USA Law and Practice Contributed by: Elena Rubinov, George Casey, Heiko Schiwek, Vinita Sithapathy, Pierre-Emmanuel Perais and Clara Pang, Linklaters LLP
4. Acquisitions of Public (Exchange- Listed) Energy and Infrastructure Companies 4.1 Stakebuilding Most acquisitions in the US are negotiated transac- tions and do not involve the buyer building a stake in the target beforehand. Stakebuilding Strategies Stakebuilding is permitted in the US and US federal law does not mandate that an acquiror make a bid for the target upon reaching a threshold. Therefore, an acquiror may usually purchase a publicly traded target’s shares on the open market, as long as it does not hold “inside” information contravening insider trading rules. US securities laws generally require an acquiror to file a notification on Schedule 13D, requiring disclo- sure of the acquiror’s ownership stake and intentions with respect to the target, within five business days of acquiring beneficial ownership of over 5% in a target company. Acquisitions in excess of the Hart-Scott- Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) threshold (USD126.4 million in 2025) require antitrust filings. Additionally, several states have “anti-takeover” stat- utes encouraging acquirors to negotiate with man- agement and discouraging certain hostile activities. Delaware’s business combination statute prevents acquirors from entering into business combinations with a target for a period of three years if they exceed a specific ownership threshold (15%), unless they received prior board of directors’ approval or a super- majority shareholder vote. Material Shareholding Disclosure Threshold Under Sections 13 (d) and 13 (g) of the US Securities Exchange Act of 1934 (the “Exchange Act”), persons or groups who own or acquire beneficial ownership of over 5% of certain classes of equity securities reg- istered under the Exchange Act are required to file beneficial ownership reports with the SEC. If Section 13 (d) is triggered, a person must file a Schedule 13D unless they are eligible to use Schedule 13G. The
tion that would otherwise be taxed as a dividend for US federal income tax purposes. 3.3 Spin-Off Followed by a Business Combination When a spin-off is followed by a business combi- nation, it is often structured as a Morris Trust or a Reverse Morris Trust transaction. These arrangements involve the parent company spinning off a business and subsequently merging itself or the SpinCo with a third party. • Morris Trust transaction: the parent company transfers all assets – except those intended to be merged with the third party – to the SpinCo. The remaining parent company merges with the third party. • Reverse Morris Trust transaction: the assets to be combined with the third party are transferred to the SpinCo. The SpinCo then merges with the third party. Both transaction types can be structured to be tax free if specific conditions are met, including that the third party must be smaller than the SpinCo, ensuring that the parent company’s shareholders maintain a majority stake in the merged entity. 3.4 Timing and Tax Authority Ruling Key considerations for a spin-off include identifying the assets and liabilities to be allocated and prepar- ing audited financial statements for the business to be spun off. Transaction agreements are also needed to effect the separation of the divested business from the retained business and to set out post-separation covenants and relevant SEC filings – including a Form 10 registration statement and information statement. Depending on the transaction complexity and the potential US tax leakage should the transaction not qualify as a tax-free spin-off, a company planning a spin-off transaction may submit a letter-ruling request to the IRS to confirm the spin-off qualifies as a tax-free reorganisation under Section 355 of the Code. The IRS usually takes six months to grant a ruling, but the company may request to fast-track the process.
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