COVID-19 Pandemic Impacts Previously Announced M&A Transactions: Bed Bath & Beyond Sues 1-800-Flowers for Refusing to Close; Hexcel and Woodward Agree to Terminate Merger of Equals – Adopt Limited Duration Rights Plans

Sullivan & Cromwell LLP - April 13, 2020
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In the midst of the ongoing COVID-19 pandemic, the recent market moves and the potential for a prolonged period of economic uncertainty, parties to a pending M&A transaction may be considering their rights, obligations and options with respect to the transaction.  This memorandum discusses two such recent examples that stand in contrast to one another.  On April 1, 2020, Bed Bath & Beyond Inc. sued 1-800-Flowers.com, Inc., which allegedly refused to close the transaction due to the uncertainty and negative impacts of the COVID-19 pandemic, but did not invoke the “material adverse effect” clause of the underlying purchase agreement.  In contrast, on April 6, 2020, Hexcel Corporation and Woodward, Inc. entered into a mutual termination without requiring any termination payment and respectively adopted limited duration shareholder rights plans.