K&L Gates has posted a nice overview of the
general issues one needs to consider when negotiating non-disclosure agreements
and standstills (here), inclduing the limits on their enforceability.
The authors of the memo also point out the hole in the indirect protection
argument that Vulcan is attempting to make in front of the Chancery Court
when they advise targets not to fall for the indirect protection argument when
When negotiating a standstill, the acquiror may argue
that the target company does not need a lengthy standstill because it is
already indirectly protected by the confidentiality agreement providing that
the proprietary information to be provided to the acquiror may only be used in
connection with the currently negotiated transaction and not for any other purpose.
Targets should resist such argument-the target's board wants certainty that the
acquiror cannot launch a hostile bid and does not want to get into an argument
about whether the acquirer is misusing the proprietary information.
If you want a standstill, ask for a standstill.
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