February 12, 2020

Western Digital/Hitachi (FTC 2012)

Deal SummaryCooperation | Conditions Precedent |Defense Strategy | Litigation Commitments | Remedy Commitments | Reverse Break Fees | Termination Provisions

(a)               Deal Summary. On March 7, 2011, Western Digital announced that it would acquire Hitachi for $4.3 billion. Western Digital was required to use “reasonable best efforts” to defend any litigation seeking to block or delay the merger. Although there was no reverse breakup fee, Western Digital agreed to make specific divestitures to obtain clearance. The parties agreed that either company could initially terminate the transaction twelve months after signing (March 7, 2012). The FTC conditionally cleared the transaction on March 5, 2012 when it issued a modified final Decision and Order requiring Western Digital to sell assets used to manufacture and sell desktop computer hard disk drives to Toshiba Corporation to resolve the agency’s competition concerns.

(b)               Cooperation. § 6.6: Antitrust. (a) Notwithstanding anything to the contrary set forth herein, each applicable Party shall (i) make its initial filing required under the HSR Act and any other initial filings required under or with respect to the Antitrust Laws reasonably promptly and in consultation with the other Parties, (ii) use reasonable best efforts to obtain all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from, and the giving of any necessary notices to, Governmental Entities and other persons and the making of all necessary registrations, declarations and filings (including filings under the HSR Act and any other Antitrust Laws and other registrations, declarations and filings with, or notices to, Governmental Entities, if any), and in connection therewith and for the avoidance of doubt, the Buyer Parent, the Company and the Seller shall interface with such Governmental Entities and in making regulatory strategy decisions, (iii) use reasonable best efforts to coordinate and cooperate with, and give due consideration to all reasonable additions, deletions or changes suggested by another Party in connection with, making (A) any filing under or with respect to any Antitrust Laws and (B) any filings, conferences or other submissions related to resolving any investigation or other inquiry by any Governmental Entity, (iv) use reasonable best efforts to provide any supplemental information requested by a Governmental Entity, including participating in meetings with officials of such entity in the course of its review of this Agreement and the transactions contemplated by this Agreement, (v) use reasonable best efforts to avoid any Action by any Governmental Entity or other person, and (vi) use reasonable best efforts in litigating or participating in the litigation of any Action whether judicial or administrative, brought by any Governmental Entity, for the purpose of enabling the Parties to consummate the transactions contemplated by this Agreement on the terms and conditions set forth herein. No Party shall initiate any meeting or discussion with, or make any submission to, any Governmental Entity with respect to any filings, applications, investigation, litigation, or other inquiry regarding the transactions contemplated by this Agreement without giving the other Party (or Parties) reasonable prior notice of the meeting or discussion and, to the extent permitted by the relevant Governmental Entity, the opportunity to attend and participate; providedhowever, that no Party shall engage in any substantive communication with any Governmental Entity without the consent of the other Parties.

(c)             Conditions Precedent. §§7.1 and 7.2, 8.1 and 8.2

7.1 No Adverse Governmental Action, Proceeding or Injunction. No Governmental Entity having jurisdiction over the Company, the Seller, the Buyer or the Buyer Parent shall have issued an order, decree or ruling or taken any other material action enjoining or otherwise prohibiting consummation of the acquisition of the Stock on the terms contemplated by this Agreement; provided that any order, decree or ruling with respect to Antitrust Laws other than those set forth on Schedule 7.2 shall be disregarded for purposes of this Section 7.1.

7.2 Antitrust Approvals. The approvals required to consummate the transactions contemplated by this Agreement pursuant to the Antitrust Laws of the jurisdictions listed in Schedule 7.2 shall have been obtained or any applicable waiting periods thereunder (and any extensions thereof) shall have expired or been terminated.

8.1 No Adverse Governmental Action, Proceeding or Injunction. No Governmental Entity having jurisdiction over the Company, the Seller, the Buyer or the Buyer Parent shall have issued an order, decree or ruling or taken any other material action enjoining or otherwise prohibiting consummation of the acquisition of the Stock on the terms contemplated by this Agreement; provided that any order, decree or ruling with respect to Antitrust Laws other than those set forth on Schedule 7.2 shall be disregarded for purposes of this Section 8.1.

8.2 Antitrust Approvals. The approvals required to consummate the transactions contemplated by this Agreement pursuant to the Antitrust Laws of the jurisdictions listed in Schedule 7.2 shall have been obtained or any applicable waiting periods thereunder (and any extensions thereof) shall have expired or been terminated.

(d)                            Defense Strategy. § 6.6: Antitrust. (a) Notwithstanding anything to the contrary set forth herein, each applicable Party shall (vi) use reasonable best efforts in litigating or participating in the litigation of any Action whether judicial or administrative, brought by any Governmental Entity, for the purpose of enabling the Parties to consummate the transactions contemplated by this Agreement on the terms and conditions set forth herein. No Party shall initiate any meeting or discussion with, or make any submission to, any Governmental Entity with respect to any filings, applications, investigation, litigation, or other inquiry regarding the transactions contemplated by this Agreement without giving the other Party (or Parties) reasonable prior notice of the meeting or discussion and, to the extent permitted by the relevant Governmental Entity, the opportunity to attend and participate; providedhowever, that no Party shall engage in any substantive communication with any Governmental Entity without the consent of the other Parties.

(e)                    Litigation Commitments. § 6.6: Antitrust. (a) Notwithstanding anything to the contrary set forth herein, each applicable Party shall (vi) use reasonable best efforts in litigating or participating in the litigation of any Action whether judicial or administrative, brought by any Governmental Entity, for the purpose of enabling the Parties to consummate the transactions contemplated by this Agreement on the terms and conditions set forth herein.

(f)                            Remedy Commitments. § 6.6: (b) In connection with and without limiting the generality of the foregoing, each of the Seller, the Company and their respective boards of directors shall, if any federal, state or foreign takeover statute or similar statute or regulation is or becomes applicable to this Agreement and the transactions contemplated by this Agreement, use its reasonable best efforts to ensure that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby or thereby and otherwise to minimize the effect of such statute or regulation on this Agreement and the transactions contemplated by this Agreement. Notwithstanding anything herein to the contrary other than the last sentence of this Section 6.6(b), the Buyer and the Buyer Parent shall take any and all action necessary to obtain the required antitrust approvals or clearances from the Governmental Entities listed on Schedule 6.6, including but not limited to (i) selling or otherwise disposing of, or holding separate and agreeing to sell or otherwise dispose of, assets, categories of assets or businesses of the Company, the Buyer or the Buyer Parent or their respective subsidiaries; (ii) terminating existing relationships, contractual rights or obligations of the Company, the Buyer or the Buyer Parent or their respective subsidiaries; (iii) terminating any venture or other arrangement; (iv) creating any relationship, contractual rights or obligations of the Company, the Buyer or the Buyer Parent or their respective subsidiaries or (v) effectuating any other change or restructuring of the Company, the Buyer or the Buyer Parent or their respective subsidiaries (and, in each case, to enter into agreements or stipulate to the entry of an order or decree or file appropriate applications with any Governmental Entity in connection with any of the foregoing and providedhowever, that the Buyer and the Buyer Parent shall not be required pursuant to this Section 6.6(b) to commit to or effect any action that is not conditioned upon the consummation of the Agreement or transactions contemplated by this Agreement) (each a “Divestiture Action”) to ensure that no Governmental Entity enters any order, decision, judgment, decree, ruling, injunction (preliminary or permanent), or establishes any law, rule, regulation or other action preliminarily or permanently restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement (each an “Antitrust Prohibition”), or to ensure that no Governmental Entity with the authority to clear, authorize or otherwise approve the consummation of the transactions contemplated by this Agreement, fails to do so by the Closing Date. In the event that any action is threatened or instituted challenging the transactions contemplated in this Agreement as violative of any premerger notification rule or other Antitrust Law, the Buyer and the Buyer Parent shall take all action necessary, including but not limited to any Divestiture Action, to avoid or resolve such action. In the event that any permanent or preliminary injunction or other order is entered or becomes reasonably foreseeable to be entered in any proceeding that would make consummation of the transactions contemplated hereby in accordance with the terms of this Agreement unlawful or that would restrain, enjoin or otherwise prevent or materially delay the consummation of the transactions contemplated by this Agreement, the Buyer and the Buyer Parent shall take promptly any and all steps necessary to vacate, modify or suspend such injunction or order so as to permit such consummation prior to the Closing Date. The Company shall cooperate with the Buyer and the Buyer Parent and shall use its reasonable best efforts to assist Buyer and the Buyer Parent in resisting and reducing any Divestiture Action, providedhowever, that neither the Buyer Parent nor the Seller or the Company shall initiate any offer or enter into discussions with any Governmental Entity with respect to any Divestiture Action or any other action in connection with any matter within the scope of this Section 6.6(b) outside the presence of the other Party (or Parties) unless required to do so by the applicable Governmental Entity. Notwithstanding the foregoing or any other provision of this Agreement, including the second sentence of this Section 6.6(b), neither the Buyer, the Buyer Parent, nor the Company shall be required to undertake (i) any Divestiture Action that, individually or in the aggregate, would reasonably be expected to materially impair the business operations of the combined company absent such imposed conditions; or (ii) any Divestiture Action sought by a Governmental Entity of the United States or the European Union or any other Governmental Entity in any other jurisdiction other than the jurisdictions specified in Schedule 6.6.

(g)                            Reverse Break Fees. N/A

(h)                           Time Period and Other Conditions Under Which the Parties May Walk Away from the Agreement. § 10.1 Methods of Termination. This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing:

                        (a) by mutual consent of the Parties;

                        (b) by any of the Parties at any time after the date that is twelve (12) months following the date of execution of this Agreement (the “Termination Date”), if the Closing shall not have occurred and the Party seeking termination is not in material violation or breach of its respective representations, warranties, covenants or obligations contained in this Agreement;