In response to the epidemic of M&A strike suits (litigation brought for the purpose of obtaining a settlement), target companies that have not already amended their bylaws with exclusive forum provisions are taking action prior to announcing their deals. These bylaws require that certain disputes be litigated exclusively in specified courts. They intend to avoid the uncertainty and additional expense of litigating in multiple jurisdictions as a result of their M&A deals. Virginia incorporated, Kraft Foods Group is the latest M&A target company to adopt an exclusive forum bylaw. As of March 24, more target companies have adopted exclusive forum provisions in connection with their deals than in any other year since this new trend emerged in 2013. Delaware is the leading forum with 58% of target companies selecting it so far in 2015.
|April 2015||Last 12 Months|
|Ave. 1 Day Premium %||9.0%||27.4%|
|% of Mergers that are Accretive||33.0%||43.1%|
|Ave. Target Break Fee as % of Equity Value||3.4%||3.4%|
|Ave. Reverse Break Fee as % of Equity Value||12.7%||5.5%|
|% of Mergers that were hostile/unsolicited||0%||13.2%|
Fried, Frank, Harris, Shriver & Jacobson LLP was the top legal adviser on U.S. Public M&A deals announced in April.
|Rank||Firm||Equity Value $bil|
|1||Fried, Frank, Harris, Shriver & Jacobson LLP||5,797.0|
|2||Wilson Sonsini Goodrich & Rosati||5,452.0|
For deals announced in the first quarter, JPMorgan has emerged as the disclosed fee leader with $168 million already disclosed. This represents an 88.7% increase in fees compared to first quarter 2014. Centerview Partners has moved in to second place among financial advisors in disclosed fees. Morgan Stanley rounded out the top three in disclosed fees.
The pace of new issuance of SEC registered high-yield new issues declined 9.5% in April with $5.55 billion pricing during the month down from $6.13 billion in March.
Covenant protection continued to weaken during April. 39% of SEC registered deals had limitations on restricted payments covenants compared to 40% of new issues priced in the last twelve months. Limitations of indebtedness covenants were also present in only 46% of April's new issues compared to 47% of deals priced in the last twelve months.