Question: CEI and NU were planning a multibillion dollar merger Among the
CEI and NU were planning a multibillion-dollar merger. Among the terms and conditions of the underlying merger agreement, CEI agreed to purchase all of NU's outstanding shares for $3.6 billion--$1.2 billion over the prevailing market price. Shortly before the scheduled closing, CEI declared that NU had suffered a material adverse change that "dramatically lowered" NU's valuation, and CEI declined to proceed with the merger unless NU would agree to a lower share price. NU rejected the share price reduction, treated CEI's demand as an anticipatory repudiation and breach of the agreement, and declared that the merger was "effectively terminated." Both parties brought suit. The district court ruled that NU could sue on behalf of its shareholders for the $1.2 billion. The court reasoned that the merger agreement expressly designated NU's shareholders as intended third-party beneficiaries. Due to subsequent legal actions, both parties appealed. The appellate court then decided the issue of whether any NU shareholders were intended third-party beneficiaries. If you were on the court, how would you have ruled? Why?
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