Monday, November 07, 2005

Ever see a company act like a dumped girlfriend/

Merger and acquisition (M&A for those in the know) deals usually have break fees built into them in case one of the betroth get cold feet on the way to the alter of corporate union. Some deals even have clauses to compensate the involved parties in case the marriage doesn't work out as planned (a corporate prenuptial if you will).

But I am not sure how often it happens that one company sues another on the basis of buy me or else. Having been on the end of a buy me, I mean marry me or get out (I chose to get out) proposition, I can understand a "buy me now or its over" situation, but I can't understand a "marry me now or I will sue you" ultimatum.

So I guess we will have to see where the Guidant Sues Johnson to Force Buyout situation ends up, but the question is, if this deal goes through, how will husband and wife ever share the bathroom.


Anonymous Daniel Nerezov said...

Josh, I think you might be talking about estoppel, either the equitable kind or the common law variety.

Veeerrry tricky area. Could go either way on any particular set of facts. The remedy basically stops people from going back on their word. Not explicit contractual obligations (which is plain vanilla contract law), but the things people say and write to each other prior to contract being executed.

The issue comes up a lot. Not sure how many plaintiffs argue estoppel in the context of M&A, but people force others to complete contracts all the time. It's'd be in a negotiation with somebody, but you're also entertaining other offers...and then you walk away. Well, in how estopel has developed, the couter party has a potential claim against you to force you to complete the transaction. It's all to do with unconscionability and other nasty stuff.

7:20 AM  

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