M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Friday, July 9, 2010

Yucaipa v Barnes & Noble (day 2)

Again, courtesy of Courtroom View Network, I'm a fly on the wall of the Barnes & Noble poison pill trial.  Greg Taxin is back on the stand and now being questioned by Vice Chancellor Strine.   It's more like a conversation between two very informed people than it is a witness examination.  Vice Chancellor Strine has already made a reference to Michael Vick getting off.  This is going to be fun.    


Strine and Taxin this morning - 

VC Strine - B&N 2  Taxin-B&N 

Taxin is making the general argument that the B&N pill is novel because it's intended not to prevent a takeover, but to prevent blockholders or large shareholders from taking collective action (i.e. running a proxy contest).  Strine doesn't seem like he's on board with this, yet.

VCS: "Blockholders ... it's starting to look like Italy around here without the benefit of the food..."

Taxin is now being questioned regarding an amendment to the beneficial ownership definition and what B&N might have been trying to accomplish with its amendment:

Beneficial ownership

Taxin now under cross examination.  Got the assignment to write an expert report in the middle of June and turned around a final report in three days.  That's quick. 

Trying to make Taxin do math in his head while on the stand.  OK, I admit, I'd fail that test. C'mon give the guy a piece of paper.  

More math...this time Nachbar has helpfully done it ahead of time and provided it on a piece of paper to Taxin.  

OK, now they are arguing 6th grade math ... fractions ... I'm going to go out on a limb and suggest that Taxin is better at 6th grade math than Nachbar. ... Strine breaks out in a "cold sweat" due to the geeky back and forth over numerators and denominators.  ...  I'm going for a cup of coffee.  

Back again ... Taxin is now trying to teach Nachbar why an increase of 1 million shares in the numerator is not the same of an increase of 1 million shares in the denominator ...

Now back and forth  - not about the expert report but about whether Taxin understands an institutional investor's deposition testimony to mean that the third party admires Ron Burkle or not.  Hmm.  

Uh ... is Taxin suggesting that the database he relied on to write his report doesn't include any cases of hostile acquisitions where there was a pill in place and an acquirer ran a proxy contest in conjunction with a tender offer?  That's odd.  Strine doesn't appear to be impressed.  

Nachbar offers up a binding judicial admission on behalf of all the defendants  - B&N will not seek to enforce the language of "beneficial ownership" any differently than "beneficial ownership" is interpreted under DGCL 203.   Okay, now we're getting somewhere!

Taxin is excused.  Leonard Riggio is called ... but he's indisposed.  Okay, he's in the men's room.  He'll be in soon.   Riggio is now on the stand.  Going through some background - "Isn't it a fact ..." type questions.


Confusion reigns over binders ... it's time for a break!

July 9, 2010 in Cases | Permalink | Comments (0) | TrackBack (0)

Thursday, July 8, 2010

Pills in Court Today

It's been a busy day in Delaware - thanks to the wonders of the Internet and Courtroom View Network, I've been watching  the Versata v Selectica appeal before the Delaware Supreme Court (yesterday) and the Yucaipa v Barnes & Noble trial today.  The Yucaipa trial is going on in Vice Chancellor Strine's courtroom right now.  It's a four day bench trial.  

Investor Ron Burkle has already testified that B&N's pill is "draconian" and confusing.   There's now a lot of testimony by board member Patricia HIggins along the lines of the "I don't recall" and "I'm not personally aware" nature right now.  I'll be summarizing the proceedings later tonight or tomorrow.  


-Update I:  In a brief recess right now.  Higgins has been testifying in great detail about the process by which the board went about adopting the shareholder rights plan - and in doing so, she's hitting all the Unocal key words - informed, reasonable, threats, etc.

  -Update II

   Burkle lawyer: I object.  

   VC Strine: To what?

   Lawyer:  That which has not yet been uttered, but may be uttered.

   VCS (to witness): Don't utter that, otherwise it will be smote.  And bad things can happen when we start striking testimony...

-Update III: Greg Taxin now on the stand testifying as an expert (ex. 764 for those of you with Bloomberg Law).  He's testifying on proxy contests, the election of directors, and rights plans.   Testifying that there are two provisions that impact one's ability to run a proxy contest:  1) the 20% trigger, while insiders own more than 30%; and 2) the definition of beneficial ownership.  Nice charts - illustrating how often dissident proxy contests can win.  He's relying on data from SharkRepellent.  Dissidents seem to have won 32% of proxy contests over the past decade.

Here's the chart:


July 8, 2010 in Takeover Defenses | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 6, 2010

Pills, Pills, Pills

It's a big week for the shareholder rights plan in Delaware.  We've got two high profile cases.  The first is the challenge to Barnes & Nobles' shareholder rights plan in the Chancery Court.  We've blogged about that saga here already.  Second is Versata's challenge to the Selectica NOL pill that will be heard at the Supreme Court.   Paul Thomas and Randall Thomas have a new paper on the Selectica NOL pill, Resetting the Triggering on the Poison Pill: Selectica's Unanticipated Consequences.  They argue that dropping the trigger level down to less than 5% will have an important, and potentially negative impact on the market for corporate control.  This paper is worth reading before dropping in on the arguments later this week.

Abstract: The Delaware Chancery Court recently applied the Unitrin case to uphold the validity of an NOL Rights Plan with a 5 percent trigger level in Selectica, Inc. v. Versata Enterprises, Inc. The Chancery Court’s ruling is sufficiently expansive that it sanctions the reduction of Rights Plans’ trigger levels to 5 percent at all Delaware corporations. Using a weighted voting model, we show that such an across the board reduction of trigger levels would have important, unanticipated consequences. In particular, we demonstrate that it would favor hedge funds and private equity firms at the expense of strategic acquirers, and that it would greatly increase the power of third party proxy voting advisors. We conclude that the Delaware Supreme Court should consider these unintended side effects in crafting its decision in this case, and that it should adopt an expansive reading of the meaning of preclusive defensive tactics based on its earlier precedent in Unitrin and Moran.

July 6, 2010 in Takeover Defenses | Permalink | Comments (0) | TrackBack (0)

Sunday, July 4, 2010

Amazon Acquires Woot!

Not the most conventional of press releases, but this has got to be the best merger announcement ever.  Woot! announces its acquisition by Amazon.  Typically, for a public-private deal the merger agreement requires that the seller make no public announcements with respect to the transaction.  All announcements should come from the acquirer.  But, if the seller is going to be this fun and creative, why not!

We thought there must be easier ways of making it big 
 without working like dogs and sweating like pigs
 …and then “boom!” we got acquired by Amazon!
 So no more rolling in late with our pajamas on.

..."You can labor all day til you're tired and old or 
 you can wait for Amazon to call and when they do you say '$old!' "  


Update:  For its part, Amazon didn't make any public announcement re the transaction, but Woot!'s CEO released this "serious" comment on the company's website describing the transaction.  It includes this jewel of a line in the FAQs: 

    Q: Is Snapster [the CEO]  leaving?
    A: Are you kidding? He’s out the door about ten seconds after that check clea--  that is to say, Snapster will continue as Woot.com CEO, just like before, and the rest of our staff’s not going anywhere either. 

July 4, 2010 in Transactions | Permalink | Comments (1) | TrackBack (0)