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Mar 06, 2014

Reasonable Best Efforts: Cold Comfort to Sellers


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New York antitrust partner Beau Buffier and M&A associate Tammara Fort, along with J. Reuben Clark Law School (Brigham Young University) associate professor Matthew Jennejohn, published an article, "Reasonable Best Efforts: Cold Comfort to Sellers,” in the January 2014 issue of The M&A Lawyer.

The article examines a preliminary bench ruling from the Delaware Chancery Court in the matter of Cooper Tire & Rubber Company v. Apollo (Mauritius) Holdings Pvt. Ltd., et al, which refused Cooper Tire’s assertion that Apollo has failed to use its reasonable best efforts to complete negotiations with Cooper Tire’s labor union and close their then-pending merger. According to the authors, the case “provides a rare Delaware court interpretation of the actions required to satisfy the “reasonable best efforts” standard that has become commonplace in antitrust covenants in merger agreements.” They add that, based on Cooper, “a reasonable best efforts standard alone provides cold comfort to sellers seeking deal certainty in circumstances where there is a meaningful likelihood that the antitrust authorities will require economic concessions in order to approve a transaction.” In the end, according to the authors, the lesson of Cooper is clear: “if a strategic buyer comes offering assurances of reasonable best efforts without any specifics, let the seller beware.”

View the article, Reasonable Best Efforts: Cold Comfort to Sellers