Section 251(h) eliminates the requirement for a stockholder vote in a back-end merger for a target company whose shares are listed on a national securities exchange or are held by more than 2,000 record holders if:
(1) the merger agreement expressly states that the merger is governed by Section 251(h) and requires the buyer to complete the merger as soon as practicable following the tender offer;
(2) the buyer completes a tender offer for all of the target company’s outstanding voting stock;
(3) following the closing of the first-step tender offer, the buyer owns at least the percentage of the target company’s stock that would otherwise be required to adopt the merger agreement and approve the back-end merger (i.e., a majority, or higher threshold if required by the target’s organizational documents);
(4) at the time the target company’s board of directors approves the merger agreement, no party to the merger agreement is an interested stockholder (as defined in Section 203(c) of the DGCL) of the target;
(5) the buyer entity that consummated the offer merges with the target pursuant to the merger agreement; and
(6) the target company’s remaining outstanding shares are converted in the back-end merger into the same consideration paid to stockholders in the offer.
Section 251(h) of the DGCL should lead to an increase in the use of the “two-step” acquisition structure for mergers and acquisitions of Delaware public companies.