WHITE KNIGHT TRANSACTIONS – The target may agree to deal-protection mechanisms in a white knight transaction. Mechanisms may include a break fee, no-shop clauses, asset options and stock options. – Ontario courts have acknowledged that deal-protection mechanisms in a white knight context are appropriate where they are required to induce a competing bid; the competing bid represents sufficiently better value for shareholders to justify their use; and they represent a reasonable commercial balance between their potential negative effect as auction inhibitors and their potential positive effect as auction stimulators.
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Canadian Mergers & Acquisitions
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