‘Go Shop’ Provision Does Not Affect Bright-Line Date

In ILM 201234026, the IRS concluded that a "go shop" provision does not alter the bright-line date for a covered transaction.

The acquiring corporation (Acquirer) acquired Target corporation (Target) in a covered transaction as defined in Treas. Reg. Sec. 1.263(a)-5(e)(3) pursuant to a merger agreement. The terms of the merger agreement were approved by both corporations' boards of directors, and the agreement was executed on March 31, 2012. The merger agreement allowed Target to continue to look for another acquirer (the "go shop" provision) until April 30, 2012. If Target found a better offer, Acquirer could match it. If Acquirer declined to do so, Target could abandon its merger agreement with Acquirer.