Deal protection
SUPPLEMENT - THE 2008 GUIDE TO JAPAN - January 01, 2008
Mori Hamada & Matsumoto
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This article summarises the state of affairs in Japan with respect to deal protection provisions in M&A transactions involving public companies, such as no-shop clauses that may or may not be backed up by liquidated damages provisions and termination fees.
Historically, it has been quite rare to find any type of deal protection provisions in transaction agreements in Japan, probably due to the fact that, at least until recently, there was not perceived to be any realistic threat of a continuing transaction being disrupted by a third party. It has been common to include exclusivity provisions in an MOU or other preliminary agreement that requires exclusive negotiations for a specified period leading up to execution of a definitive agreement. However, these exclusivity provisions generally contain no specified penalties for breach and would fall away when the definitive agreement is executed.
Whether or not third-party interlopers have become a...
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