Recent Cases Remind M&A Participants of When Disclosure of Merger Negotiations Is Required


Two recent decisions by United States federal courts serve as useful reminders to companies and their advisors of the rules regarding disclosure of merger negotiations. While the cases do not enunciate new law, they do provide several useful illustrations of circumstances where disclosure is, and is not, required.

In both Vladimir v. Bioenvision, Inc.1 and Levie v. Sears Roebuck & Co.,2 stockholders of a target company who sold stock prior to the announcement of an acquisition agreement claimed that the company’s failure to disclose the negotiations in advance of the actual signing violated, among other things, Rule 10b-5, particularly in the context of other disclosures made by the target during the relevant time period.

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