Page 360 - מיזוגים ורכישת חברות - ברקלי תשפא

Act, the identity of the surviving corporation was dictated by regulatory requirements
under the Bank Holding Company Act. There may be other reasons to reverse the
direction of a merger, such as the impact of change‐of‐control triggers under existing
contracts and shareholder vote requirements.

Historically, capital requirements and pooling‐of‐interests accounting
requirements drove financial institution acquisitions and bank acquisitions, in particular,
to be structured as tax‐free stock‐for‐stock mergers. Even following the abolition of
pooling, all‐stock transactions continue to be well represented, particularly among some
of the larger transactions. Prior to the credit crisis and increased capital issues, significant
cash components had become a common feature in the financial institutions landscape
(although even the deals with significant cash components have generally continued to
be structured as reorganizations for tax purposes), including Wachovia’s $25 billion
acquisition of Golden West, Capital One’s $15 billion acquisition of North Fork
Bancorporation, The PNC Financial Services Group’s $6 billion acquisition of Mercantile,
Bank of America’s $35 billion acquisition of MBNA, Washington Mutual’s $6.5 billion
acquisition of Providian and BBVA’s $9.6 billion acquisition of Compass Bancshares. In
general, the stock portion of these mergers has been tax‐free to target stockholders. TD
Bank, however, has undertaken several part stock, part cash transactions in which the
stock consideration was also taxable to target stockholders, including the acquisitions of
BankNorth and Commerce. In light of the particular recent focus on preservation of
capital and liquidity, most of the larger transactions in 2008 were stock deals, although
the tax characterization has varied. For instance, the JPMorgan Chase/Bear Stearns
merger was structured as a taxable stock deal, in view of the merger price in light of Bear’s
recent historic trading levels. In several instances this also included a swap of acquiror
"mirror" preferred stock (sometimes given a nominal vote) for target preferred stock.

Notwithstanding current capital concerns, cash considerations can be expected to
persist, such as in Bank of America’s $21 billion acquisition of LaSalle Bank. This is
particularly true where an all‐ or part‐stock deal might have taken longer to complete or
added complexity. Foreign acquirors without a U.S.‐registered currency in particular may
want to rely on all‐cash transactions. Examples include Bank of the West’s acquisition of
Commercial Federal in 2005, the $10.5 billion acquisition of Charter One by Royal Bank of
Scotland and the $1.2 billion acquisition of First Community by BNP in 2004.

In some situations, issuing stock as all or even part of the merger consideration is
not practical, such as in acquisitions of subsidiaries of other corporations, or where the
acquiror is not itself a publicly‐traded entity or is a foreign bank holding company. In some
instances, foreign acquirors reported having been reluctant to issue stock due to concerns
about "flow back," the anticipation that institutional stockholders in a U.S. target (e.g.,
index funds) will not wish or may not be permitted to own foreign‐based stock issued in
the merger and will sell their shares, causing them to flow back into the home country

356