$2.35 billion is the merger Verisk cannot walk away from. Delaware Chancery Court ruled Friday that the insurance data analytics firm, which carries roughly a $25 billion market cap, must use "commercially reasonable efforts" to secure regulatory approval for its acquisition of AccuLynx, a privately held provider of CRM software for roofing contractors. Verisk shares opened Monday down 5.7%.
How the termination unraveled
Verisk agreed to buy AccuLynx last summer. The FTC issued a second request for documents in October, pushing regulatory approval past the deadline written into the merger agreement. Verisk used that delay to terminate the deal in December. AccuLynx disputed the termination. Verisk then filed for court approval to exit in January.
The court found that Verisk largely brought the FTC's scrutiny on itself. Shortly after signing the AccuLynx deal, Verisk ended separate negotiations with ServiceTitan, an AccuLynx competitor, over what had been described as an "enhanced" integration, offering ServiceTitan only a standard integration instead. ServiceTitan informed the FTC. Verisk, still unaware of that communication, told regulators it had not terminated integration agreements with AccuLynx rivals. That statement was inaccurate. After Verisk acknowledged the ServiceTitan talks and ran a document search, the FTC had already developed a "market reset" theory of anti-competitive harm and required full compliance.
The FTC's anti-competitive theory
The agency posited that after the merger closed, Verisk might build a more sophisticated pricing integration exclusively for AccuLynx and withhold it from rivals, foreclosing competitors in the market for roofer business management software. That theory drove the second information request. The ruling found Verisk's handling of the ServiceTitan situation contributed directly to the regulatory delay it later cited as grounds for termination.
The court stopped short of ordering the deal to close. It required Verisk to keep pursuing FTC clearance and ruled AccuLynx is entitled to damages for direct costs with interest.
Specific performance, a seldom-used lever
Delaware Chancery Court rarely compels parties to proceed with a deal rather than settle for damages. The most recent comparable case appears to be last year's ruling involving 3D printing companies Nano Dimension and Desktop Metal. The largest on record appears to be the 2008 case between chemicals companies Hexion and Huntsman. Twitter sought the same remedy from Elon Musk before he agreed to proceed.
Verisk said it respectfully disagreed with the ruling and was evaluating its options. AccuLynx owner Rich Spanton did not respond to a request for comment.