against the agreement on a superior offer. The merger agreement also included an agent for zulily, but with a twist: zulily could terminate the merger contract to withdraw a superior offer only after 45 days of amending the board`s recommendation. In fact, the 45-day wait created a window of opportunity during which Liberty, despite a competitive top bid, was able to impose the offer on Zulily`s shareholders and hold a referendum on its agreement. At first glance, a two-tiered buyer could distinguish his market from Omnicare by avoiding support agreements altogether.
It is understandable that this was not the usual practice for two-tier mergers in Delaware in which shareholders participated, because, in such contexts, a buyer should both enhance the security of the conclusion and signal to the market support from the party or parties holding the majority shares. Indeed, in an audit of two-tiered mergers according to Omnicare, both before Section 251 (h), with objectives of the Delaware public limited company with 50% or more controlling shareholders , almost all of the support agreements (22 of the 24 financial statements) of the controlling shareholders included. The prevailing question for purchasers of such transactions was therefore not whether they should strive for support agreements, but what those agreements look like. The overriding response was to include an agent in the merger agreement: in a large number of supervisors dealing with support agreements (eight out of 22), controlling shareholders involved the offer or exchange of all their shares, unless the merger agreement was terminated, which included a right to terminate a superior offer, and such termination was the only way forward. to reduce or terminate the tendering obligation related to the exercise of a fiduciary duty by a board of directors. higher and competing offers. 4In the year section 251, (h) contained a restriction on interested shareholders, the commentators found that Section 203 of the DGCL, whose definition of the interested shareholder was lowered in Section 251, point h), generally defined the “ownership” of 15% of a company`s outstanding shares, so that a support contract entrusted a buyer with ownership of the shares of a counterparty shareholder. , in violation of the 251-hour limit in effect at the time. (return) In this regard, the engineer Zulily is not as favourable to the purchaser as he allows, since the time to submit bids was only 45 days after the recommendation was amended, regardless of the conditions that were or were not met for the offer.