M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Saturday, October 24, 2009

Grading Google

Talk about a serial acquiror, over at Silicon Alley Insider they've assembled a list of 52 of Google's recent acquisitions.  Silicon Alley Insider has done us all a service by grading Google's efforts.  The grades are decidedly mixed  - an "F" for Dodgeball (what was that?) and an "A+" for Applied Semantics among others.  It's hard to know whether the grades really matter given that Google says it intends to use the acquisitions as a way of doing back door hiring of talented teams rather than to acquire useful new technology.  Hmm.  Why not just hire them and save on the legal bills? 



October 24, 2009 | Permalink | Comments (0) | TrackBack (0)

Friday, October 23, 2009

Australian Takeovers Panel

The Australian Takeovers Panel is presently seeking comment on a rewrite of their procedural rules.  The Takeover Panel there is modeled on the UK Takeover Panel.  Comments are due by October 26! 

In May, the Takeovers Panel began to revisit their rules (GN 7) with respect to deal protection measures, no-shops/no-talks, go-shops, asset lock-ups, break fees (limited to around 1% of equity value of the target) and other deal related provisions.  While all this seems familiar to those of us who think about through the lens of Delaware law, some of their approach takes a decidedly British view on takeovers.  For example, their statement on "frustrating actions" puts the shareholders and not the board clearly in the driver's seat (right side, obviously) when it comes to deciding whether or not to accept an offer:

Although it is generally the responsibility of a company’s directors to make company decisions, decisions about control and ownership of the company are properly made by its shareholders. Where a corporate action could frustrate a proposal concerning control or ownership of a company, the Panel will generally require that shareholders be able to determine the control and ownership of the company. The Panel expects that target company directors will act appropriately in such situations and that references to the Panel on these matters will not be common.

Action taken by a target company is likely to frustrate a takeover bid if taking that action has a material effect on the objective of the bid. Such action will usually allow the bidder either to rely upon a condition in its offer, causing the offer to lapse, or allow a bidder not to proceed with a genuine potential offer. 


October 23, 2009 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 22, 2009

Oracle Fiddling While Sun Burns?

MySQL, an afterthought in Oracle's decision to buy Sun last April has turned into a major obstacle with the EU Competition Commission standing in the way over the fate of the technology.  According to PC World representatives from Oracle met with the commission yesterday and, well, it didn't go well. 

In a meeting with Oracle President Safra Catz in Brussels on Wednesday, Competition Commissioner Neelie Kroes "expressed her disappointment that Oracle had failed to produce, despite repeated requests, either hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the Commission," a Commission spokesman said.


Meanwhile Sun's sales have been declining as rivals IBM and Hewlett-Packard take advantage of the uncertainty around Sun's business with aggressive migration plans. Oracle CEO Larry Ellison said last month that Sun is losing $100 million a month while it waits for the deal to close.

He has also asserted that Oracle's database competes with Microsoft's SQL Server and IBM's DB2 products, and not with MySQL.

Sun announced a big round of layoffs yesterday, citing the additional time it is taking to close the deal with Oracle. The company said it will lay off 3,000 workers around the world over the next 12 months. Oracle is widely expected to make deeper job cuts if the deal closes.

Although the delay is expensive, short of reaching a deal with the Commission, there's no real end in sight for Oracle.  The Merger Agreement (Sec. 8.01(b)) won't permit Oracle to walk for antitrust reasons until at least April of 2010.  That's six months, or $600 million in losses away. 

In Section 6.10 (below), the parties included what appears to be relatively modest antitrust language. 

(b) Without limiting the generality of the undertakings pursuant to this Section 6.10, the parties hereto shall (i) provide or cause to be provided as promptly as practicable to Governmental Authorities with regulatory jurisdiction over enforcement of any Antitrust Laws (each such Governmental Authority, a “Governmental Antitrust Authority”) information and documents requested by any Governmental Antitrust Authority or necessary, proper or advisable to permit consummation of the transactions contemplated by this Agreement, including preparing and filing any notification and report form and related material required under the HSR Act and any additional consents and filings under any Antitrust Laws as promptly as practicable following the date of this Agreement (but in no event more than fifteen (15) Business Days from the date hereof except by mutual consent confirmed in writing) and thereafter to respond as promptly as practicable to any request for additional information or documentary material that may be made under the HSR Act and any additional consents and filings under any Antitrust Laws; (ii) use their reasonable best efforts to take such actions as are necessary or advisable to obtain prompt approval of consummation of the transactions contemplated by this Agreement by any Governmental Authority; and (iii) use their reasonable best efforts to contest on the merits, through litigation in United States District Court and through administrative procedures in relation to other Government Authorities, any objections or opposition raised by any Governmental Authority;provided, however, that nothing in this Section 6.10 shall require Parent to appeal any Order from a Governmental Authority.

What are "reasonable best efforts" anyway?  The reaction we're hearing from the EU Competition commission suggests that Oracle could be doing something "reasonable" to assuage their concerns, but it's not. "Reasonable best efforts" is one of those ambiguous phrases, like materiality, that people think have meaning, but when one tries to give them meaning, they get harder to actually pin down. One would think that the mounting losses at Sun would be motivation enough for Oracle to give its dealings with the  EU its best effort, but apparently it's not.   I find it hard to believe that Oracle is unable (or unwilling) to respond to EU requests for a report on the marketplace and competition with respect to MySQL.  So, while Oracle digs in its heels over MySQL, Sun is left to suffer.


October 22, 2009 in Antitrust, Transactions | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 21, 2009

Bulow and Klemperer on Auctions

Jeremy Bulow and Paul Klemperer have a new paper out in the current issue of the American Economic Review, Why Do Sellers (Usually) Prefer Auctions?.  Here's the abstract:

We compare the most common methods for selling a company or other asset when participation is costly: a simple simultaneous auction, and a sequential process in which potential buyers decide in turn whether to enter the bidding. The sequential process is always more efficient. But preemptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry -- precisely because of its inefficiency -- it usually generates higher expected revenue. We also discuss the effects of lock-ups, matching rights, break-up fees (as in takeover battles), entry subsidies, etc. (JEL D44, G34, L13)


October 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, October 19, 2009

Reuters Interview with Vice Chancellor Laster

Reuters sat down with the newest Vice Chancellor.  His thoughts on the financial crisis:

"With the crash in the banking system still ringing loud in everyone's ears," said Laster. "If there was ever a moment where a politically sensitive Delaware judiciary might have reached out to change Delaware law, that was it. Oversight law is not going to change for a moment-specific reason."


"I don't think it's fair to say about the financial crisis that directors weren't trying to do a good job. Directors were trying to do a good job," he said.

"Now it is always nice after the fact to try to find someone else to hold the bag, but I think it critically important we not to judge these things in hindsight. The core question for us is always: At the time the decision was made, what were the directors thinking?"


October 19, 2009 in Delaware | Permalink | Comments (0) | TrackBack (0)