Thursday, September 30, 2010
This is a big week for newsworthy shareholder votes! Dollar Thrifty shareholders voted down the Hertz offer today (from Bloomberg):
The vote at the special meeting in Chicago today was about 13.8 million shares against the Hertz bid, versus 11.8 million shares in favor.
Only 41% of the outstanding shares were voted in favor of the Hertz deal.
For weeks Avis had refused to give Dollar Thrifty a reverse termination fee with an anti-trust/regulatory trigger - until yesterday when they offered up a $20 million fee. To be honest, the 1.3% fee that $20 million represents is nothing compared the damage that might be suffered by Dollar should Avis walk away in the event of regulatory challenges. I know that the reverse termination fee has been a big sticking point with the Dollar board, but given the small size of the one finally offered up by Avis, I can't imagine that the reverse termination fee was really driving many votes. If you think about a reverse termination fee as an equivalent to a liquidated damages provision paid to the seller in the event the buyer is unable to complete the deal, even the $44 million offered up by Hertz was probably much too small.
Wednesday, September 29, 2010
It's been an exciting couple of weeks on the proxy fight side. Yesterday, Barnes & Noble announced the results of the proxy contest instigated by Ron Burkle of Yucaipa. Management board members were returned and the dissidents lost (WSJ). But here's the thing - management directors got 44% of the vote and Yucaipa's slate got only 39%. OK, that's still a win for management under current voting rules for a company without a majority voting provision in its bylaws. However, given that Riggio undoubtedly voted the 30% or so that he controls in his favor, the fact that management could only come back with 44% of the quorum (not the total shares outstanding) is pretty pathetic. And Burkle doesn't off easy either - apparently Aletheia sat on the sidelines, not voting a large percentage of its stock (FT.com). Turns out when Burkle's legal team was arguing at trial over the summer that they hadn't made an agreement - even a wink and a nod - with Aletheia that they were right! Sorry I ever doubted them. But I bet you Burkle is wishing he might winked and nodded a bit more.
Over at Airgas, the parties are going to court next week to argue over the question of the validity of the bylaw amendment that calls for a shareholder meeting in January 2011. Air Products won that vote. Air Products was also successful in getting their slate of directors elected ousting three incumbent Airgas directors, including Peter McCausland, the CEO and Chairman. Not but a couple of days later the Airgas rump board expanded its size by one and reappointed McCausland to the board. Sure, I know, the board has the authority to expand or decrease its size and that it's perfectly within its rights to reappoint McCausland. But, c'mon.
All in all, it's been a couple of interesting weeks on the proxy contest front. I suspect that neither the Barnes & Noble fight nor the Airgas/Air Products contest are near over.
Tuesday, September 28, 2010
For readers who are following our posts (here and here) on BHP Billiton’s hostile bid for Potash, you should take a look at this post by the Deal Professor which considers the possible steps that Potash can take to deter BHP. There is a lot of uncertainty in this transaction, including a host of regulatory and political issues. For now, Potash’s sideshow litigation is moving along in U.S. federal court. Potash has the opportunity to at least drag this out a bit with a ruling allowing the discovery process to proceed.
Monday, September 27, 2010
Apparently the voting in the B&N proxy fight between the Burkle and management camps is still too close to call (AP story) and voting closes tomorrow. ISS has lined up with Burkle and the dissidents. Glass Lewis, Egan Jones and Proxy Governance have all lined up with management.
Friday, September 24, 2010
I'll just add this brief comment to Afra's good post on the state of the proposed Potash/BHP transaction. Potash has sued BHP in federal court over this BHP's hostile offer (Download Potash complaint). It's worth noting that since the complaint alleges various violations of the Williams Act, which you'll remember is the disclosure regime that governs tender offers, Potash is limited in the remedies that it can ask for. The best remedy for inadequate or incorrect disclosure is .... well ... disclosure. That's why the injunction that Potash is asking for is tied to slowing the offer down until the disclosure can be corrected. In the real world of large NY law firms, that isn't a whole lot of time ... 24, 48 hours to kick out an amended Schedule TO?
I have no doubt that if Potash could get an injunction preventing the offer from going forward, it would. In fact, they hint at it in the complaint - suggesting the tender is coercive because BHP is only seeking 51% has not conditioned the offer on receiving more than 67% of the outstanding shares. I think they're hoping that a judge will agree with them and enjoin the whole deal. Well, that's not going to happen. There's no obligation under the Williams Act that an offerer buy 100% of the outstanding shares, and buying less than all, without more, is just not coercive. In any event, the courts have regularly ruled that the Williams Act is not intended to be a defensive weapon to protect management from unwanted bids. A plaintiff is only going to get an injunction to block a bid if the preferred remedy - disclosure - isn't enough to avoid irreparable harm (see Rondeau v Mosinee Paper), and I don't see the irreparable harm here.
Just the other day one of my students dropped by my office and made an embarrassing admission. Seems he will be joining the corporate department of a big law firm after graduation and ... well ... he said that when the associates were talking "shop" over lunch during the summer that it all sounded like Japanese to him. He is afraid that being an English major in college is just about to catch with him.
Well, don't worry, cause there's an app for that -- Latham & Watkins "Book of Jargon." Download it now so you never have to guess what a "Macaroni Defense" is or what "KFC" stands for. I'll admit I wracked my brain for minutes and then gave up. I had never heard of the KFC acronym before. I looked it up in the Book of Jargon and apparently it means "Kentucky Fried Chicken." Is that a new deal structure?
Thursday, September 23, 2010
In local news, quasi-mythical shareholder plaintiff Alan R. Kahn recently filed suit in MA challenging the Genzyme-Sanofi transaction. In his complaint (which is sadly not available online) he alleged various breaches of fiduciary loyalty by the board, etc. The suit seeks (i) class action status, (ii) an order enjoining the defendants from initiating any defensive measures that would inhibit the defendants' ability to maximize shareholder value, (ii) compensatory damages and (iii) an award to plaintiffs of the costs of the action, including reasonable attorneys' and experts' fees and expenses.
Wait a minute ... there is no Genzyme-Sanofi deal, not yet anyway. Talk about jumping the gun! Well I guess he had the joy of being able to yell "FIRST!"
Well bad news for Mr. Kahn - if he thinks that he'll be able to get an injunction or an order out of the MA courts to prevent or even slow down this deal when and if it ever gets announced he's sadly mistaken. This Skadden Arps memo via the Boston Bar Association (H/T EDJ) notes that the MA courts are especially stingy when it comes to handing out injunctions to block deals:
The lesson of Elliot and its brethren is clear. Massachusetts law is increasingly unreceptive to injunction motions seeking to interfere with sophisticated corporate transactions, particularly where such motions would seek to interfere with shareholder votes. While such cases may occasionally find litigation “traction” elsewhere — indeed, there are Delaware cases granting injunctions in some circumstances,including injunctions delaying shareholder votes — our judges have been skeptical.
At least they are more predicable. It wasn't long ago that the knock on business litigation in MA was that there results were often no better than a lottery.
Wednesday, September 22, 2010
A heated cross-border hostile takeover saga (with big US connections) has been occurring over potash (a key input for fertilizer and other agricultural products), and the moves by the various players should remind our readers of classic plays in the hostile takeover game. In August of this year, British-Australian giant BHP Billiton (the jilted former suitor of Rio Tinto back in 2008) launched a $39 billion takeover bid for Canadian company Potash Corporation of Saskatchewan Inc. (“PotashCorp”). PotashCorp’s board has been actively resisting BHP’s bid, putting forth the usual argument that BHP’s offer is opportunistic, inadequate and coercive, that Potash is better off alone rather than selling to BHP (without of course ruling out a potential sale at some point), and that “superior offers are expected to emerge.” PotashCorp’s management has not relied only on the standard letters, press releases and regulatory filings to resist BHP, as Brian noted earlier, PotashCorp’s CEO has also posted videos to communicate with the company’s shareholders. Meanwhile BHP’s CEO is busy meeting with Canadian lawmakers and defending the Potash bid to his shareholders. Now, there is also news that China’s Sinochem Corp. has allegedly hired expensive bankers (are there any other kind…) to explore a rival offer for PotashCorp. In light of potential competition from Sinochem, BHP’s CEO stated yesterday that BHP would be willing to walk away if the offer didn’t make sense for his shareholders. Of course, this could also be because it is not clear that BHP’s shareholders buy the argument that the PotashCorp acquisition is the way to go (especially since there is a lot of evidence that big transactions like this rarely add value for the shareholders of the buyer). Moreover, unlike these kinds of big deal involving US companies where shareholders of the acquirer often do not get voting rights, BHP may need shareholder approval for its offer under the UK Listing Rules which require approval from shareholders of the acquirer of larger (Class 1 transactions), meaning a transaction that amounts to 25 percent (or more) of any of the company‘s gross assets, profits, or gross capital, or in which the consideration is 25 percent (or more) of the market capitalization of the company‘s common stock.
PotashCorp isn’t waiting around to see if Sinochem comes forward with an offer, it has also filed a suit in US federal court seeking to block the takeover and accusing “BHP of making false and misleading statements in regards to how it plans to run the combined company in the future.” PotashCorp has also raised the BHP shareholder vote issue, stating in its complaint that “BHP failed to disclose to PCS shareholders that on the day it launched its hostile bid, and thereafter in light of the market reaction to the offer price, it was reasonably likely that a vote of BHP shareholders – required under U.K. law for any acquisition where the consideration equals 25% or more of the acquirer’s market capitalization – would be required. Indeed, even BHP’s lowball bid was equal to approximately 23% of BHP’s market capitalization at the time the tender offer was commenced. BHP’s misleading omission deprived PCS shareholders of critical information in at least two respects: that approval of the transaction was uncertain, and that the need for shareholder approval could constrain BHP’s ability to increase its bid to a level closer to fair value.”
For M&A buffs, it is worth keeping an eye on this deal, there are a lot of moving targets and I wouldn’t be surprised if more legal, strategic and regulatory issues arise.
Matthew Cain and Steven Davidoff (The Deal Professor) have a new paper, Form Over Substance? The Value of Corporate Process and Management Buy-Outs, over at SSRN. This area of the law is one where there is a lot of interest and I suspect is ripe for some change, particularly with respect to challenges to cash-out mergers. So this paper is a welcome addition to the mix.
We examine management buy-out (MBO) transactions announced from 2003-2009 in order to study the wealth effects of MBOs and the role of process. We find that there is “value” in corporate process. MBO offer premiums are positively associated with competitive contracts and the existence of special committees. Among transactions with low initial offer premiums, bid failures are more likely when target shareholders benefit from competitive contracts. Our results allow for a cautious approach and more rigorous application of current Delaware law to provide that courts more vigorously scrutinize MBO transactions. They also inform the proper standard for review of other forms of takeovers with explicit agency/principal conflicts, including freeze-outs.
Monday, September 20, 2010
Over at Truth on The Market, J.W. Verret lists the Top Ten Books in Corporate Law that he believes a practitioner would find useful in day to day practice. This follows a prior post listing his top ten books in corporate governance, which reader comments led him to believe had (perhaps) too academic a focus. As he notes, most of the entries on the new list are treatises.
Acknowledging that corporate practices can vary widely, I have to say that, while I have consulted most of the books on his list, they are not the ones I turn to most often. As a transactional practitioner I’m generally looking for books that give more concise, practical advice on how to actually do things.
So, here’s my list of 10 texts for the transactional practitioner (in no particular order):
- Corporate Finance and the Securities Laws, by Charles J. Johnson, Jr., Esq., Joseph McLaughlin, Esq.
- Negotiated Acquisitions of Companies, Subsidiaries and Divisions, by Lou R. Kling & Eileen T. Nugent
- Start-Up & Emerging Companies: Planning, Financing & Operating the Successful Business, edited and co-authored by Gregory C. Smith with Contributing Experts
- Negotiating and Drafting Contract Boilerplate, edited & co-authored by Tina L. Stark
- Any one of: (a) The Section 16 Treatise and Reporting Guide, (b) The Section 16 Deskbook or (c) The Section 16 Forms and Filings Handbook, each of which is by Peter Romeo and Alan Dye
- Resales of Restricted Securities, by J. William Hicks
- The Williams Act—Tender Offers and Stock Accumulations, by Arnold S. Jacobs
- Legal Opinions: Drafting, Interpreting, and Supporting Closing Opinions in Business Transactions, by Donald W. Glazer, Scott T. FitzGibbon, Steven O. Weise
- Regulation of Securities: SEC Answer Book, by Steven Mark Levy
- Regulation of Corporate Disclosure, by J. Robert Brown
In the interest of full disclosure, several have been written or edited by partners or former partners of mine and I’ve contributed to a couple of them. I have excluded bar resources and pure form books, although often these are the things I use most frequently. I also excluded any text that is over two volumes long. And of course I've left off imternet resources, which I use quite frequently.
Thoughts welcome in the comments.
Sunday, September 19, 2010
By now it should be obvious to most readers that one of my target audiences when I write this blog is mostly recent law grads still getting their footing as young associates. I think it's useful to reinforce a couple of lessons that they may not have thought much about while in law school, but once you get out in practice confront you every day. First among them for transactional lawyers - particularly those new to the practice who are, often for the first time, handling confidential client information - is insider trading. As any transactional lawyer will tell you, when you work on deals, you're constantly handling inside information. If you want to have a long career you have to take that seriously. That's why I will often highlight "idiot lawyers" and others who ruin their careers for small amounts of cash, or for fleeting personal glorification. Some of these people deserve what they get, others ... well ... others could have been you. These are lessons worth learning.
All that said, the latest addition to the pantheon of people who should have known better, but thought maybe nobody would notice, is Dr. Bobby Khan. The SEC recently filed a civil complaint against Khan alleging that Khan traded on material nonpublic information that he acquired from a long time business associate and friend. The associate was an officer at Sciele who shared information with Khan about a pending transaction in which Sciele would be acquired by a Japanese pharmaceutical firm. The SEC alleges that Khan received that information after having assured his associate he would keep it confidential. In fact, the SEC alleges that after having learned about the acquisition from his associate over dinner, Khan sent the following email:
"Had a great dinner with you on Friday and I wish all the best with the negotiations on the potential buyout of Sciele. Of course, I will keep it confidential."
Of course, he will. But, you know how the story ends. Following his receipt of this information, Khan allegedly opened an online brokerage account, his first since 2003 and then transferred approximately one-third of his then liquid net worth into that account in order to purchase about 4,000 shares of Sciele stock only a few days before public announcement Sciele's acquisition on September 1, 2008. Following the tender offer announcement, Khan sold all of his Sciele shares in October 2008, making $45,000 in profits.
I'll give you three guesses where the SEC got the e-mail to the officer of Sciele. It probably wasn't Khan. I'm sure that when the SEC starting putting the dots together on who Khan was it took them about three minutes to realize that the Sciele officer was on the advisory board of Khan's startup. In fact, I wouldn't be surprised if the Sciele officer gave up Khan right away.
The good news for Khan is that he is a medical doctor and not a lawyer. Presumably he will still have a career after this is over.
Saturday, September 18, 2010
Over at The Conglomerate, they recently concluded a good forum on the current state of the shareholder rights plan following the eBay v Craigslist litigation. They had contributions from Gordon Smith, Eric Talley, and Christine Hurt with Erik Gerding moderating. Steven Davidoff even made a cameo. It's worth dropping by for a read.
Thursday, September 16, 2010
In yesterday's Airgas shareholders' meeting, Air Products put forward a bylaw amendment (you can find the text of the amendment here, proposal 5 on page 65) that would change the date of the annual meeting to January, 2011 effectively short-circuiting the staggered board/poison pill defense. As I said yesterday, it's intriguing. Now, that bylaw amendment won a bare majority of shareholders present and voting. Airgas' response was to claim that since the proposed amendment did not receive a supermajority of votes from the outstanding shares that the bylaw did not pass. That's odd. I pulled the 1995 Airgas certificate of incorporation and went straight the to language on amendments and this is what it says:
6. By-Law Amendments. The Board of Directors shall have power to make, alter, amend and repeal the By-Laws (except so far as the By-Laws adopted by the stockholders shall otherwise provide.) Any By-Laws made by the Directors under the powers conferred hereby may be altered, amended or repealed by the Directors or by the stockholders. Notwithstanding the foregoing and anything contained in this certificate of incorporation to the contrary, Article III of the By-Laws shall not be altered, amended or repealed and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least 67% of the voting power of all the shares of the Corporation entitled to vote generally in the election of Directors, voting together as a single class.
Looks about right. I suspect if Air Products is unable to 67% of the outstanding shares that the bylaw amendment goes down, notwithstanding the fact that it may have gotten a majority of the quorum in yesterday's meeting. That will leave Air Products with one-third of the board and hanging around until the next annual meeting. That's a mighty uncomfortable position to be in unless it can convince a Delaware court to order the Airgas board to pull the pill. We'll see.
Correction: Strike that, reverse it. The Deal Professor is obviously correct on this point. As has been also pointed out to me by a helpful reader, the "Article III" referenced in the bylaw amendment provision of the certificate (above) points back to bylaw provisions relating to "Directors". The annual meeting is covered under "Article II" of the bylaws (from the bylaws) and they are subject to the following amendment provision:
Article IX, Section 1. Amendments of By-Laws.
Wednesday, September 15, 2010
... your Airgas stock, I mean. The shareholder meeting is today and they have two major issues on the table: 1) a contested director election; and 2) a bylaw amendment to push up the next shareholder meeting. I think the second proposal is intriguing. The deterrent power of the combination of the poison pill and the classified board comes from the lengthy delay that the structure forces upon any potential acquirer. Going through two election cycles before you can take control is a lot to risk - a year can be a long time when you have a lot of money at risk. That's where the bylaw amendment comes in. By having shareholders vote to amend the bylaws to provide for a shareholder meeting in January 2011 Air Products is trying to create its own short-cut and reduce the time/risk involved in holding three seats with a pill in place. Interesting. So remember to get out and vote.
Update: Looks like the Air Products directors have won. Here the press release from Airgas. The outcome of the bylaw amendment is a little uncertain (from the press release):
Airgas continues to believe that Air Products' by-law proposal to require a Meeting of Stockholders be held on January 18, 2011 - only four months after the 2010 Annual Stockholder Meeting - and that all future annual meetings of stockholders be held in January is invalid under both Delaware law and Airgas' Certificate of Incorporation. We also believe that the proposal has not been approved because it received the affirmative vote of less than 67% of the shares entitled to vote generally in the election of directors. As previously announced, Airgas intends to seek an expedited judicial determination on the validity of this by-law.
With Mark Hurd now out of the way, it seems that HP has unleashed its acquisition crew and given it almost a blank check. There was 3Par for which HP paid 325 times EBITDA ... catch me, I just fainted ... Now, there's ArcSight. At $1.5bn, the valuation for this target is almost as rich according to Bloomberg:
The offer also values ArcSight at 57 times the company’s Ebitda, compared with a median 11.5 times Ebitda in 10 comparable deals tracked by Bloomberg.
Seeking Alpha also has some thoughts on the valuation:
HP put the enterprise value of the transaction, which is slated to close by the end of the year, at $1.5bn. That means the tech giant is paying 7.5 times ArcSight’s trailing sales of $200m. (For the current fiscal year, ArcSight is expected to put up about $225m in sales, meaning HP is paying about 6.7x projected sales.) On a trailing basis, both McAfee (MFE) and VeriSign’s (VRSN) identity and authentication business garnered 3.5x sales in their respective sales to Intel (INTC) and Symantec (SYMC). (Morgan Stanley advised both McAfee and ArcSight, while JP Morgan Securities advised VeriSign.)
But this isn't really a new direction for HP. Actually, they've been in the market buying for some time now ... remember Palm? They paid $1.2 billion for that company just last April. Before that it was 3Com. Now, I've got nothing against HP. Really, I don't. In fact, it's great news for shareholders of the sellers. Clearly it's a make or buy decision and HP has decided to buy. I'm just a little mystified at why HP appears to insist on overpaying for almost everything.
Tuesday, September 14, 2010
Before his arrest, Bob Moffat had it all - stand out student in college, led to an "extraordinary career with IBM, a happy family. He had it all. And then he threw it all away when he became involved with the Galleon crew. From today's Bloomberg report on the latest Galleon sentencing:
“Why the defendant betrayed the only employer he has had for his entire career has not been addressed,” Batts said. “His astounding breach of his fiduciary duty to his employer is why he is here.”
I think I know why. He didn't make any money. No, that's true. But it's a familiar story. According to the pre-sentencing report (Moffat - PSR):
"My actions were not driven by greed or the desire to profit by disclosing this information. In fact, I did not make any money as a result of what I did. In the end, I believe my actions stemmed from misplaced trust, letting 'my guard down' and a misguided desire to appear important and knowledgeable to share Ms. Chiesi that I was 'in the know' about important matters." Bob's mistakes were real and he is deeply sorry for them, but it must also be understood that his motives were not venal and not profit-driven. Perhaps his ego got in the way by making him want to impress someone with whom he had become intimate. Perhaps he just wanted to seem knowledgeable and worldly. This case is tragic precisely because Bob Moffat's actions are so inexplicable and because he threw away what he had spent so much of his life working for -- in exchange for non-pecuniary benefits that were, at most, fleeting and insubstantial.
It's just another reminder that if you're handing out tips on inside information, you don't actually have to "profit" (as in receive cash) for those tips to be liable. Moffat got six months in jail and lost it all today.
Monday, September 13, 2010
Friday, September 10, 2010
Chandler handed down his decision in the eBay-Craigslist trial and ruled, mostly, in favor of eBay. According to the Bloomberg report:
The poison pill was enacted “to punish eBay for competing with Craigslist” and not “in response to a reasonably perceived threat or for a proper corporate purpose,” Chandler said in his decision. ...
Trial testimony didn’t establish that Buckmaster and Newmark “acted in good faith and in pursuit of a good corporate purpose when they deployed” the pill, Chandler said. The judge concluded that the pair “resented eBay’s decision to compete with Craigslist” and set up the defense “as a punitive response.”
But it wasn't a complete win for eBay. eBay had challenged Craigslist's staggerd board as a defensive measure and argued that it too should be evaluated under Unocal. Chandler didn't bite. The staggered board was left in place.
I'm still looking for a copy of the opinion in a form that doesn't require me to pay Lexis $50! If anyone has it and is willing to share, I'll read it for you!
BTW: Those of you who took my corporate law final will find the facts in this case oddly familiar.
Update: Thanks to those of you who sent me copies of the opinion - Download EBay v Newmark. Greatly appreciated.
Update: You can always count on Francis Pileggi and the Delaware Litigation Blog. He's got the opinion here. Chandler summarizes the mixed bag opinion in the David v. Goliath case in the following way:
... the battle in Delaware has not been as one-sided a victory for the smaller contender as was the contest between the fabled Israelite and Philistine: more fortunate than Goliath, eBay leaves this field with only a gash across its forehead; less fortunate than David, craigslist leaves this field with something less than total victory.
In applying the Unocal analysis to Craig Newmark and Jim Buckmaster's decision to adopt a rights plan, Chandler focused the threat identified by Jim and Craig (why not Newmark and Buckmaster?). It appears that they identified the "threat" to be the prospect of eBay or some other corporate behemoth one day turning Craigslist into a money making operation. Here's how Chandler dealt with that "threat":
Jim and Craig did prove that they personally believe craigslist should not be about the business of stockholder wealth maximization, now or in the future. As an abstract matter, there is nothing inappropriate about an organization seeking to aid local, national, and global communities by providing a website for online classifieds that is largely devoid of monetized elements. Indeed, I personally appreciate and admire Jim’s and Craig’s desire to be of service to communities.The corporate form in which craigslist operates, however, is not an appropriate vehicle for purely philanthropic ends, at least not when there are other stockholders interested in realizing a return on their investment. Jim and Craig opted to form craigslist, Inc. as a for-profit Delaware corporation and voluntarily accepted millions of dollars from eBay as part of a transaction whereby eBay became a stockholder. Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders. The “Inc.” after the company name has to mean at least that. Thus, I cannot accept as valid for the purposes of implementing the Rights Plan a corporate policy that specifically, clearly, and admittedly seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders—no matter whether those stockholders are individuals of modest means or a corporate titan of online commerce. If Jim and Craig were the only stockholders affected by their decisions, then there would be no one to object. eBay, however, holds a significant stake in craigslist, and Jim and Craig’s actions affect others besides themselves. ...
Directors of a for-profit Delaware corporation cannot deploy a rights plan to defend a business strategy that openly eschews stockholder wealth maximization—at least not consistent with the directors’ fiduciary duties under Delaware law.
Thursday, September 9, 2010
No surprise, really. According to Reuters, Vice Chancellor Strine just handed down an opinion (84 pages - if someone wants to send it along, I'd gladly read it for you...) in which he denied the Dollar shareholder plaintiff's motion for a temporary restraining order to prevent Dollar's deal with Hertz from moving forward.
I'm pretty bad at guessing what's going on in the mind of most judges, but this one was pretty obvious.
Update: Vice Chancellor Strine frames the Revlon question nicely. Here from page 44 of the opinion:
Put simply, I do not quibble with the notion that the plaintiffs’ perspective is one that loyal fiduciaries reasonably seeking to obtain a value-maximizing deal could have adopted. But that, of course, is not the question. The question is whether the alternative approach that the Dollar Thrifty Board adopted was itself a reasonable choice that a loyal and careful board could adopt in the circumstances. I frame that question with purpose. The heightened scrutiny that applies in the Revlon (and Unocal) contexts are, in large measure, rooted in a concern that the board might harbor personal motivations in the sale context that differ from what is best for the corporation and its stockholders. Most traditionally, there is the danger that top corporate managers will resist a sale that might cost them their managerial posts, or prefer a sale to one industry rival rather than another for reasons having more to do with personal ego than with what is best for stockholders. Avoiding a crude bifurcation of the world into two starkly divergent categories – business judgment rule review reflecting a policy of maximal deference to disinterested board decisionmaking and entire fairness review reflecting a policy of extreme skepticism toward self-dealing decisions – the Delaware Supreme Court’s Unocal and Revlon decisions adopted a middle ground.
It used to be that a board in response to an unwanted offer a board would just send a press release to PR Newswire and then file a 14D-9. My ... how times have changed. Potash is presently fending off an unwanted bid from BHP and rather than simply issue a press release, they go to YouTube! (H/T WSJ Deal Journal) Here's Potash CEO Bill Doyle explaining the board's reasons for rejecting the offer:
It's a simple, low budget production. I wonder why they thought it would be more useful than a press release. It's certainly not easier - it takes CEO time and still requires a filing with the SEC. Since you can't file a video clip, yet, the whole thing has to be transcribed before its filed. Here's the filing for the video. It's also not the kind of thing that CNBC or some other business network is going to want to air. I wonder what it's for.
Oh and here's Bill Doyle on those dastardly arbitrageurs ... you know who you are ...
To be honest, I still think the guys over at Woot! know how to use video to communicate with their customers and shareholders. Can you imagine the impact of a monkey puppet rejecting BHP's bid?!