October 1, 2010
Note to Self
The dispute over who owns the Dodgers may turn on one word. It is the 12th word of the second paragraph of the first exhibit of an agreement signed by Frank and Jamie McCourt six years ago. If that word is "inclusive," Frank could be the sole owner of the Dodgers. If that word is "exclusive," Jamie could be the co-owner. Three copies of the agreement say "inclusive." Three copies say "exclusive." Frank and Jamie have both said they were not aware of the different wording until this year. The difference in the words: two letters, and perhaps hundreds of millions of dollars.
The two primary questions for Silverstein [the lawyer]: How does he explain the conflicting language in the various copies of the agreement, and why did he apparently substitute one version for another without notifying his clients of the discrepancy?
"The lawyer will have to explain why he would unilaterally change a document without getting everyone's permission," said Andrew Waxler, whose El Segundo firm specializes in representing defendants in legal malpractice cases.
Frank McCourt's lawyers have said Silverstein simply made a drafting error and corrected it. In his testimony, Frank said Silverstein did not materially change the agreement by substituting an exhibit that read "inclusive" for one that read "exclusive" after the parties had signed the document.
What with clients sending you only signature pages, it becomes very tempting to make a quick little change in a document that no one will notice. They don't notice ... until they do ...
Afsharipour on Indian Outbound M&A
The other great power of the 21st century tends not to get a lot of attention. I don't know why. In any event, that's changing. Afra has just added to growing body of work that helps put the rise of India in context. Her new paper, Rising Multinationals: Law and the Evolution of Outbound Acquisitions by Indian Companies, is available on SSRN. I find it ironic that Indian multinationals have finally begun to come into their own. Maybe that just shows my age. I really enjoyed this paper.
Here's the abstract:
India is one of the fastest growing economies in the world and is predicted to become the third-largest economy in the world after the United States and China. India’s economic transformation has allowed Indian firms to gain significant attention in the world economy, particularly as acquirers of non-Indian firms. In the past decade, Indian companies have launched multimillion and multibillion dollar deals to acquire companies around the globe, with a significant concentration of targets in developed economies, in particular the United States and the United Kingdom.
Finance and business scholars have addressed outbound acquisitions by Indian multinationals, emphasizing the business and economic motivations for such transactions. However, there has been little analysis from a legal perspective of the significance of India’s legal norms and rules, including recent shifts in the country‘s regulatory and legal regimes, in the rapid expansion of Indian multinationals. This Article fills this void by analyzing the role of India’s post-liberalization legal reforms in outbound acquisitions by Indian companies. This examination presents a more complete picture of the legal environment and legal rules that have facilitated outbound acquisitions by Indian multinationals, but also reveals how limitations in India‘s legal reforms have constrained these deals.
This Article argues that Indian corporate law plays a number of important roles in the emergence of Indian multinationals. First, legal reforms since economic liberalization have set the stage for outbound acquisitions by Indian multinationals. Second, Indian legal reforms and legal history have shaped outbound acquisitions both in terms of transaction structure and transaction size. Third, legal constraints on Indian firms’ mergers and acquisition activity impose substantial restrictions not only on the methods that Indian multinationals use in pursuing outbound acquisitions, but also on the future potential of Indian multinationals.
September 30, 2010
Dollar Thrifty Vote Goes Down
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.
September 29, 2010
Adventures in Shareholder Democracy
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.
September 28, 2010
More on BHP/Potash deal
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.
September 27, 2010
Every vote counts
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.