British - Israel Investments undertook to pay a middleman fees for its merger with Melisron but refused to pay after the merger was completed, arguing that the merger that was actually carried out was a reverse triangular merger in which it became fully owned by Melisron, and not a classic merger, as was proposed.
The Court found that the middleman is entitled to the fees because the agreement between the parties made no reference at to the merger technique, but to its actual completion. In a classic merger transaction, the acquired company is absorbed into the acquiring company and all of the acquired company's assets and liabilities are automatically transferred, by virtue of the law, to the acquiring company, while in a reverse triangular merger, the acquired company remains fully owned by the acquiring company. Despite the differences between the merger methods, both achieve the same purpose, that is, acquiring full control without changing the legal ownership of the assets. Here, the goal was to create a merged company that would control 100% of the assets of both companies and operate as a single business unit, thus the merged company would take advantage of utilizing the benefits arising from the combination of the two companies. Therefore, even if the original proposal was based on the idea of a merger using a technique that would lead to joint control of the two companies, while in the end another merger technique was chosen, this does not negate the middleman's right to the fee.