Matt Levine’s Money Stuff: The Killer Non-Acquisition

Fake M&A?

We talked last week about fake mergers and acquisitions. That is, we talked about situations in which a big company might pretend to want to buy another company — might sign a letter of intent, do due diligence, negotiate a deal, maybe even sign a merger agreement — without actually intending to close the deal. The big company might want to crush competition, and the efficient way to crush a competitor might not be to buy it, but to pretend to buy it. If you enter into exclusive merger negotiations with a smaller company, then:

1. Nobody else can buy ...