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Summary
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An M&A
transaction structured as a true merger
- Rather than an acquisition by one party of
the other
- Deal terms are negotiated with a view to
parity
- Even so, from the outset, one company is
often
expected to be the dominant partner
- While many MOEs have been successful,
particularly in the financial services sector,
several have been disastrous:
- AOL / TimeWarner
- McKesson / HBOC
- Cendant / CUC
- Daimler / Chrysler
Paradigm
terms for an MOE
- All stock; fixed exchange ratio
- Exchange ratio reflects pre-signing market
prices
i.e. neither party receives an acquisition premium
- Board seats are split, or nearly so
- The two CEOs either split Chairman and CEO
roles or have a plan for one to succeed the other as CEO after an agreed period
of time
- Name of new company / location of
headquarters are a toss-up
- Optics of acquisition structure can be a
sticking point
- e.g, which party legally survives the merger
- Sometimes a new holding company is used in a
double dummy structure to avoid this issue
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Developments
Notable Deals
SEC_CODE_REF_0090001192884
Related Topics
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