Views From New York - What We Can Take From The US Market Right Now

Introduction

We have just returned from a week in New York. We spent a great deal of time exchanging views with our ~100 Kramer new partners and new and existing clients and colleagues on the ground.

In this note, we summarise the insights we gathered while in the M&A centre of the universe and what they mean for the Australian M&A landscape.

In brief

• On the ground in New York the overwhelming view was that M&A activity has picked up pace as we enter the third quarter of the year. While the bulk of that activity is driven by domestic M&A, we extrapolate that the pick up in activity will see North American bidders return to our shores soon.
• Reforms in Delaware have allowed merger parties to provide for recoverable loss for a breach of a merger agreement to extend to the lost premium suffered by shareholders where expressly provided for. Australian transactors face a similar gap in loss recovery, and we pose the question whether this needs to be addressed by Government or market practice.
• We unpack our most recent US-Australian cross-border merger, the all scrip combination of Sayona Mining and Piedmont Lithium, with a simultaneous capital raising. Sayona required an approval of its shareholders, given it was technically a reverse takeover, and also had to issue an F-4 Registration Statement. The US governed F-4 was used to satisfy the Australian disclosure requirements, with a short wrapper to address Australian specific matters – a novel approach approved by ASIC to streamline disclosures for the transaction.

US activity – what it means for the Australian landscape

M&A activity: The overwhelming view was that liberation day liberated the US markets from some M&A. However, advisers and transactors have picked up the pace, with all market participants we met with saying they are very busy right now. We extrapolate that this is similar to, and otherwise a good leading indicator for, the Australian market. Historical averages suggest ~40% of our M&A is led by inbound North American acquisitions, whereas our recent Public M&A Report found that ~20% of public M&A was comprised of North American acquirers. We were told that for the time being the focus of acquirers has been on the domestic US market, given the geo-political uncertainty. However, we are optimistic that US bidders will return and this will provide tailwinds for our market.

IPO activity: Particularly noteworthy, the IPO markets in the US have opened up. Reports indicate that the US market saw a ~75% increase in IPOs in the 6 months to 30 June 2025. That bodes well for the ASX, on the back of the GemLife and Virgin Australia IPOs. We have seen the rate of inquiry on IPOs lift dramatically, and the investment banks we speak to have equally noted the increase in IPO requests for proposals.

Redomicilitions: A related live question we talked extensively with US market participants was finding the optimal listing venue. The common view, which we are also seeing, is that companies are increasingly asking if their home listing venue is maximising shareholder value. We have considered redomiciliations in a detailed past article. While the flow from our shares to the more liquid US markets is the general direction of travel, we have seen some companies, like Light & Wonder, consider transferring their primary listing to the ASX and even potentially delisting from Nasdaq entirely. These latter cases are rare, but a hopeful sign for the ASX of some two-way flow in redomiciliations.

Regulatory lens: One view was unanimously held. Trump's America is open for business from a regulatory perspective. This view will be sector and asset specific, but as a general vibe, we concluded that the regulatory settings are pro-acquisitions, particularly where it means that US enterprises will strengthen. The importance of soft sounding the US Government in guiding a transaction through also stuck out for us. Now more than ever, nuanced canvassing of the US Government is critical to the art of cross-border deals.

US developments on recovering target shareholders' loss

There has been key legislative change in Delaware to address a shortcoming in public company M&A. It is noteworthy because it is worth asking whether reform in law or practice is appropriate for Australian deals to address the same issue.

Background

There is often a disconnect in public deals in the US and in Australia whereby the target enters into the implementation or merger agreement, but it is the shareholders that benefit from the transaction in the form of a control premium for their shares.

With no privity of contract between the bidder and the shareholders, if a bidder breaches the implementation agreement and the deal fails to implement, it is unlikely that shareholders would be able to recover loss of the premium they were otherwise entitled.

In most cases, the best a target can hope for is to try and seek specific performance, which is theoretically challenging and to date not yet properly tested in the Australian courts.

Case law leading up to the reform

The matter was brought to the fore in a Delaware case that arose when Elon Musk agreed to buy Twitter, but then seemingly got cold feet and tried to walk from the deal.

In deciding that case, Crispo v Musk, the Delaware Chancery Court stated that a Delaware target could not recover against a buyer in breach any premium that its shareholders would have been entitled to receive if the merger had been implemented where the agreement expressly provided that shareholders are not third-party beneficiaries of the agreement for such purposes.

The Crispo decision took many practitioners by surprise, as it has been widely assumed that such lost premium damages could be provided for in a merger agreement and were generally recoverable by a target through one of two approaches:

• either by providing in the merger agreement that lost premium were specifically within scope of the target's damages; or
• by allowing the target, in its capacity as an agent of its stockholders, to pursue such damages on their behalf.

Most practitioners therefore had chosen to remain silent on the issue in merger agreements.

The Crispo decision followed an earlier decision in Consolidated Edison v. Northeast Utilities in 2005. Practitioners had been unsure whether the Chancery Court would follow the Con. Ed. decision.

Reforms to the Delaware General Corporation Law

To address Crispo, the Delaware General Corporation Law was amended late in 2024 with the following effect:

• A breaching party to a merger agreement may include an obligation to pay to the target an amount for loss of any premium or other economic entitlement the stockholders of such target would be entitled to receive if the merger were consummated.
• If a damages payment is made to the target, it may keep the payment without having to distribute the payment to its stockholders.
• An agreement may include a provision appointing representatives to act on behalf of the stockholders to enforce the stockholders' rights under the agreement.

Interestingly, the reforms are stated to provide for a breaching party to be subject to "such penalties or consequences as set forth in the agreement." There is some speculation among practitioners that the reference to "penalties" may have the unintended consequence of overriding common law restrictions on break fees amounting to a penalty by being greater than a reasonable pre-estimate of loss. That may embolden US transactors to reach even higher on the size of break and reverse break fees, which are already at levels significantly above the Australian market.

Should Australian follow the lead from Delaware

The Delaware reforms address a challenge we often grapple with when acting for the target – if the bidder does not perform the implementation agreement, shareholders are left high and dry. Is it time for Australia to follow the path taken in Delaware?

It might be overly ambitious to expect legislative change in this area now, as it is unlikely to be a priority for our legislature, who are unlikely to get much political credit for addressing the issue.

Absent legislative change, should more targets push for bidders to compensate shareholders for lost premium in implementation agreements. On the face of it, there is nothing legally preventing this, it is more of a question of bargaining power, noting the weight of market precedent is against adopting this position. Notably, the Delaware reforms still require the parties to expressly allow the recovery of lost premium in their merger agreements.

Perhaps what it will take is a cross-border deal with a US acquirer, where a target could credibly argue that the position reflects what the bidder would face in their home jurisdiction.

The outcome of the Mayne Pharma-Cosette situation currently before the courts may also focus the minds of target boards on issues such as this. Stay tuned...

Case study: our recent US-Australian cross-border deal

Cross border US-Australian mergers with related capital raisings and dual listings are on the rise.

In this regard, we have recently advised on the all-stock merger of equals between Sayona Mining, an ASX listed North American lithium producer, and Piedmont Lithium, an integrated lithium business with a primary listing on the Nasdaq and a secondary listing on the ASX via Chess Depository Interests.

The merger was implemented under a Delaware law plan of merger with shareholder approval required from both Sayona (under ASX listing rules as a reverse takeover as Sayona was doubling its share capital) and Piedmont shareholders (under Delaware law).

In addition to the merger, Sayona undertook an institutional placement to raise approximately A$40 million on announcement, together with an issue of approximately A$69 million of shares and further options issuance to Resource Capital Fund VIII L.P on completion.

To issue the shares under the merger, Sayona filed a registration statement on Form F-4 with the US Securities and Exchange Commission, with Australian disclosure law requirements dealt with via an Australian-focused wrapper.

The Australian Securities and Investment Commission granted relief from the prospectus requirements under Australian law to allow for the circulation of an Australian-focused wrapper (~5 pages) on top of the US prospectus, rather than issuing a separate prospectus.

To reconcile Piedmont's dual listing of common stock on the Nasdaq, and Australian CDIs on the ASX, the merger was structured so that:

• holders of Piedmont CDIs, which were predominantly Australian shareholders, received Sayona ordinary shares (Piedmont CDI Consideration); and
• holders of Piedmont common stock, which were predominately US shareholders, received Sayona ADSs corresponding to Sayona ordinary shares (Piedmont Common Stock Consideration).

As a result of the merger, Sayona established a dual listing, with an ASX primary listing of ordinary shares and a Nasdaq secondary listing of American depositary shares (ADSs)
A key part of navigating any dual listing is streamlining the engagement with both regulators and listing platforms to facilitate all necessary corporate actions in an efficient manner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.