M&A 2019 Annual Review

• The EU’s General Data Protection Regulation (GDPR) generated record-breaking fines, including a €50M fine against Google by the French data protection authority for alleged violations of GDPR’s transparency, information, and consent requirements in deploying targeted advertisements. The forthcoming ePrivacy Regulation is likely to have an even greater impact on the use of cookies and similar technologies, interest-based advertising, and other collection of data from users’ devices. • Beyond the U.S. and EU, privacy laws are expanding globally as well. 2 THE BLOCKCHAIN INDUSTRY CONSOLIDATES AND MATURES The blockchain industry ripened as a vector for M&A, joint ventures, and other strategic transactions during 2019. Noteworthy transactions included the acquisitions of cryptocurrency derivatives trading facilities (such as Kraken’s acquisition of Crypto Facilities), blockchain-enabled payment remittance companies, and custody services (such as Coinbase’s acquisition of Xapo’s institutional custody business). Investment also grew in supply chain management, healthcare, and other verticals. At the same time, established financial players seeking greater returns for their investors are continually deploying their own “permissioned” blockchain-enabled solutions. Overall, dealmaking in 2019 exhibited a more calculated approach than in 2018, likely as a result of what is known as the “Crypto Winter,” where the hyped valuations of several cryptocurrencies returned to normal levels or folded for lack of underlying substance. 2019 also saw both governments and tech giants focusing on the implications of blockchain products. For example, the rise of cryptocurrencies and the interest of established players has put pressure on central governments to look into crafting their own digital asset platforms. The combination of regulation and consolidation will continue to drive activity in the blockchain space. 3 h M&A LITIGATION CONTINUES AND E EVOLVES The focus of M&A litigation continued to change, though such litigation remains an integral piece of the public, and in some cases the private, M&A landscape. • Migration to Federal Courts – 2019 saw the effects of the movement of shareholder M&A litigation out of Delaware state courts, following those courts’ determinations in the Trulia and Corwin cases. Shareholders still challenge a majority of public acquisitions, but the bulk of those challenges have shifted to federal court, with more focus on disclosure issues than on fiduciary issues, and to some other state courts. In support of potential challenges, shareholders have continued to seek (and litigate for) access to corporate books and records. Delaware courts in 2019 reminded parties in emphatic fashion that they will enforce the terms of the parties’ negotiated agreement. Some examples include: • Strict Enforcement of a Termination Provision – In Vintage Rodeo Parent, LLC v. Rent-a-Center, Inc. , a target company, immediately after the scheduled end date under a merger agreement, terminated the deal and demanded a $92.5M reverse termination fee, since the regulatory approval condition had not been satisfied. The buyer objected to the termination, noting, among other things, that the parties were continuing to seek regulatory approval. The Delaware Court of Chancery enforced a provision requiring the buyer to provide notice of extension of the end date, which the buyer had failed to provide. • Ordering a Buyer to Close – Coming off the heels of the Delaware Supreme Court’s 2018 Akorn decision finding – for the first time – that a material adverse effect had occurred, 4 the Delaware Court of Chancery, in Channel Medsystems, Inc. v. Boston Scientific Corp. , rejected a buyer’s claim that a material adverse effect had occurred and ordered the buyer to close the acquisition. The court found that, while a “The rise of cryptocurrencies and the interest of established players has put pressure on central governments to look into crafting their own digital asset platforms.” 3 MORRISON & FOERSTER 2019 M&A ANNUAL REVIEW