Delaware Court Finds Reverse Triangular Merger Does Not Violate Contractual Prohibition on Assignment by Operation of Law


The Delaware Chancery Court, in Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH (Feb. 22, 2013), held that the acquisition of a company in a reverse triangular merger did not violate a restriction in an existing agreement of the target company that prohibited assignments by operation of law.

The decision reaffirms the traditional assumption that, in most circumstances, the acquisition of a company through a reverse triangular merger does not violate anti-assignment provisions in the target company’s underlying agreements. In part because of that assumption, reverse triangular mergers are one of the most common M&A structures. In a reverse triangular merger, the acquiror forms a shell company and merges the shell company into the target company, with the shell company disappearing and the target company surviving as a wholly-owned subsidiary of the acquiror.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.