The clearest method for achieving exclusivity is an exclusive negotiating period, during which both sides agree not to talk to third parties, even if approached unexpectedly by others. In some arenas, these terms are called no-talk periods.
mergers and acquisitions
The following items are tagged mergers and acquisitions.
Deal Making Without a Net: Yahoo’s Tumblr Acquisition
On May 19, Internet company Yahoo announced that it was purchasing the blogging service Tumblr for about $1.1 billion in cash. The acquisition could put a fresh face on the aging Internet company and provide it with a profitable revenue source—or it could turn out to be another instance of the Web pioneer overpaying for a start-up and failing to nurture it, as was the case after Yahoo bought Flickr and GeoCities.
Negotiate Conditions – And Bring Value to the Deal
Like a contingency, a condition to a deal is a related though far less common deal-structuring technique. A condition is an ‘if’ statement like a contingency, but, whereas a contingency depends on unknown future events, a condition is entirely within the control of the parties involved.
An International Negotiation for an All-American Brand
On February 14, the news broke that Berkshire Hathaway, the conglomerate run by Warren Buffett, is planning to purchase H.J. Heinz—and its iconic Heinz ketchup—for $23 billion. Joining Berkshire Hathaway in the acquisition is 3G Capital Management, a Brazilian-backed investment firm that owns a majority stake in Burger King. The deal marks a harmonious pairing between burgers and ketchup.
Business Negotiations and the Return of the LBO
Computer giant Dell’s potential $23 billion leveraged buyout could mark the beginning of a new era of sky-high-priced acquisitions, writes Matt Wirz in the Wall Street Journal.
A Value-Creating Condition Thwarted
In late 1999, with its stock in free fall, NCS HealthCare, a provider of pharmacy services to long-term care facilities, began “exploring strategic alternatives” – code in the mergers and acquisitions world that NCS’s board wanted to put the company up for sale.
In 2001, Omnicare, a larger provider in the same general industry, offered to buy NCS for $270 million, a number lower than the value of the company’s debt. The deal would have left the company’s stockholders with nothing, and talks broke down when NCS demanded a higher price. In June 2002, Omnicare’s fierce rival Genesis HealthCare came to the table with an offer for NCS. Fearful of having its deal stolen away by Omnicare, which had just beaten Genesis in a bidding contest for another company, Genesis proposed a condition on the deal. It would make an offer only if NCS’s chairman and president, who together held a majority of the voting shares, committed to the Genesis deal and rejected any competing offer from Omnicare. NCS accepted this condition, and the merger was announced on July 28, 2002.
How Much Exclusivity is Enough?
On February 14, 2005, telecommunications giant Verizon announced that it would buy MCI for $6.75 billion in cash and Verizon stock. The announcement followed closely on the heels of two other announcements of big telecom mergers: first Sprint and Nextel, then AT&T and SBC Communications. In light of this rapid industry consolidation, only one player would be stranded without a partner: tiny Qwest Communications, whose market capitalization was less than one-fifth that of any of its soon-to-be-merged competitors.
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