How do appraisal rights in cross-border public M&A transactions into Canada compare with appraisal rights under Delaware law?
The 2023 ABA Canadian Public Target M&A Deal Point Points Study, together with an August 2023 Canadian court decision, provide timely and illustrative points of comparison on two key transactional issues.
- First, while appraisal rights closing conditions are uncommon in U.S. public M&A transactions, they are a near-omnipresent feature of Canadian public M&A. This raises several strategic considerations for a U.S. buyer eyeing a Canadian public target.
- Second, while Delaware and Canadian courts have been trending in the same direction in favouring deal price over other valuation methodologies in deciding fair value in appraisal proceedings, the "one true rule" in Canada remains that the court will account for all relevant factors. This highlights the importance of the sales process conducted in determining the deference the court will give to deal price. It also highlights that target directors in Canada are not subject to exactly the same duties as target directors under Delaware law when overseeing the sale of the company.
Writing in The M&A Lawyer (PDF, 206 KB), we explain that, overall, U.S. counsel will find that appraisal rights in cross-border public M&A into Canada are both partly familiar and partly foreign.
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