Evolving companies: mergers

Mergers of major companies are usually reviewed by the Federal Trade Commission or another federal government agency that regulates the field at issue. For example, the Federal Communications Commission approves of mergers between businesses it regulates. These reviews are designed to ensure the mergers and acquisitions of companies don’t violate various anti-trust laws, such as the Sherman Act and the Clayton Act, that guard against monopolies.

The FTC and a handful of other federal agencies will often put conditions on mergers as part of the review process. Documents in these internal agency proceedings, including final orders of the FTC that set conditions, are generally available on the FTC Web site.

Many of the other documents the FTC has that were relied on in making final decisions on mergers will be covered by Exemption 5 to the federal Freedom of Information Act, however. That provision protects from public release attorney work product, documents that are part of the decision-making process and other information that would normally be privileged in litigation.

Likewise, information that is provided to the FTC before a merger is protected by the Clayton Act, 15 U.S.C. § 18a(h), and cannot be released to the public unless it’s part of an administrative or judicial action. Lieberman v. F.T.C., 771 F.2d 32 (2nd Cir. 1985). Administrative law judges, who hear cases involving the agency’s laws and regulations, can also issue protective orders sealing documents. Exxon Corp. v. F.T.C., 65 F.2d 1274 (D.C. Cir. 1981).

Reporter’s tip: One company is always buying another — it’s never truly a merger of equals. Each company will spin a merger announcement differently, so even comparing both press releases can lead to some good stories.

Reporter’s tip: The value-per-share is a crucial number in a merger deal, and it’s important to know how much stock and how much cash are involved in a deal. Cash deals will almost always be better for a company than stock deals. Stories about mergers generally answer questions on what the deal will do to earnings, what executives will come and go, whether the board has approved the deal, and when it’s expected to close.