D Reorganizations
Summary
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 Per
IRC §§ 368(a)(1)(A) and
368(a)(2)(D)
Target
merges into a subsidiary of Buyer
- Target shareholders receive merger consideration
in exchange for their
Target stock
- No requirement that voting stock be used
Target-Sub
merger must qualify as an
A reorganization
 Additional
requirements
SEC_CODE_REF_0090001192884
Issues
- Same rules regarding
escrowed and
contingent stock apply as in A
reorganizations
- Target preferred
stock can't be assumed by Sub
Must either redeem or have Buyer re-issue
- Complications ensue if Buyer
already owns Target stock
- IRS issued regulations in 2003 to
treat forward triangular mergers as direct mergers if Sub is a
"disregarded entity"
Post-acquisition
- Sub can transfer Target assets
to a subsidiary
controlled by Sub
- Buyer can transfer its Sub stock
to a subsidiary
controlled by Buyer
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Transaction
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Result
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