A Twist in the Delaware Two-Step: A Proposed Amendment to the Delaware General Corporation Law Would Eliminate Required Stockholder Vote
A two-step merger is a common acquisition structure for public company sale transactions. Under this structure, the buyer commences a tender or exchange offer to obtain over 50% of the target’s voting shares, followed by a second-step merger to acquire the remaining voting shares. Generally speaking, unless the buyer obtains 90% or more of the target’s voting shares in the first-step tender or exchange offer (or through exercising a "top-up option," if any), the target’s stockholders must vote to approve the second-step merger. This stockholder vote requires a proxy statement or an information statement to be delivered to the target’s stockholders, which can be onerous.