June 27, 2016

Corp Fin: 7 New “Rule 701” CDIs

As noted in this Cooley blog, Corp Fin issued 7 new CDIs last week on Rule 701 issues – primarily in the M&A context…

Social Media: Deal Announced By Blog Post!

As noted in this blog by Steve Quinlivan:

Tesla, in an offer to acquire SolarCity, appears to be the first to announce a major proposed acquisition by a blog post. Since an 8-K was also filed, it can’t be sole proof that social media is a recognized distribution channel for Regulation FD. But dissemination was nonetheless rapid, with the first news apparently appearing on Twitter at about 4.11 pm, the 8-K being filed at 4.13 pm, and the first Wall Street Journal e-mail alert being received at 4.58 pm (all times Central).

There had to be some advance coordination between the parties, because SolarCity filed an 8-K almost simultaneously. The exhibit includes an email from SolarCity’s CEO, in which he wisely advises employees not to comment on social media.

The Tesla 8-K also discloses that Tesla adopted an exclusive forum by-law the day before the acquisition was announced.

DGCL Amendments: Appraisal Actions & “Intermediate-Form” Mergers

Here’s a summary of this memo from Ropes & Gray:

On June 16, 2016, Delaware Governor Jack Markell signed into law House Bill 371, which amends the Delaware General Corporation Law (DGCL) with respect to, among other things, appraisal proceedings and “intermediate-form” mergers.

Specifically, the bill amends Section 262 of the DGCL to limit de minimis appraisal claims and to provide surviving corporations with the right to pay stockholders exercising appraisal rights prior to the time the Delaware Court of Chancery makes a final value determination, thereby limiting the amount of interest that would accrue on an appraisal award.

The legislation also clarifies the requirements and procedures relating to “intermediate-form” mergers under Section 251(h) of the DGCL, particularly those involving rollover of target equity.

Broc Romanek