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Delaware Chancery Court Rules that a Reverse Triangular Merger Does Not Constitute an ''Assignment by Operation of Law''

The Delaware Court of Chancery (the ''Court'') recently ruled in Meso Scale Diagnostics LLC v. Roche Diagnostics GMBH that a reverse triangular merger does not constitute an assignment by operation of law. This ruling validates the long-held belief among deal lawyers that a reverse triangular merger does not involve an assignment of the target company’s assets and, therefore, does not trigger anti-assignment provisions in the target company’s contracts that restrict an “assignment by operation of law.” Importantly, it also reverses an April 2011 ruling by the Court in the same case that concluded that there was ambiguity regarding whether an “assignment by operation of law” provision should apply in the context of a reverse triangular merger.

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