Chapter 48 - § 48.2 • MERGERS

• Jurisdiction: Colorado

§ 48.2 • MERGERS

Mergers under CBCA generally take one of three forms.

• Forward Merger: The seller merges into the acquirer,¹⁶ with the acquirer surviving the merger.
• Forward Triangular Merger: The seller merges into a wholly owned subsidiary of the acquirer, with the subsidiary of the acquirer surviving the merger.
• Reverse Triangular Merger: A subsidiary formed by the acquirer for the sole purpose of effecting the merger merges into the seller, with the seller surviving as a wholly owned subsidiary of the acquirer.

The choice of merger form will be driven by a number of business and practical considerations. For instance, one of the most significant considerations involves tax outcomes.¹⁷

§ 48.2.1—Merger Documentation and Filing Requirements

To effect a merger under CBCA, the acquirer must file a statement of merger under the Colorado Corporations and Associations Act.¹⁸ Certain provisions are statutorily required to appear in the statement of merger.¹⁹

§ 48.2.2—Dissenters' Rights in Mergers

Shareholders may opt to vote against a merger. If such dissenters comply with CBCA procedures,²⁰ in lieu of the consideration set forth in the plan of merger, they are entitled to receive (1) cash equal to the "fair value" of their shares and (2) interest accruing from the effective date of the merger. Fair value, with respect to a dissenter's shares, means the value of the shares immediately before the effective time of the merger, excluding any appreciation or depreciation in anticipation of the merger except to the extent that exclusion would be inequitable.²¹ However, a shareholder entitled to dissent and demand payment for his or her shares may not also challenge the corporate action creating the right to dissent unless the action is unlawful or fraudulent with respect to the shareholder.²²

Procedure for Exercise of Dissenters' Rights

A shareholder who wishes to assert dissenters' rights must (1) provide the corporation with written notice, prior to the vote on the merger proposal, of the shareholder's intention to demand payment for his or her shares if the merger is effectuated and (2) not vote the shares in favor of the merger proposal.²³ If either of these requirements is not satisfied, a shareholder will not be entitled to demand payment for his or her shares.²⁴

Procedure to Demand Payment

If the merger is approved, a shareholder who wishes to demand payment must (1) provide the corporation with a payment demand and (2) deposit the shareholder's stock certificates.²⁵ A shareholder who demands payment in accordance with the foregoing retains all rights of a shareholder, except...