I’ve had occasion to consider the dispute between Cooper Tyre and Apollo Tyres, as the Wall Street Journal asked me about the efforts language at issue.
That’s something that Steven Davidoff considered in this recent item in the New York Times Dealbook:
Section 6.3 of the acquisition agreement requires that Apollo “in the most expeditious manner possible” use its “reasonable best efforts” to obtain all necessary consents “under any applicable laws.” This provision, which is in every acquisition agreement, generally requires Apollo to obtain regulatory clearance for the transaction for things like antitrust approvals. That is what obtaining consents under “applicable laws” refers to.
Section 6.12 of the acquisition agreement requires that Apollo use its “reasonable best efforts” to obtain all third-party consents that “may be required in connection with the consummation of the merger” based on the terms of any contract set forth on an undisclosed schedule to the acquisition agreement.
This provision is meant to deal with consents to outside parties, like provisions in contracts requiring consent for their transfer.
The big difference between the two provisions is that Section 6.3 requires that the party to act “expeditiously” while Section 6.12 does not.
MSCD 8.48 has some bearing on this:
[I]mposing on Acme an obligation to use reasonable efforts to sell widgets doesn’t make sense unless you indicate how many widgets it must sell, and how quickly. And that imposing on Acme a reasonable-efforts obligation to file a registration statement doesn’t make sense unless you include some indication of how soon it has to file it. For purposes of an obligation to use reasonable efforts, always incorporate a standard for measuring performance. A vague standard—for example, one using promptly—would be sufficient.
By that standard, section 6.12 of the merger agreement has more teeth. (Go here for the merger agreement.)
While we’re on Cooper Tyre, “reasonable best efforts” is an awkward hybrid. And note how sections 5.1(a) and 5.1(c) of the merger agreement use “commercially reasonable efforts,” whereas elsewhere the phrase used is “reasonable best efforts.” Furthermore, a trivial but still annoying bit of variation is that some references are just to “reasonable best efforts,” whereas others are to “its reasonable best efforts” and “all reasonable best efforts.”
So evidently what we have here is another embarrassing BigLaw copy-and-paste palimpsest. I assume it was drafted by Apollo’s counsel, Sullivan & Cromwell.