---

name: prompt-pack-merger-agreement
description: Use when drafting a merger or amalgamation agreement for a transaction in which two or more entities combine. Covers exchange ratio, representations and warranties, covenants, conditions to closing, termination rights, break fees, and regulatory approval requirements. MENA-focused: addresses UAE Commercial Companies Law, KSA Companies Law, DIFC/ADGM corporate legislation, and cross-border competition filings.
license: MIT
metadata:
id: prompt-pack.merger-agreement
category: prompt-pack
practice_area: corporate-m-a
priority: P2
intent: [drafting, merger-agreement]
related:
- prompt-pack-letter-of-intent
- prompt-pack-memorandum-of-understanding
- prompt-pack-ip-due-diligence-checklist
- prompt-pack-joint-venture-agreement
- heuristic-always-state-jurisdiction-first
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Merger Agreement

When to use this

Use this skill when drafting the definitive agreement governing a merger or amalgamation — the combination of two companies into a single surviving entity. Distinguish from a share purchase agreement (acquisition of a company's shares) and an asset purchase agreement (acquisition of specific assets). Mergers typically involve share exchange rather than cash payment and require corporate law compliance for the merger procedure.

Triggers:

• "Draft a merger agreement for the merger of [Company A] into [Company B]."
• "We need an amalgamation agreement for our GCC restructuring."
• "Draft heads of agreement for a statutory merger under DIFC company law."

Note on MENA usage: In most MENA jurisdictions, the formal statutory merger process is less commonly used for commercial M&A than a share purchase or business combination structure. Confirm with local counsel whether a statutory merger procedure is available and appropriate for the target jurisdiction.

Required inputs

Input	Why it matters	Default
Company A and Company B names, jurisdictions	Identifies the parties and applicable law	Ask user
Merger structure	Forward merger / reverse merger / amalgamation / scheme of arrangement	Ask user
Exchange ratio	Core economic term; number of surviving entity shares per Company A share	Ask user
Governing law	Determines applicable corporate law and procedural requirements	Jurisdiction of surviving entity
Regulatory approvals required	Competition filings, sector-specific approvals (banking, telecoms, etc.)	Ask user based on jurisdiction
Anticipated closing timeline	Determines urgency and covenant structure	Ask user

Optional inputs

• Cash component (if mixed cash/share consideration)
• Earnout provisions (if part of consideration is contingent)
• Board recommendation commitment and fiduciary out
• Employee benefit continuation provisions
• No-shop / no-solicitation provisions during the period from signing to closing
• Break fee and reverse break fee

Document structure

1. Recitals

• Brief description of each party
• Purpose: the boards of directors of Company A and Company B have each determined that the merger is in the best interests of their respective companies and shareholders
• Transaction overview: [Company A] will merge with and into [Company B] (the "Surviving Entity") in accordance with the applicable corporate law

2. The Merger

2.1 Merger mechanics

• At the effective time, Company A shall merge with and into Company B; Company B shall be the Surviving Entity.
• Company A shall cease to exist as a separate legal entity at the effective time.

2.2 Effective time

• The merger becomes effective upon filing of the merger certificate / registration with [relevant corporate registry].
• Target effective date: [date / as soon as practicable after conditions are satisfied].

2.3 Articles of association / constitutional documents

• The articles of association of the Surviving Entity shall be [as set out in Exhibit X] with effect from the effective time.

3. Exchange Ratio and Merger Consideration

3.1 Exchange ratio

• Each share of Company A outstanding immediately prior to the effective time shall be converted into the right to receive [X] shares of Company B (the "Exchange Ratio").

3.2 Adjustment mechanism

• Exchange ratio is subject to adjustment for any share split, consolidation, reclassification, or dividend occurring between signing and closing.

3.3 Cash in lieu of fractional shares

• No fractional shares of Company B shall be issued; Company A shareholders entitled to fractional shares shall receive cash based on the volume-weighted average price of Company B shares for the [10] trading days preceding the effective time.

3.4 Dissenting shareholders

• Shareholders of Company A who exercise applicable dissent rights (if any under the governing law) shall receive fair value for their shares as determined under applicable law.
• Note: dissenter / appraisal rights vary significantly by jurisdiction; confirm availability with local counsel.

4. Representations and Warranties

Both parties provide standard M&A representations and warranties, typically including:

Company A represents and warrants:

• Due incorporation and good standing
• Corporate authority to enter into the agreement and consummate the merger
• No conflict with charter documents, material contracts, or applicable law
• Capitalization: all shares described are validly issued and outstanding; no outstanding options or warrants except as disclosed
• Financial statements: prepared in accordance with [IFRS / US GAAP / applicable local GAAP]; present a true and fair view
• No material adverse change since the balance sheet date
• Compliance with applicable law; no material litigation
• Tax: all material taxes filed and paid
• Intellectual property: owned or licensed as described; no infringement
• Absence of undisclosed liabilities
• Material contracts: list attached; no defaults

Company B (Surviving Entity) provides reciprocal representations.

5. Covenants

5.1 Conduct of business pending closing
From signing to closing, each party covenants to:

• Conduct its business in the ordinary course consistent with past practice
• Not make material changes to compensation, benefit plans, or capital structure without consent
• Not enter into material contracts outside the ordinary course without consent
• Not declare dividends or make distributions without consent
• Use reasonable best efforts to preserve business relationships and key personnel

5.2 No-solicitation (no-shop)
From signing to closing, Company A will not solicit, encourage, or facilitate any competing acquisition proposal, subject to a customary fiduciary out allowing the board to respond to an unsolicited superior proposal.

5.3 Regulatory approvals
Each party will use best efforts to obtain all required regulatory approvals, including:

• Competition / merger control filings (identify applicable jurisdictions: UAE, KSA, Egypt, EU, etc.)
• Sector-specific approvals (banking: UAE Central Bank, SAMA; telecoms: TRA; etc.)
• Foreign investment approvals (MISA in KSA; UAE Cabinet approval for certain sectors)

5.4 Shareholder approval
Each party will promptly convene a general meeting to approve the merger; the board of each party will recommend shareholder approval.

6. Conditions to Closing

6.1 Mutual conditions (either party may waive):

• Shareholder approval obtained by both parties
• All required regulatory approvals obtained; no injunctions

6.2 Conditions for Company A's benefit:

• Company B's representations and warranties are true and correct in all material respects at closing
• Company B has performed all covenants in all material respects
• No material adverse effect has occurred with respect to Company B

6.3 Conditions for Company B's benefit (reciprocal):

• Same as above with respect to Company A

7. Termination

7.1 Termination rights:

• By mutual written consent at any time
• By either party if: closing has not occurred by the outside date (typically [6–12 months] from signing); shareholder approval not obtained; required regulatory approval denied
• By Company B if: Company A board changes its recommendation
• By Company A if: superior proposal is received and fiduciary out exercised

7.2 Break fee (Termination fee):

• If Company A terminates to accept a superior proposal: Company A pays break fee of [2–4]% of transaction value to Company B
• If Company B is unable to close due to failure to obtain regulatory approval: Company B pays a reverse break fee (regulatory break fee) to Company A of [similar or higher amount]

8. Indemnification and Survival

• Representations and warranties of both parties shall survive closing for [12 / 18 / 24] months (or not at all in an all-equity deal — common in public mergers)
• Individual claim threshold (basket): [X]
• Aggregate cap on indemnification: [X% of transaction value]
• Exclusions from cap: fraud, willful misrepresentation, fundamental representations (title, capitalization, authorization)

9. Miscellaneous

• Expenses: each party bears its own transaction costs unless otherwise agreed
• Governing law and dispute resolution — critical; specify court or arbitration
• Entire agreement, amendment, waiver
• Counterparts and electronic execution

Jurisdictional notes

Jurisdiction	Key issues
UAE (onshore)	Statutory mergers governed by Federal Decree-Law on Commercial Companies; Arabic-language merger plan must be published and approved by Ministry of Economy; creditor notification periods apply.
DIFC / ADGM	DIFC Companies Law / ADGM Companies Regulations provide for mergers; English-law framework; suitable for holding-company mergers in financial services.
KSA	Saudi Companies Law governs mergers; MISA and sector-specific approvals (SAMA, CMA) required; Arabic-language documentation; Sharia-compliant financing of any cash component required for Islamic finance entities.
Egypt	Mergers governed by Companies Law No. 159 of 1981 and the Capital Market Authority (CMA) for listed companies; creditor protection provisions.
Competition law	UAE, KSA, and Egypt each have competition laws that may require merger notification if combined market share or transaction value exceeds prescribed thresholds. Cross-border mergers may also require EU and/or third-country filings.

Exchange ratio / valuation note: In MENA statutory mergers, an independent valuation by a court-appointed or regulatory-approved valuer may be required; the exchange ratio must be supported by a fairness opinion. Do not agree an exchange ratio without engaging a financial adviser for the valuation exercise.

Common mistakes

• Using US-style merger agreement in a civil-law MENA jurisdiction: representations and warranty insurance, indemnification baskets, and Delaware corporate law concepts do not map cleanly onto UAE or KSA corporate law; local counsel must adapt.
• Omitting creditor notification: most MENA jurisdictions require a notice to creditors period (30–60 days) before a merger becomes effective; this extends the closing timeline and must be included in the planning calendar.
• Forgetting sector-specific approvals: a banking, insurance, or telecoms merger that closes without regulatory approval is void; always identify and track all required regulatory approvals before signing.
• No reverse break fee: if the deal may fail due to regulatory denial, the buyer/Company B should bear a reverse break fee risk; this is commonly overlooked in domestic transactions.

Related skills

• [[prompt-pack-letter-of-intent]]
• [[prompt-pack-memorandum-of-understanding]]
• [[prompt-pack-ip-due-diligence-checklist]]
• [[prompt-pack-joint-venture-agreement]]
• [[heuristic-always-state-jurisdiction-first]]