Court rejects Verisk plan to cancel $2.35 billion merger

Zoom in: The ruling relied on specific performance, a rarely enforced anvil that hangs over most corporate acquirers.

Catch up quick: Verisk is an insurance data analytics firm with around a $25 billion market cap. Last summer it agreed to buy AccuLynx, a privately held provider of CRM software for roofing contractors.

• In October, FTC antitrust regulators requested additional information. The delay pushed regulatory approval past the agreed-upon date, prompting Verisk in December to terminate the agreement.
• AccuLynx argued the termination was invalid, causing Verisk in January to seek court approval.

Behind the scenes: Shortly after Verisk agreed to buy AccuLynx, it ended separate negotiations for an "enhanced" integration with AccuLynx rival ServiceTitan — instead offering a standard integration.

• ServiceTitan told the FTC about the aborted agreement, which caused the FTC to develop a "market reset" theory of anti-competitive behavior.
• Per the ruling: "The FTC posited that after the merger, Verisk might develop a new, more sophisticated pricing integration for AccuLynx that it would not offer to AccuLynx's competitors, thereby foreclosing AccuLynx competitors from effectively competing in the market for roofer business management software."
• When the FTC asked Verisk if it had terminated integration agreements with AccuLynx rivals, Verisk — still unaware of ServiceTitan's message to the FTC — said it had not.
• Verisk soon would acknowledge the ServiceTitan talks and run a document search, but by then the FTC was either annoyed or mistrustful (or both) and decided it would require full compliance.
• Thus, the second information request that caused Verisk to cancel the entire merger.

Fast forward: The court basically ruled that Verisk brought this situation upon itself.

• It didn't force the merger to close, but rather said that Verisk must use "commercially reasonable efforts" to obtain regulatory approval. Plus that AccuLynx is entitled to damages for direct costs with interest.

Zoom out: It's uncommon for Delaware Chancery Court to order specific performance — in which parties are required to move forward on a deal, rather than just pay to get out of it — but it's not unprecedented.

• The most recent example seems to have come last year with 3D printing companies Nano Dimension and Desktop Metal, while the largest was likely with chemicals companies Hexion and Huntsman in 2008.
• Specific performance also is what Twitter demanded of Elon Musk, who chose to capitulate rather than wait for a ruling.

State of play: Verisk shared opened Monday down 5.7% today. In a statement, it tells Axios: "While we appreciate the court's efforts to deliver a decision quickly, we respectfully disagree with the court's ruling and are evaluating our options."

• AccuLynx owner Rich Spanton didn't return a request for comment.

The bottom line: Some deals can come back from the dead.