USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Vinita Sithapathy, Kristina Trauger, Pierre-Emmanuel Perais, Clara Pang and Gregory Gewirtz, Linklaters
6. Acquisitions of Public (Exchange- Listed) Technology Companies 6.1 Stakebuilding Most acquisitions in the USA are negotiated transac- tions and do not involve the buyer building a stake in Stakebuilding is permitted in the USA and, unlike oth- er jurisdictions’ takeover laws, US federal law does not mandate that an acquirer make a bid for the tar- get upon reaching a specified threshold. Therefore, unless it has publicly announced or commences a tender offer for shares of the target, an acquirer may purchase a publicly traded target’s shares on the open market, so long as the acquirer does not hold “inside” information that would cause such purchase to violate insider trading rules. the target prior to the transaction. Principal Stakebuilding Strategies Federal securities laws generally require an acquirer to file a notification on Schedule 13D (or a short-form equivalent), which requires disclosure of the acquirer’s ownership stake and its intentions with respect to the target, within five business days of acquiring benefi- cial ownership of more than 5% in a target company. Additionally, acquisitions in excess of the HSR Act threshold (USD126.4 million in 2025, adjusted annu- ally) may require an antitrust filing. In addition, several states including Delaware have “anti-takeover” statutes that encourage acquirers to negotiate with management and discourage certain hostile activities. The General Corporation Law of the State of Delaware (DGCL) prevents acquirers from entering into business combinations with a target if they have exceeded a specific ownership threshold (15%), unless acquirers received prior board of direc- tors’, or super-majority shareholder, approval. 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 more than 5% of certain classes of equity securi- ties registered under the Exchange Act are required to file beneficial ownership reports with the SEC. Gener- ally, if Section 13 (d) is triggered, a person must file a
In a 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 then merges with the third party. Conversely, in a Reverse Morris Trust transac- tion, the assets to be combined with the third party are transferred to the SpinCo. After this transfer, the SpinCo then merges with the third party. Both Morris Trust and Reverse Morris Trust transac- tions can be structured to be tax-free, provided spe- cific conditions are met. Notably, one of these condi- tions is that the third party must be smaller than the SpinCo, ensuring that the parent company’s share- holders maintain a majority stake in the merged entity. 5.4 Timing and Tax Authority Ruling The key preliminary considerations for a spin-off include identifying the assets and liabilities to be allo- cated and preparing audited financial statements for the business to be spun off. Transaction agreements will also need to be drafted to effect the separation of the divested business from the retained business, as well as to set out post-separation covenants and relevant SEC filings – including a Form 10 registration statement and information statement, which will also need to be prepared. Depending on the complexity of the transaction and the potential US tax leakage that could arise if the transaction did not qualify as a tax-free spin-off, a company planning a spin-off transaction may wish to submit a letter-ruling request to the Internal Revenue Service (IRS) to obtain a ruling that the spin-off quali- fies as a tax-free reorganisation under Section 355 of the Code. The IRS generally takes approximately six months from the date that the request is submitted to grant a ruling. This timeline may be shortened if the company submits a request to “fast-track” the ruling process, which the IRS may grant if certain require- ments are satisfied.
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