Simon this month said it wants to scrap the tie-up because Taubman breached the merger agreement by not taking steps to mitigate the damage from the pandemic. Taubman is holding firm, accusing Simon of “a classic case of buyer’s remorse.”
The biggest deal in dispute before Delaware courts remains South Korea’s Mirae Asset Global Investment Co.’s $5.8 billion purchase of 15 luxury hotels from China’s Dajia Insurance Group. The portfolio includes the JW Marriott Essex House, overlooking Central Park in New York City, the Westin St. Francis in San Francisco, Loews Santa Monica Beach Hotel, and the Four Seasons in Jackson Hole, Wyoming. Dajia is suing Mirae to try to force the deal through.
And in May, WeWork co-founder Adam Neumann sued the company’s biggest investor, SoftBank Group Corp., for its decision to withdraw a $3 billion investment in the workplace provider. The investment was part of a rescue package agreed after WeWork’s initial public offering was shelved last year.
In Limbo
A handful of deals are in dispute but haven’t yet reached litigation stage. Britain’s Cineworld Group Plc. is backing away from its C$2.15 billion ($1.6 billion) purchase of Canada’s Cineplex Inc., saying the target breached the terms of their merger agreement and was unwilling to correct the situation. Cineplex has threatened litigation.
It’s a similar situation for Boeing Co. and Embraer SA, which had agreed on a $4.2 billion tie-up in January last year. In April, Boeing said it would abandon the deal, weeks after Chief Executive Officer Dave Calhoun warned that the company would need to adjust to a “new reality” as travel demand evaporates. Embraer has said it would seek damages.
Compromise
More than $6 billion worth of deals have been renegotiated this year, with engineering services company BorgWarner Inc.’s $3.3 billion transaction for Delphi Technologies Plc the biggest. BorgWarner in March said that Delphi’s decision to tap out its credit line without permission breached their agreement. The companies in May agreed to new terms for their deal, with shareholders of automotive parts maker Delphi taking a small cut to the ownership ratio initially proposed. The deal was approved by shareholders last week.
Maybe Later
After a campaign that lasted more than six months, Xerox Holdings Corp. decided to scrap its $35 billion hostile bid for HP Inc., saying the COVID-19 pandemic made the macroeconomic and market outlook too uncertain.
This is just one of a number of transactions dealmakers say have been put on ice -- some less publicly -- by companies waiting for the world to ride out the health crisis. They are hopeful for the second half of the year, predicting at least some of those deals will come back as the economy recovers.
One bright spot: a small recovery in M&A activity in June, compared with declines in both April and May. Volumes globally climbed 87% to $93.3 billion as of June 26, the worst June since 2002.
--With assistance from Elizabeth Fournier and Michael Hytha.