Assignment
Fire Business AG (“Fire”)
Fire Business AG (“Fire”) is the sole shareholder of Web GmbH, whose business seat is in Hamburg (“Web”). The web is a provider of internet services (music, video on demand, Web access, etc.), targeting mainly private customers. Fire is the German subsidiary of a huge UK company (Fire plc). Fireworks as a holding company. For strategic reasons, the Fire group wants to get rid of the Web business.
The sales process shall be organized as a limited auction procedure. For that purpose, Fire has commissioned the investment bank Credit Suisse.
As a first step, Credit Suisse has drafted an information memorandum for potential buyers (see Attachment 1). These potential buyers must sign a Non-Disclosure Agreement before receiving the information memorandum.
After having reviewed the information memorandum, a total of seven potential buyers submitted a non-binding offer. Four of them dropped out in the first round. Specifically, a very low purchase price was the reason for the dropout. By letter from Credit Suisse, the three remaining potential buyers were invited to participate in the next stage in the auction procedure.
Before this stage, they will be given the chance to conduct proper due diligence. For that purpose, a so-called data room will be installed in the office of Credit Suisse in Frankfurt, to house certain documents with respect to the company.
Furthermore, the three potential buyers have received a draft Share Purchase Agreement. After conducting the due diligence, they should submit their final bids.
1. What is the typical content of a non-binding offer in our case here and why Credit Suisse needed such information to assess the various bids?
2. Please explain the main clauses of such a Non-Disclosure Agreement and why such clauses are needed.
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