Blank Rome LLP represented Churchill Capital Corp., a publicly traded investment vehicle, in its merger with Clarivate Analytics Plc, a global leader in providing trusted insights and analytics to accelerate the pace of innovation. The closing of the merger was announced on May 13 following the receipt of stockholder approval at Churchill’s special meeting of stockholders.

Following the closing, the combined company was renamed Clarivate Analytics Plc, and anticipates that starting on May 14, 2019, its ordinary shares and warrants will begin trading on the New York Stock Exchange and NYSE American under the symbols CCC and CCC WS, respectively.

The Blank Rome Team was led by partners Robert J. Mittman, Kathleen A. Cunningham and Brad L. Shiffman, together with partners Joseph T. Gulant and Emanuel J. Adler, as well as associates Elena P. Jacque, Thomas M. Callahan and David A. Gilbert.

POWER magazine has posted the first of a two-part series examining what dealmakers need to know before making any power industry mergers and acquisitions.

The authors, Jeff M. Dobbs and Robert S. Goldberg, are partners with Mayer Brown LLP in the firm’s Houston office.

The series is designed to describe the legal due diligence process, the types of agreements, and issues that are frequently encountered in the diligence review of operating electric power generation assets. It also will outline the structure of a typical acquisition agreement for these assets, and highlight typical provisions and issues that are heavily negotiated between buyers and sellers.

Read the article.

Rent-A-Center, Inc. announced that it has entered into an agreement with Vintage Rodeo Parent, LLC, an affiliate of Vintage Capital Management, LLC, for Vintage to acquire all of the outstanding shares of Rent-A-Center common stock for $15 per share in cash. The transaction, which is not subject to a financing condition, and is expected to close by the end of 2018, subject to customary closing conditions including the receipt of stockholder and regulatory approvals, represents a total consideration of approximately $1.365 billion, including net debt.

Under the terms of the agreement, Rent-A-Center stockholders will receive $15 in cash for each share of Rent-A-Center common stock, which represents a premium of approximately 49 percent over the company’s closing stock price on Oct. 30, 2017, immediately prior to the announcement that the company’s board of directors initiated a process to evaluate strategic and financial alternatives focused on maximizing stockholder value.

The Rent-A-Center board has unanimously approved the transaction and recommends that stockholders vote in favor of the transaction. Upon completion of the transaction, Rent-A-Center will become a privately held company and its common shares will no longer be listed on any public market.

B. Riley Financial, Inc. and certain of its affiliates have committed to serve as equity and debt participants in the transaction.

J.P. Morgan Securities LLC is acting as exclusive financial advisor to Rent-A-Center and provided a fairness opinion to the Rent-A-Center Board of Directors. Winston & Strawn LLP is serving as legal advisor to Rent-A-Center, and Sullivan & Cromwell LLP is serving as legal advisor to the Rent-A-Center Board of Directors.

B. Riley FBR, Inc. is serving as financial advisor and lead arranger and Guggenheim Corporate Funding LLC is serving as administrative agent and joint lead arranger. Wilson Sonsini Goodrich & Rosati, Professional Corporation is serving as legal advisor to Vintage.

DLA Piper represented Bregal Sagemount in the sale of its portfolio company Remote DBA Experts, LLC, a leading provider of remote database administration and cloud-managed services, to Madison Dearborn Partners, a Chicago-based private equity firm, the firm said in a release.

The DLA Piper team was led by Joe Alexander (Miami), the firm’s Southeast US managing partner and co-chair of US Private Equity, and included partners Daniel Rollman, Jamie Konn (both Atlanta), Omari Sealy (Miami), Julia Kovacs, Jennifer Kashatus (both Washington, DC), William Bartow (Philadelphia), Nathaniel McKitterick (Silicon Valley) and Drew Young (New York).

Although non-disclosure agreement negotiations may seem like a perfunctory step in the M&A process, NDAs present many issues that buyers and sellers should carefully consider before escalating discussions and venturing further toward a deal, according to a post by Faegre Baker Daniels.

Lance Bonner and Kate Sherburne explain: “Unlike confidentiality agreements in other commercial transactions, NDAs negotiated at the onset of the M&A process are often non-mutual and only bind the buyer with respect to the seller’s confidential information. As a result, negotiating an NDA typically begins with a form prepared by the seller or its investment bank or their respective legal counsel. Key negotiation points will vary depending on the characteristics of the proposed transaction and relationship of the parties.”

The authors discuss the areas that are commonly important, including confidential information, exclusions, representatives of the buyer, access to employees, suppliers and other business relations, non-solicitation, and more.

Read the article.

Image by Mike Mozart

AT&T and the Justice Department could be on their way to a major court battle, which one analyst believes the company stands a strong chance of winning, CNBC reports.

AT&T’s wants to acquire Time Warner, but the government wants the company first to sell Turner Broadcasting, which includes CNN, or sell DirecTV. The company has made it clear that it has no intention of selling any of those assets.

“If this does go to court, we think AT&T holds a strong position and would likely prevail,” Paul Gallant, a Washington analyst at Cowen Research, said Thursday in a note to clients.

CNBC reporter Jeff Cox writes that Cowen believes the  company has three advantages that would give it an edge in its fight with the DOJ.

Read the CNBC article.

Respondents to Dykema’s 13th Annual M&A Outlook Survey expressed an overall bullish viewpoint of the economy and U.S. merger and acquisition market, bringing a new level of optimism, not seen in several years.

According to the firm, 39 percent of respondents in this year’s survey expect the M&A market to strengthen over the next 12 months, up from 33 percent last year and 37 percent in 2015. With a record-breaking robust stock market and uncertainty surrounding the presidential election fading, this revelation mirrors the 60 percent of respondents who predict a strong U.S. economy in the next 12 months, doubling last years’ results.

“With the uncertainty around the presidential election in the rearview, our survey respondents are abandoning the ‘wait and see’ mantra, with an increasing number predicting that deal activity is back on the rise,” said Thomas Vaughn, co-leader of Dykema’s M&A practice. “In this year’s survey, we are, however, still hearing that uncertainty around the Trump administration’s priorities and regulations will have the greatest impact on M&A from a global perspective.”

More than half (50 percent) of respondents expect Donald Trump to be a positive force in U.S. markets as a whole this year. Likely factors playing a role in this optimistic sentiment include expected reduction in corporate tax rates, more favorable business regulations, and the Trump administration’s perceived business-friendly positive economic policies.

The survey yielded a number of other interesting conclusions, including:

• Half of respondents said President Trump will have a positive impact on the U.S. economy and M&A market in 2018.
• Seventy-percent of respondents predict the volume of small deals (under $50 million) will increase over the next 12 months, with 53-percent predicting an uptick in deals valued between $50 million and $100 million.
• Sixty-eight-percent of respondents said they would be involved in an acquisition in the next 12 months, which is fairly consistent with 2016’s 70 percent.
• For the fourth consecutive year, respondents expect technology and healthcare to see the most M&A activity in the next year. Fifty-nine-percent of respondents also predict an increase in M&A activity between fintech startups and established financial services organizations in 2018.
• Almost 80-percent of respondents expect an increase in M&A activity involving privately owned businesses in the next 12 months, increasing by 10-percent from last year’s results.
• Mirroring prior years, dealmakers say the leading driver of cross-border deals will be companies seeking growth via entrance into foreign markets. More companies in Asia are expected to pursue deals in the U.S., and outbound M&A activity from the U.S. to Mexico and Canada is expected to increase in the next year, despite ongoing public statements by the Trump administration around the renegotiation of the North American Fair Trade Act (NAFTA).

“The middle market is quickly becoming the focus of M&A,” said Jeff Gifford, co-leader of Dykema’s M&A practice. “Technology and healthcare are two of the more active spaces, with fintech becoming an increasingly popular area of interest. Megadeals have lost some of their steam and we are seeing more and more companies pursuing small to middle market strategic transactions.”

Survey results are being released this week at Dykema’s exclusive annual M&A Outlook events in Detroit and Chicago. The full report is available here.

Black Duck Software has posted online a complimentary webinar examining key open source software-related issues and deal points in M&A, licensing and other transactions.

Cybersecurity has become one of the areas where substantive diligence should be conducted not as an afterthought but as an integral part of the M&A process for any deal, particularly those that involve targets with any kind of online presence, Black Duck says on its website.

The continued growth in the use of open source software underscores the importance of thorough software due diligence.

Understanding these key legal and technical risks, as well as strategies for mitigating them, will help you speed and smooth negotiations, avoid protracted due diligence and get better deal terms.

Watch the webinar.

Baker McKenzie’s Global Arbitration News has posted an article discussing the difficult questions raised in both substantive and procedural law by indemnification clauses in share purchase agreements.

The author, Dr. Philipp Schuett, explains that the reason is that an indemnification dispute involves at least four parties: “The target company, the third party who raises claims against the target company, the seller (= the indemnitor) and the buyer (= the indemnitee).”

He then discusses the reasons to include indemnification clauses in SPAs, the scope and wording of indemnification clauses, the potential for disputes, and avoidance of post-M&A disputes.

Read the article.

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In a merger-and-acquisition transaction, the convention is for the seller to make representations and warranties to the buyer regarding the target business, according to an article posted by Womble Carlyle Sandridge & Rice.

“When the target business is a private company, the acquisition agreement typically provides the buyer with a post-closing right to indemnification if any of the seller’s representations and warranties prove to be untrue,” writes partner Melinda Davis Lux. “The purchase agreement also typically provides that the buyer’s right to indemnification is the buyer’s exclusive remedy for breaches of the seller’s representations and warranties.”

In her article, she discussindemnification time limits, shortening the statute of limitations and its consequences, time extensions, and lengthening the statute of limitations.

Read the article.

Practical Law has completed its annual survey of public M&A transactions, the fourth to analyze deal-protection measures binding target companies.

The company will discuss the survey results in a complimentary 60-minute webinar scheduled for April 26 at 1 p.m. EDT.

This year’s edition reviews the first full year of public merger deals to have been negotiated following the Delaware Supreme Court’s seminal 2015 decision in Corwin v. KKR, which held that an informed stockholder vote can restore the presumptions of the business judgment rule in the target board’s favor. The study provides a timely snapshot of how practitioners have begun responding to this increased deference toward director decision-making in M&A.

The Practical Law study examines how various deal characteristics — including buyer type, form of consideration, deal size, and financing—affect the negotiations and ultimate agreement between the transaction parties. The study also reviews the deal protections negotiated by buyers who require their own stockholder approval before closing. This analysis has two goals: to learn how frequently those buyers agree to symmetrical deal-protection measures, and to determine how reciprocally binding covenants and remedies affects the deal protections agreed to by the target company.

Daniel Rubin, Senior Legal Editor, Practical Law Corporate and M&A and primary author of the study, will review the study’s results, including its findings on no-shop and go-shop provisions, fiduciary outs and matching rights, termination rights, and break-up fees.

Following the webinar, attendees will receive a link via e-mail to these Practical Law resources:

Fiduciary Duties in M&A Transactions
Fairness Opinions

Register for the webinar.

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President Trump has named Makan Delrahim, a former government antitrust enforcer and corporate lobbyist, to lead the Justice Department’s review of mergers and acquisitions, The New York Times reports.

Companies are hoping that the new Republican administration will be more permissive with mergers than the Obama administration was, writes Cecilia Kang. Trump’s predecessor blocked dozens of blockbuster deals over the past eight years, including AT&T’s bid for T-Mobile in 2011 and Comcast’s merger with Time Warner Cable in 2015.

“Mr. Delrahim, who serves as legal counsel to the president, will be quickly tested in his new position by AT&T’s $85 billion bid for Time Warner, which is set to be reviewed this year. Other mergers under review include Dow Chemical’s bid for Dupont and Bayer’s acquisition of Monsanto,” Kang writes.

Read the NYT article.

By Keli Johnson Swan
Scott & Scott LLP

Mergers and acquisitions typically require extensive financial and legal disclosures, due diligence, and complex contract language to protect buyers from legal issues that may arise from the purchase. Potential liability arising from intellectual property issues is a significant factor to consider in any M&A transaction.

There following are a few key considerations to negotiate during any corporate transaction.

(1) Transferring Ownership of Existing Trademarks, Copyrights, and Patents.

Often a purchaser will acquire a company that will continue to operate as it was, continuing to use its existing trademarks, copyrights, or patents. Each of these intellectual property rights must be evaluated carefully and negotiated as part of the transaction. The purchaser should investigate any existing infringement claims against the seller prior to acquiring ownership of any marks or IP rights. Additionally, the purchaser will be required to appropriately register the transfer, and continue enforcing these rights with take-down notices and any other necessary legal means or risk losing the ability to enforce them.

(2) Transferring Ownership of IT Assets, Including Copyrighted Software

Depending on the nature of the transaction, the purchasing company may choose to dissolve the target company and dispose of its assets. In some instances, the purchaser chooses to retain the assets.

If the purchaser chooses to retain the IT assets, it assumes the responsibility of ensuring that all software complies with the relevant licensing agreement or risks potential copyright infringement liability. There are a number of steps the purchaser should take to mitigate potential exposure, including conducting an internal audit of the new IT assets, evaluate any existing licenses, and determine whether any remediation is required in order to become compliant.

Some larger companies have Enterprise agreements with Microsoft and other software publishers that may include affiliates that are acquired after the agreement is signed. The purchaser will need to determine whether the software on its newly acquired assets fall within the scope of any Enterprise agreement and take the appropriate steps to ensure the software is included in the user counts for any true-ups required pursuant to the agreement.

Even if a diligent audit and assessment of the company’s network reflects no potential claims for copyright infringement, the purchasing company may still face hurdles to properly transferring ownership of the copyrighted software.

Many software publishers include a provision barring the transfer of ownership of a software license in the license agreement. Others allow the transfer, subject to written consent from the software publisher. This final step is key to ensuring the assets acquired during the transaction are properly licensed. In the event of a software audit, the purchasing company will be required to prove ownership of the software installed on all of its computers and servers. Therefore, it is important that the transfer of ownership is documented with the software publisher for recordkeeping.

Alternatively, some purchasing companies choose to avoid the time and expense of a full audit of the newly acquired assets, and instead reformat the computers and install a predetermined set of software. Although this method can be effective if properly managed, it is important to verify that there are sufficient licenses for all of the installations.

(3) Indemnification Against Existing Claims

In addition to various potential legal issues that may arise in a transaction, an M&A contract should contemplate any potential claims or include who will be responsible for any existing intellectual property claims. Depending on the size of the company and the scope of non-compliance, copyright infringement damages could soar into the 7 figures.

If a copyright (or trademark or patent) infringement claim is known at the time of the purchase, it is critical to obtain an independent valuation of the potential exposure by an expert. Correctly calculating estimated damages is incredibly complex. The most prudent approach is to engage an expert to conduct its own analysis of the raw data, licenses, or legal issues and prepare an independent estimate for resolving the claims.

(4) Escrow Accounts To Resolve Claims

Once the purchaser is aware of the estimated liability of any potential or existing claims, it may choose to require that a specific sum of money be placed in escrow in order to resolve the matter. Escrow contracts may be a valuable tool for a purchaser seeking to mitigate risk and liability from intellectual property liability or any unforeseen risks arising from the sale.

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A federal judge blocked the $54 billion merger between health insurance giants Anthem and Cigna, saying the deal would increase prices and reduce competition, according to a report by The Washington Post.

Carolyn Y. Johnson reports that this ruling is the second recent court decision to uphold the Justice Department’s opposition to deals that would have consolidated the five largest insurers in the United States into three companies.

“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,” U.S. District Judge Amy Berman Jackson wrote in a 12-page order.

In the merger agreement, Anthem had agreed to pay Cigna a $1.85 billion termination fee if the deal is blocked because of regulatory interference.

Read the Washington Post article.

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Practical Law will present a free 60-minute webinar reviewing the year in M&A. During the webinar, Daniel Rubin, Senior Editor, Practical Law Corporate and M&A, will analyze what’s market data and review critical M&A trends, unique transactions and highlights from 2016 that may affect your practice in 2017.

The event will be Wednesday, Feb. 1, at 1 p.m. EST.

The presenter will discuss:

• Trends in deal size and deal volume among strategic and financial buyers, including the year’s swell of busted deals.
• The use of cash and stock consideration in public M&A deals in 2016.
• The continuing influence of shareholder activism on the M&A market.
• Legal developments and trends from 2016 that will influence deal-making in 2017.
• And more.

Also, participants may check out What’s Market, which provides a continuously updated database of agreements covering a range of corporate, securities, finance and commercial topics, including public merger agreements and spin-offs. In the public merger agreements database, readers can analyze and compare negotiated terms, such as fiduciary outs, matching rights, termination fees and pricing collars, across multiple deals. What’s Market also contains links to the underlying public documents.

A short Q&A will follow.

Presenter:
Daniel Rubin, Senior Legal Editor, Practical Law Corporate and M&A

Following the webinar, email links will be provided to these Practical Law resources:

Making Good Use of Special Committees.
Preparing a Portfolio Company for Sale.

Register for the webinar.

Black Duck Software has posted a complimentary ondemand webinar discussing the top five open source issues that impact transactions for both buyers and sellers in M&A transactions.

The 60-minute webinar is titled “Top 5 Open Source Issues – Stories from the M&A Trenches.”

“Open source risk is a significant issue for both buyers and sellers in M&A transactions,” Black Duck says on its website. “Although open source comprises 30-50% of the code in an average application, sellers rarely know what open source they’re using and there are often serious risks associated with open source components in code assets.”

In this session, Jim Markwith, a technology attorney who handles complex IP licensing transactions, and has been involved in scores of M&A deals, provides in-depth descriptions of the challenges encountered and their impact on the transaction, punctuating the presentation with insightful stories from the M&A trenches.

Register for the ond-demand webinar.

Respondents to Dykema’s 12th Annual M&A Outlook Survey predict a flat year ahead with steady deal flow, expressing an overall neutral viewpoint coinciding with the recent leveling off of the global M&A market.

Nearly half (47 percent) of respondents said they expect the market will see no significant change in the next 12 months, up from 43 percent in last year’s survey. Executives expressed some concerns about the effects corporate tax increases, increased federal regulation and taxation of carried interest could have on M&A in the coming year. But they believe other hot button news like Brexit fallout, financial-institution regulatory reform and uncertainty about the upcoming presidential election, will have a negligible effect on deals.

“When it comes to M&A in 2017, the biggest determining factor is likely the fate of the U.S. economy,” opined Thomas Vaughn, co-leader of Dykema’s M&A practice. “It’s not surprising that respondents – seeing a decline in 2016 deal volume after several years of strong growth – are taking a wait-and-see approach.”

The survey yielded a number of other interesting conclusions, including:

• By a two-to-one margin, respondents said the policies of Republican Donald Trump, if elected, would be more supportive of the U.S. M&A market than Democrat Hillary Clinton. But a plurality of respondents said both candidates would have a neutral effect on the U.S. M&A market in 2017.
• About half of respondents (49 percent) said availability of capital was most responsible for fueling current M&A activity, essentially the same percentage as in 2015. Twenty-five percent of respondents credited favorable interest rates, a 7 percentage point increase from 2015 despite the Federal Reserve’s December 2015 rate increase.
• Respondents said U.S. financial buyers had the most influence on U.S. deal valuation over the past 12 months. This was the first time strategic U.S. buyers weren’t seen as the most influential since the 2008 survey – even if financial buyers beat out strategics by only 5 percentage points.
• Sixty-eight percent of respondents said they expected an increase in M&A activity from privately owned businesses in 2016, down from 72 percent last year. The 4 percent difference basically mirrors the drop in the percentage of respondents predicting M&A growth this year.
• Despite the drop in overall confidence, 70 percent of respondents said they expect an acquisition involving their company or one of their portfolio companies in the next 12 months, up from 67 percent in 2015. Forty-eight percent expected a sale, compared with 42 percent last year.
• Aging business owners seeking to sell were again seen as the top driver for growth in M&A activity from privately owned businesses.

“While this year’s report demonstrates a more neutral sentiment for the global M&A market as a whole, there are segments of the market catching attention, including the energy, healthcare and technology sectors,” said Jeff Gifford, co-leader of Dykema’s M&A practice. “On the international front, the pace of outbound acquisitions by Chinese companies, particularly in the U.S. and Europe, does not appear to be slowing down anytime soon. This trend is in large part due to an increasing level of comfort navigating Chinese regulatory bodies and growing confidence that these deals will go through successfully.”

Survey results are being released this week at Dykema’s exclusive annual M&A outlook events in Detroit, Chicago and San Antonio.

See the full report.

Salesforce once enjoyed a cozy relationship with Microsoft, now it’s urging regulators to kill Microsoft’s deal to buy LinkedIn as “anticompetitive,” according to the company’s chief legal officer.

CNN Money is reporting that Salesforce also bid for LinkedIn, but lost out to Microsoft’s $26.2 billion bid for the professional social network.

“Microsoft’s proposed acquisition of LinkedIn threatens the future of innovation and competition,” Burke Norton, chief legal officer at Salesforce, said in a statement. “By gaining ownership of LinkedIn’s unique dataset of over 450 million professionals in more than 200 countries, Microsoft will be able to deny competitors access to that data, and in doing so obtain an unfair competitive advantage.”

“The combative remarks hint at a renewed chill in the relationship between Salesforce and Microsoft,” writes CNN’s Seth Fiegerman. “The two companies entered into a global strategic partnership in 2014, heaping praise on one another after years of fierce competition. It was unclear how Salesforce’s comments would impact the partnership.”

Read the article.

London-based venture firm Invoke Capital is betting that a startup using artificial intelligence to process legal documents and automate due diligence in mergers and acquisitions can replace the armies of lawyers needed to close billion-dollar deals, reports Bloomberg Law.

On its website, Luminance says its product “pairs the computing power of artificial intelligence with human training and experience. Luminance can process large, complex and fragmented data sets within an hour, and presents the entirety of the data room in an intuitive visualiser.”

Reporter Jeremy Kahn writes that CEO Emily Foges said in a statement that “the software can highlight important information without needing to be told what specifically to look for, according to Foges. Rather than employing attorneys to scan through thousands of documents to identify possible issues, these lawyers can now devote their time to analyzing the software’s findings and negotiating deal terms, Foges said.”

“Luminance has been trained to think like a lawyer,” Foges said in a statement.

Read the article.

DLA Piper represented private equity firm Guardian Capital Partners in the acquisition of Carson-Dellosa Publishing, LLC, a provider of K-8 supplemental education content.

The firm announced in a release:

Partnering with Guardian, Carson-Dellosa’s executive management team will continue to operate the company, which provides products to more than 1,000 schools. Carson-Dellosa provides workbooks, critical-needs resources, and test-prep and hands-on learning materials, for parents, teachers and students.

The acquisition will help position Carson-Dellosa, which has more than 35 years experience in digital and print consumer educational products, for continued growth and will bolster the company’s operating and financial capabilities.

The DLA Piper team representing Guardian was led by partners Jay Coogan, Lisa Jacobs and Darius Gambino, and associates Michael Bushey, Alvin Johnson, Priya Narahari (all of Philadelphia), of counsel Cathryn Le Regulski (Northern Virginia), partner Julia Kovacs, and associate Brittany Ann McCants (all of Washington, DC), partner Frank Mugabi and associate Witold Jurewicz (both of New York), partner Nate McKitterick (Silicon Valley) and associate Nelson Lam (San Francisco).