The Assertio Holdings 8-K hit EDGAR on Wednesday afternoon. The filing listed Item 1.01 for entry into a new definitive agreement and Item 1.02 for termination of the prior one — the classic terminate-and-sign sequence that, in 2026 as in 2018, signals a deal jump that worked. The original acquirer was paid its break fee, the target’s board exercised the fiduciary out, the new acquirer signed the new merger agreement, and the EDGAR feed picked it up four business days later. By the time the deal-press blogs ran with it on Thursday morning, the lawyers on both sides had already moved on to the next file.
Jumping bids have been part of M&A practice for a long time. The 2024 and 2025 wave of contested deal-jumping fights — Pfizer’s response to Novo Nordisk’s Metsera approach being the loudest, with the Spirit-Frontier-JetBlue echo still rattling around the corner — has tightened the doctrine without rewriting it. The Cooley M&A blog’s December 2025 walkthrough, “So, you think you can (deal) jump?”, is the cleanest current statement of where the lines sit. The doctrine is the same. The form contracts have not all caught up to where the litigation is now landing.
This post walks through the no-shop architecture as it actually functions in 2026, where the fiduciary-out exit ramp lives, what the match right does and does not do, and what to draft on either side of the table.
The architecture of the no-shop clause
A no-shop clause in a 2026 public-target merger agreement is a five-part instrument, and the parts work as a system. The first part is the affirmative restriction — the target agrees not to solicit, encourage, or facilitate competing acquisition proposals. The second is the information-control overlay — the target agrees not to provide non-public information to any third party without specific contractual authorization. The third is the fiduciary-out carve-out — the target may, despite the restrictions, respond to an unsolicited proposal if the target’s board determines in good faith that the proposal constitutes or is reasonably likely to lead to a “Superior Proposal.” The fourth is the match right — the target must notify the original buyer, provide the new proposal’s terms, and give the original buyer a matching period before the board can change its recommendation or accept the new proposal. The fifth is the break fee — the financial cost the target pays if the no-shop process leads to a deal jump.
The 2026 form contracts have largely settled on a four-business-day match right, a 3% break fee for deals under $1 billion of equity value scaling down to 2% for larger deals, and a “reasonably likely to lead to a Superior Proposal” trigger for the fiduciary-out carve-out. The numbers are tighter than they were a decade ago. The doctrinal substance has not moved much.
What has moved is the litigation posture. The Pfizer/Novo/Metsera fight, which played out in Delaware Chancery in the first quarter of 2026, demonstrated that a first buyer determined to block a deal jump has more litigation tools than the form contract obviously contemplates. The first buyer can challenge whether the new proposal actually meets the Superior Proposal threshold. The first buyer can dispute whether the board’s good-faith determination was reasonable. The first buyer can argue that the new bidder’s diligence access violated the information-control overlay. Each of these challenges, even when unlikely to succeed on the merits, can slow the new deal enough that the new bidder loses interest. The deterrent effect on jumping bidders is real.
The fiduciary out is narrower than the form suggests
The fiduciary-out carve-out in a typical 2026 no-shop reads broadly. The target board “may” respond to an unsolicited proposal “in compliance with applicable fiduciary duties.” The breadth of that language hides three procedural gates the doctrine and the contract layer on top.
The first gate is the unsolicited requirement. The proposal must come in over the transom; it cannot have been solicited, encouraged, or facilitated by the target. The form contract operationalizes this through the no-solicit and no-discuss prongs, both of which the target must comply with right up to the moment the new proposal arrives. A target that has been quietly nodding at a potential topping bidder during the no-shop period has, on the form’s own terms, lost the fiduciary out. The Cooley walkthrough notes that the targets that successfully execute deal jumps almost always have a clean evidentiary record of no contact during the no-shop period.
The second gate is the Superior Proposal determination. The board must determine, in good faith and after consultation with its financial and legal advisors, that the new proposal constitutes or is reasonably likely to lead to a Superior Proposal. The contract’s definition of Superior Proposal is fact-specific — typically a proposal that is more favorable to the target’s stockholders, taking into account financial terms, certainty of closing, timing, and other relevant factors. The board’s determination is reviewed for good faith, not for substantive correctness. But the litigation posture in a contested deal jump tests the determination’s evidentiary support hard. A board that documents the determination with a single financial advisor’s fairness opinion and a one-page Delaware-counsel memo is going to be in a less defensible position than a board that documents the determination with a full advisor analysis, a second opinion, and a board record that walks through each factor.
The third gate is the match right. Even after the board determines the new proposal is or could lead to a Superior Proposal, the contract requires the target to give the original buyer a matching period. The original buyer can adjust its bid. If the adjusted bid meets or exceeds the new proposal, the target is contractually bound to recommend the original buyer’s deal — and is exposed to a breach claim if it does not. The match right is not optional. It is the most-litigated piece of the no-shop architecture in jumping-bid disputes.
The match right is harder to defeat than buyers think
A first buyer faced with a higher topping bid has three responses. It can match the bid, walk away with the break fee, or fight. The first option preserves the deal at a higher price; the second preserves the relationship at the cost of the deal; the third — the Pfizer/Novo response — uses litigation as a substitute for matching.
The litigation response works better than the form contract suggests for one specific reason. The match right runs against the target, not against the topping bidder. If the first buyer can persuade the Chancery, on a preliminary-injunction motion, that the topping bid does not actually meet the Superior Proposal threshold, the target cannot proceed with the topping bid even if the topping bidder is willing to keep waiting. The injunction freezes the process and gives the first buyer time to negotiate, walk away with the break fee on better terms, or simply outlast the topping bidder’s interest. The Pfizer/Novo dispute used exactly this approach, with Pfizer seeking a declaration that the Novo proposal could not constitute a Superior Proposal as a matter of contract interpretation.
The drafting implication for first buyers is to push for a tight Superior Proposal definition with quantitative and procedural gates. A definition that requires the topping bid to exceed the original price by a specified percentage, or that requires the topping bidder to have committed financing with specified counterparty quality, or that requires the topping bidder to accept the same regulatory-out limitations the first buyer accepted — each of these provides a contractual handle for the first buyer to argue the topping bid does not meet the threshold. A Superior Proposal definition that simply says “more favorable, taking into account all relevant factors” gives the target’s board substantial discretion and the first buyer correspondingly little.
The drafting implication for sellers is the opposite. A seller-side board that wants to preserve the credible deal-jump option should fight for a broad Superior Proposal definition that gives the board discretion to evaluate “all relevant factors” including non-price terms. A seller-side board that has accepted a narrow Superior Proposal definition is going to find the fiduciary-out exit ramp narrower than it expected when the topping bid arrives.
The break fee economics have not changed but the procedure has
The break-fee level on a 2026 deal — typically 3% of equity value, sometimes scaled or tiered — looks the same as it did five years ago. The procedural overlay around break-fee payment has tightened. The original buyer is generally entitled to be paid the break fee promptly upon termination, and the form contract typically requires the topping bidder to backstop the break fee in its own merger agreement with the target. The mechanics — the wire instructions, the timing, the holdback against pending disputes — have become more specific in the 2026 forms.
The economic reality is that the break fee is a tax on the jumping bid, not a deterrent to it. A topping bidder that pays a $30 million break fee on a $1 billion deal is, in effect, paying 3% more than the original price to acquire the target — well within the range of “premium” that any seriously-motivated topping bidder is paying anyway. The break fee deters frivolous topping bids; it does not deter motivated ones.
The first buyer’s leverage on the break fee is in tiering and triggers. A two-tier break fee — a lower amount for a topping bid that emerges during a go-shop period, a higher amount for a topping bid that emerges later — preserves a meaningful penalty for late jumping while accommodating an organized go-shop process. The form contracts in 2026 increasingly use this structure on deals where the seller’s board insisted on a go-shop. The no-shop and fiduciary-out interaction is one of the few corners of the merger agreement where the seller’s board, with serious advisors, can shape the litigation posture months before any topping bid arrives.
What the Assertio terminate-and-sign tells us
The Assertio 8-K does not, by itself, change the doctrine. It does signal that the no-shop architecture continues to permit successful deal jumps when the procedural conditions are met. The original buyer was paid its break fee. The target’s board followed the documented Superior Proposal procedures. The original buyer chose not to match. The new buyer signed and the Item 1.01/1.02 sequence ran cleanly.
What the Assertio filing illustrates is that the deal-jump exit ramp is alive and is used most often in mid-cap deals where the topping bidder has industry-specific motivation that the original buyer does not share. A pharma asset where the topping bidder’s pipeline complements the target in ways the first buyer’s pipeline does not. A real estate portfolio where the topping bidder’s footprint allows synergies the first buyer cannot match. A specialty manufacturing target where the topping bidder’s customer base provides a multiple the first buyer cannot justify. The Assertio terminate-and-sign sequence fits the pattern.
For deal lawyers running the no-shop architecture on a 2026 transaction, the implications are practical. From the buyer side, the priorities are a narrow Superior Proposal definition with quantitative and procedural gates, a meaningful match-right window long enough to mount a serious response, and a break fee structured to penalize late jumping. From the seller side, the priorities are a broad Superior Proposal definition that preserves board discretion, a clean documentation record on the unsolicited-proposal requirement, and a fiduciary-out carve-out that the board can actually use without inviting a litigation freeze.
For M&A counsel working through a contested deal-jump scenario, the form contract is the starting point but not the answer. The doctrinal posture in 2026 rewards careful documentation, contemporaneous board records, and disciplined adherence to the no-shop and match-right procedures. The Pfizer/Novo dispute and the Cooley walkthrough together provide a current roadmap.
If you are running an active no-shop process, evaluating a topping bid, or trying to figure out whether a quiet conversation crosses the no-shop line, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
— John
