Kohlberg Purchases DecoPac themiddlemarket.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from themiddlemarket.com Daily Mail and Mail on Sunday newspapers.
On April 30, 2021, the Delaware Chancery Court (the
“Court”) issued a decision in
Snow Phipps Group,
LLC v. KCake Acquisition, Inc., ordering an affiliate of
private equity buyer Kohlberg & Co. (“Kohlberg”) to
acquire cake decoration supplier, DecoPac Holdings Inc.
(“DecoPac”), for $550 million. In the opinion, newly
sworn-in Chancellor Kathaleen McCormick affirmed prior case law on
several common contractual provisions that bear on deal certainty
in the time of COVID-19 (including material adverse effect, or
“MAE,” conditions; interim operating covenants; and the
reasonable best efforts standard). Most notably, however, the Court
said it had “chalked up a victory for deal certainty”
by granting DecoPac s request to force Kohlberg to
A prospective client seeking to sell their company recently asked me if the recent craze involving the use of SPACs to buy private companies might be applicable to their firm. I answered unequivocally that SPACs were suited to much bigger companies as well as industries with more future growth and appeal than exhibited by the mature printing and packaging industry. I was wrong. In the case of one industrial printing company, a merger into a SPAC is the pathway to value and liquidity for the owners.
SPAC is the acronym for a Special Purpose Acquisition Company. In simple terms, a SPAC is essentially a shell company that raises money in the public markets via a stock listing. Since there is no actual business at its formation, the investors in a SPAC are trusting that the sponsors will find a real business worth teaming up with. Once a target company is identified, the SPAC and the target company merge, and voilà, the private company has become a public company without all the fuss o
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On April 30, 2021, then-Vice Chancellor Kathaleen McCormick of
the Delaware Court of Chancery struck a victory for deal
certainty in
Snow Phipps Group, LLC v. KCake Acquisition,
Inc. (Del. Ch. April 30, 2021), in ordering specific
performance to compel the investment funds of Kohlberg &
Company, LLC (the buyers ) to close the $550 million
acquisition of DecoPac Holdings Inc. ( DecoPac ), a
supplier and marketer of cake decorating products, upon finding
that the buyers breached their obligation to use reasonable best
efforts in connection with the debt financing for the
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On April 30, 2021, then-Vice Chancellor (now Chancellor) Kathaleen S. McCormick of the Delaware Court of Chancery issued a post-trial decision addressing an array of important topics in the busted deal context following a private equity buyer s attempt to terminate its $550 million acquisition of a private cake decorating company. In this decision
Snow Phipps Group, LLC v. KCAKE Acquisition, Inc. the court rejected the buyer s attempt to terminate the deal on the basis of an alleged material adverse change (MAC) in the target s business and the target s alleged failure to operate in the ordinary course. The court also found that the buyer had breached its contractual obligations to use reasonable best efforts to work toward a definitive credit agreement for the acquisition. The court ordered specific performance, requiring the buyer to close the transaction.