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Abstract: 

The “background of the merger” section in the proxy is an important section that is scrutinized by both the plaintiffs’ bar and the SEC. In this article, the authors discuss the (1) legal framework governing the disclosure of the “background of the merger,” (2) the process of preparing the “background of the merger” section, and (3) common areas of focus for both the Delaware courts and the SEC. The legal framework governing the disclosure of the “background of the merger” section includes the federal securities law and state law. The preparation of the “background of the merger” section should follow a few recommended protocols to ensure accuracy and completeness. The common topics scrutinized by Delaware courts and the SEC include non-disclosure agreements, material interactions between the parties, and potential conflicts of interest. The article concludes by providing a number of takeaways for practitioners.

Keywords: SEC Disclosure Requirements; Delaware Disclosure Requirements; NDAs Signed by Other Bidders; Material Discussions Between the Target and Bidders; Conflicts of Interest

Affiliations:  1: White & Case LLP; 2: Hammond; 3: White & Case.