Del. Bar Committee to Consider Draft Changes to Merger Laws

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By Michael Greene

April 12 — The Delaware State Bar Association's executive committee is expected April 21 to consider proposed changes that impact mergers and acquisitions under state law, Matthew J. O'Toole, chairman of the bar's Corporation Law Section and partner at Potter Anderson & Corroon LLP, told Bloomberg BNA.

The Corporation Law Section approved the proposed amendments April 5, which includes modifications to General Corporation Law Section 251(h)—the preferred mechanism for consummating two-step mergers under Delaware law .

Observers previously told Bloomberg BNA that the proposed amendments are largely technical clarifications .

If the executive committee approves the proposals, they still must be introduced and voted upon by Delaware's General Assembly to become law.

Appraisal Amendments

The proposed package, among other measures, would modify Section 251(h) to permit the rollover of shares to be deemed tendered when determining whether the statutory minimum tender condition is satisfied .

The draft changes also would amend Section 262 to dispense with certain minor stock-appraisal claims and allow parties to make payments to appraisal claimants to prevent further accrual of interest.

The appraisal amendments largely mirror proposed modifications approved by the section last year that were never introduced into the state's Legislature .

Under Delaware's appraisal statute, investors that choose not to participate in a merger can petition the chancery court for an appraisal of how much their shares are worth.

Last year, a group of law firms sent a letter to the state bar saying that the proposed modifications didn't go far enough to deter appraisal arbitrage claims . In such claims, hedge funds purchase shares after a merger is announced and subsequently file for a statutory appraisal of their shares.

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com