The dispute involves a corporate merger agreement where the buyer withdrew from the deal shortly before the finalization. The disagreement centers on whether the buyer's withdrawal was justified under the terms of the agreement, and what compensation, if any, the seller is entitled to due to the late-stage termination of the merger process.
Party A, the selling company, asserts that the buyer's withdrawal from the merger at the last minute was unjustified and has caused significant financial and reputational harm. Party A believes that they fully complied with all the terms of the merger agreement and that the buyer had no legitimate grounds to terminate the deal. The seller argues that the buyer's actions have not only disrupted their business operations but also led to lost opportunities, as they had already begun transitioning resources and restructuring in anticipation of the merger. Party A is seeking compensation for damages, including costs incurred during the merger process, lost business opportunities, and reputational damage resulting from the publicized withdrawal.
Party B, the buying company, contends that their withdrawal from the merger was justified due to newly discovered issues within the seller's company that were not disclosed during the due diligence process. Party B claims that these issues—such as hidden liabilities, overstated financials, or undisclosed regulatory concerns—posed significant risks that would have adversely affected the value and viability of the merger. Party B argues that under the terms of the merger agreement, they were within their rights to withdraw upon discovering material discrepancies that were not revealed earlier. They maintain that their decision to pull out was a necessary protective measure for their shareholders and that no compensation is owed to the seller as the termination was due to the seller's failure to provide complete and accurate information.
RESULT
Party A, I understand and acknowledge your contention that you have been wronged as a result of Party B's withdrawal from the merger. It is evident that you believe in your compliance with the terms of the agreement and perceive that Party B had no substantial reason to renege on the deal. The consequences you describe—financial strain, lost opportunities, and reputational damage—are serious and understandably give rise to your claim for compensation. Your position reflects a deep sense of disruption and loss, which you attribute directly to Party B's last-minute change of course.
Party B, I recognize your perspective on the necessity to withdraw from the merger due to what you describe as significant issues discovered within Party A’s company. You emphasize that these issues—affecting the very essence of the deal—were not disclosed during the due diligence process, and you argue that this non-disclosure goes to the heart of the agreement. It is your standpoint that these revelations presented potential risk to the value of the transaction and the financial well-being of your shareholders, leading you to exercise what you believe to be your justified right to terminate the agreement to protect your interests.