Livanova Plc v Sorin SPA

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Morgan
Judgment Date23 Sep 2015
Neutral Citation[2015] EWHC 2865 (Ch)
Docket NumberCase No: 6084 of 2015

[2015] EWHC 2865 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

The Rolls Building

Fetter Lane

London EC4A 1NL

Before:

Mr Justice Morgan

Case No: 6084 of 2015

In the Matter of

Between:
Livanova Plc
and
Sorin SPA

Martin Moore QC (instructed by Latham & Watkins) appeared on behalf of the Claimant/Applicant

Mr Justice Morgan
1

The application before the court is headed In the Matter of Livanova plc and in the Matter of Sorin SPA and in the Matter of the Companies (Cross-Border Mergers) Regulations 2007.

2

I will refer briefly to some of the provisions in those Regulations which themselves refer back to Directive 2005/56/EC on Cross-Border Mergers of Limited Liability Companies. Many of the provisions of the Directive and of the Regulations are relevant as background to the points arising in this case, but I think, as to the Directive, it is sufficient to refer to Articles 11 and 12 and, in the case of the Regulations, it is sufficient for present purposes to refer to Regulations 16 and 17. Article 11 of the Directive is headed: "Scrutiny of the legality of the cross-border merger". I will not read out the full text of Article 11; it refers to Member States designating the competent authority to scrutinise the legality of the cross-border merger as regards certain matters. Article 12 deals with the "Entry into effect of the cross-border merger". Article 12 provides that:

"The law of the Member State to whose jurisdiction the company resulting from the cross-border merger is subject shall determine the date on which the cross-border merger takes effect. That date must be after the scrutiny referred to in Article 11 has been carried out."

3

Part III of the 2007 Regulations has the heading: "Court Approval of Cross-Border Merger". Regulation 16(1) starts with this wording:

"The court may, on the joint application of all the merging companies, make an order approving the completion of the cross-border merger for the purposes of Article 11 of the Directive (scrutiny of completion of merger) if—…"

4

What follows that wording are several matters which must be demonstrated to the court which is asked to give approval under Regulation 16(1). Regulation 16(2) is in these terms:

"Where the court makes such an order—

(a) it must in the order fix a date on which the consequences of the cross-border merger (see regulation 17) are to have effect; and

(b) that date must be not less than 21 days after the date on which the order is made."

Regulation 16(3), as substituted by the Companies (Cross-Border Mergers) (Amendment) Regulations 2015, regulation 2, with effect from 6 April 2015, contains so far as material the following wording:

"After the consequences of the cross-border merger have taken effect (see regulation 17)…

(b) the cross-border merger may not be declared null and void."

5

Regulation 17 is headed: "Consequences of a cross-border merger". Regulation 17(1) provides what those consequences are. In summary, the assets and liabilities of transferor companies are transferred to the transferee company; there is provision for what is to happen as regards contracts of employment of the transferor company; and the transferor companies are dissolved. In the case of a merger by absorption – I interpose that is the present case – the members of the transferor companies become members of the transferee company. Regulation 17(2) provides:

"The consequences take effect—

(a) where an order has been made under regulation 16 (court approval of merger), on the date fixed in that order … ."

Regulation 17(2) provides for an alternative to which it is not necessary to refer.

6

It is not necessary for the purposes of this judgment to go into any of the background facts of this application. Nor is it necessary to describe the terms and conditions of the merger which have been put forward and have met with approval from those persons who have been asked to indicate their position. What I need to do for the purpose of this judgment is to refer to the draft order I am asked to make. The draft order contains two operative provisions. The first order is in these terms:

"It is ordered, pursuant to Regulation 16 of the Companies (Cross-Border Mergers) Regulations 2007 that the completion of the proposed cross-border merger between the Applicants be approved for the purposes of Article 11 of Directive 2005/56/EC on Cross-Border Mergers of Limited Liability Companies."

7

The second operative order provides:

"And it is ordered that the consequences of the merger will take effect as of 00:01 am London time on 19 October 2015, subject to the transaction agreement dated 23 March 2015 entered into between among others the Applicants (the "Transaction Agreement") not having been terminated by Sorin SPA and Cyberonics Inc under the terms of the Transaction Agreement."

The reference to Cyberonics is to a Delaware company. It is intended (without going into the detailed arrangements) that Cyberonics will participate in a further merger and acquisition transaction or more accurately a further stage of the merger and acquisition transaction following the merger which is the subject of the application to the court.

8

A point has been raised at the hearing as to the court's response to a draft order which states that the consequences of the merger will take effect at specified time, but subject to the underlying transaction (including this merger for which approval is sought) not having been brought to an end by a party...

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3 cases
  • Re Easynet Global Services Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 18 January 2018
    ...about this at first instance, including by me: see Re Diamond Resorts (Europe) Ltd [2012] EWHC 3576 (Ch); [2013] BCC 275 (Sales J); Re Livanova Plc [2015] EWHC 2865 (Ch) (Morgan J); and most recently, Re M2 Property Invest Ltd [2017] EWHC 3218 (Ch) (Snowden J). Some difficulty has arisen......
  • Easynet Global Services Ltd v the Companies (Cross-Border Mergers) Regulations 2007
    • United Kingdom
    • Chancery Division
    • 31 October 2016
    ...of discretion to suggest it should not be approved. In relation to discretion Mr Horan submitted that the queries raised by Morgan J in Livanova Plc [2015] EWHC 2865 (Ch) of the test applied at the approval stage posited by Sales J in Diamond Resorts (Europe) Ltd [2013] BCC 275 was well fou......
  • M2 Property Invest Ltd and Others
    • United Kingdom
    • Chancery Division
    • 8 December 2017
    ...it was not immediately obvious to me how these issues could have been resolved on the materials which I had seen. Re Diamond Resorts and Re Livanova 24 This situation raised the fundamental question of whether and if so, to what extent, the English court should, on an application under Regu......
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