Cash Election Mergers

Notable Transactions

IVAX / TEVA Drug companies

Premcor / Valero Energy Energy (Oil refining)

IRS adopts signing date rule for cash election mergers

IRS Final Regulations 9.16.05
So that if the number of Buyer shares to be issued is fixed, their value will now be measured as of the end of the last business day before the date of the binding agreement
Under prior practice, value wasn't determined until closing

Presented structural challenges to cash election mergers because of risk that a decline in the market value of the stock component before closing could result in a failure to satisfy continuity of interest requirement

IRS action provides greater flexibility and certainty when structuring cash election mergers

Commentary

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