Question

1. Kissinger Inc., has just agreed to acquire Mashly Inc., in an all-cash offer of $25/share. According to the merger agreement, Mashly could not solicit, initiate or knowingly encourage any offers or proposals that constituted an alternative merger proposal. Which of the following can be inferred based on this information?

1. Mashly has agreed to dismiss its poison pill provision for Kissinger
2. Kissinger is bearing significant deal value risk
3. Mashly has agreed to a ‘No-Talk’ clause

1. I only
2. III only
3. II and III
4. I and III
5. I, II and III

Answer 1

Option B is correct. It is called as No talk/No shop clause

In No talk clause, seller should not accept any proposals from the buyer. This is in a way that the buyer will protected from any further increase in the deal price because competition from other players.

Poison pill is something different and acts like a counter to the meger proposal where company shreholders can buy the shares at discounts. This makes the deal unattractive to the acquirer.

Acquirer facing deal value risk will not even count.