International M&A

U.K. Competition and Markets Authority Challenges Merger Between Experian and ClearScore

By Tyler Huseman

A proposed tie-up between Experian PLC, a global consumer credit reporting agency (“Experian”) and ClearScore, a British financial technology company (“ClearScore”) faces significant regulatory scrutiny.  On July 25, 2018, the United Kingdom’s (“UK”) antitrust authority, the Competition and Markets Authority (“CMA”) announced that it found that the merger raises serious competition concerns. CMA’s release stated “ClearScore and Experian are the first and second-largest providers of free credit score checking the UK … As Experian and ClearScore are the market leaders in this field, and each other’s main competitor, the [CMA] is concerned that the merged company would be less likely to innovate to help people better understand their finances, potentially leading to people paying more for credit cards and loans.” Experian and ClearScore have until July 27, 2018 to offer solutions to resolve the CMA’s concerns, otherwise the merger will be referred for an in-depth phase 2 investigation. Experian announced the proposed merger on March 15, 2018, with a purchase price of £275 million.

Paddy Power Betfair Acquires FanDuel After SCOTUS Strikes Federal Law Prohibiting Sports Betting

By Arooj Nazir

On July 11, 2018, Paddy Power Betfair, an Irish company, acquired 61% of the issued and outstanding interest in FanDuel, a US-based daily fantasy sports site.  Paddy Power Betfair retained an option to grow its share in FanDuel to 100% in five years.  The acquisition followed the striking down of a federal law prohibiting sports betting in the US by the United States Supreme Court on May 14, 2018.   The Supreme Court found that the federal ban preventing state legislatures from regulating sports betting was unconstitutional, and held that each state could enact its own laws legalizing sports betting if the congress chose not to regulate sports betting at a federal level.  The combined business is expected to have “a presence across 45 states, 8 million customers, and $265 million in annual revenue,” according to a press release issued by both companies. 

M&A Law

Comcast Ends Bidding War for Twenty-First Century Fox

By Tyler Huseman

On July 19, 2018, Comcast Corporation, the global telecommunications conglomerate (“Comcast”) announced it no longer intended to pursue its acquisition of Twenty First Century Fox, Inc., a mass media company (“Fox”) to instead focus on its acquisition of Sky, a British media and telecommunications company (“Sky”). Fox owns 39% of Sky, and had previously made an offer to purchase the remaining outstanding shares of Sky, but has not yet announced whether it would try to top Comcast’s latest bid of £14.75 per share of Sky. On June 20, 2018, The Walt Disney Company, the entertainment and mass media giant (“Disney”) announced it had signed an amended acquisition agreement to acquire Fox for $71.3 billion in cash and stock, or $38 per share of Fox. The increased purchase price was necessitated by Comcast’s bid for Fox. Disney’s higher bid and clearance (conditioned upon certain divestures) by the United States Department of Justice of Disney’s proposed transaction led to Comcast abandoning its bid for Fox. Even though Comcast has abandoned its bid for Fox, Fox’s ownership in Sky will continue to complicate both transactions.

Delaware Supreme Court Revisits Corwin Doctrine

By Michael Caine

The Delaware Supreme Court reversed the Chancery Court’s decision finding that disclosures made to shareholders didn’t include material information and was materially misleading when the founder (the “Founder”) of Fresh Market Company (the “Company”) failed to disclose his prior agreement to sale the Company to private equity firm Apollo Global Management, LLC (the “Acquirer”) where he benefited from an equity rollover and allowed the private equity firm to “maintain and improper bidding advantage and predictably emerge as the sole bidder for [the Company].”  After the transaction closed, a shareholder filed a lawsuit against directors for breach of their fiduciary duties claiming that the Company (1) had already formed a belief that the Acquirer was uniquely well situated to buy the Company, (2) had already entered into an undisclosed agreement with the Acquirer, and (3) was incentivized not to create price competition for the Acquirer.  After reviewing the transaction, the Court of Chancery dismissed the case under the Corwin doctrine.  Under the Corwin doctrine, a disinterested shareholder vote can “cleanse” purported breaches of fiduciary duty, if that vote is fully informed and uncoerced.  The Supreme Court disagreed, ruling that the Company’s commitment to the Acquirer was not fully disclosed to shareholders, resulting in a pre-ordained result and the Founder benefiting from an equity rollover.  According to the Supreme Court, “careful application of Corwin is important due to its potentially case-dispositive impact” and “partial and elliptical disclosures cannot facilitate the protection of the business judgement rule under the Corwin doctrine.”



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