Also known as: agreements and plans of merger · merger agreement · plan of merger
Written by attorneys · grounded in primary & secondary sources — see below
A formal written instrument that sets forth the terms and conditions under which two or more business entities will combine into a single survivor entity. The instrument must identify the parties, designate the survivor, and specify all other provisions required or permitted by the governing organic statutes.
Azure Solutions, a domestic corporation, negotiated a merger with Alliance Holdings and EuroTrips AG. The agreement and plan of merger named Alliance Holdings as the survivor unless foreign regulatory approvals for EuroTrips were not obtained by closing, in which case EuroTrips would survive with the same ownership allocations. Preferred shareholders sued to block the deal, claiming the plan failed to designate a single definite survivor.
Ursula, president of Sterling Build, signed a detailed agreement and plan of merger with South Framing. She presented only a two-page summary to the board, which then passed a generic ratification resolution without examining the full document. Rodney later challenged whether the board had properly adopted the plan.
Select any source to read its text and confirm it supports the definition.
NCS Health Care entered an agreement and plan of merger with Genesis that included voting agreements locking up a majority of shares. Omnicare later made a superior bid. NCS directors refused to consider the new offer because the plan prohibited termination without a fiduciary-out clause that the board had already waived.
Macmillan directors approved an agreement and plan of merger with KKR after a hurried process that excluded other bidders. Mills Acquisition challenged the deal, arguing the board had failed to maximize shareholder value when it signed the plan without a full market canvass.
Revlon directors executed an agreement and plan of merger with Forstmann Little that ended an active auction. MacAndrews & Forbes sued, claiming the board had improperly favored one bidder and abandoned its duty to obtain the best price once the company was for sale.
Virginia Bankshares directors recommended a merger in a proxy statement that omitted material facts about the fairness opinion and the controlling shareholder's motives. Sandberg sued after the vote, alleging the misleading disclosures in connection with approval of the agreement and plan of merger violated federal securities law.
The plan must identify the parties, designate the survivor, and include all terms required by statute. It may also contain additional provisions not prohibited by law and may make terms contingent on facts outside the plan.
Supporting sources
Yes, provided the plan always produces exactly one survivor. Terms may depend on objectively ascertainable facts outside the plan, such as whether regulatory approvals are obtained by closing.
Supporting sources
Yes. Directors must engage with the actual substance of the plan before adopting it. A generic ratification after seeing only a summary does not satisfy the statutory adoption requirement.
Supporting sources
…cash-out merger was not the product of an informed business judgment; (2) that the Board's subsequent efforts to amend the Merger Agreement and take other curative action were ineffectual, both legally and factually; and (3) that the Board did not deal with complete candor with the stockholders by failing to disclose all…