Considerations When Publicly Filing Merger Agreements: the Ninth Circuit Suggests that Shareholders may be Able to Claim Reliance on Representations and Warranties


The recent Ninth Circuit Court of Appeals decision in Glazer Capital Management, LP v. Magistri, 549 F.3d 736 (9th Cir. 2008) suggests that public companies could be subject to securities fraud liability claims from investors based on the statements contained in the representations and warranties section of merger agreements – despite such representations and warranties not being intended as disclosures for securities law purposes. While merger agreements may be required to be disclosed to investors in connection with a company’s public filing obligations, conventional practice has been to exclude the disclosure schedules to the merger agreement from the public filing. The disclosure schedules function to outline exceptions to the representation and warranty statements made in a merger agreement, which typically follow standard language.

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