November 4, 2010
Canada to BHP: "Thanks, but no thanks for now."
Last week the Premier of Saskatchewan gave the thumbs down to the BHP bid for Potash. Yesterday afternoon, Canada's Industry Minister Tony Clement released a statement expressing a similar sentiment:
"I can confirm that I have sent a notice to BHP Billiton indicating that, at this time, I am not satisfied that the proposed transaction is likely to be of net benefit to Canada.
"I came to this decision after a careful and rigorous review of the proposed transaction. BHP Billiton has 30 days to make any additional representations and submit any undertakings.
"At the end of that period, I will make a final decision.
"The confidentiality provisions of the Investment Canada Act prohibit me from discussing specifics of an ongoing case.
"I can assure Canadians, however, that I will provide an explanation of the reasons behind my final decision at the time that decision is made, in accordance with the provisions of the Act.
"Canada has a long-standing reputation for welcoming foreign investment. The Government of Canada remains committed to maintaining an open climate for investment."
So the ball is now back in BHP's court. It looks like it's up to them to woo the government of Canada if they want this deal to happen.
November 3, 2010
Is 10 days too long for a 13D filing?
The rule says you have 10 days to file a Schedule 13D, but count me as one who thinks we'd all be okay if that was reduced to 2 days, or some other shorter window. Andrew Ross Sorkin has more thoughts on this question.
The Airgas appeal before the Delaware Supreme Court gets underway in about 30 minutes (care of Courtroom View Network). In the meantime, Lucien Bebchuk and his co-authors put a post on the Harvard Corporate Governance Network blog describing their work on staggered boards that figured so prominently in Ted Mirvis argument before the Chancery Court. They highlight what they concluded, and, importantly, what they didn't conclude.
Back in 30 minutes when the fun starts.
The Supremes...sitting en banc.
Ted Mirvis is now making the argument for Airgas
"For over 100 years everyone has believed that the terms of a staggered board are three years."
Ridgley: Are you arguing that a year term must be exactly 365 days?
Mirvis: No, not exactly 12 months, but if there are situations where it is inadvisable to have a meeting exactly 12 months apart that's okay, but not without limits.
Redgley: But, what is the limit?
Mirvis: Should be worked out on a case by case basis.
Berger: Could directors move the annual meeting date by 6 months for business reasons?
Mirvis: If the directors wanted to do it, there would be no one to complain. Stockholders can't do it if it deprives a director of his/her term because the term is a creature of statute.
Mirvis is arguing that this is a question of statutory interpretation and not necessarily one of interpretation of the charter.
Holland, helping out Mirvis with friendly questions:
Essential Enterprises makes another appearance. You might as well read it.
Bebchuk et al's post gets a shout-out. You should read that, too.
Mirvis is done.
Air Products' counsel making his case:
Per 211, the time and place of the annual meeting should be set per the manner established in the bylaws. Now making a textual argument interpreting the charter in support of his position. If Airgas is right, then none of the words in the charter (contract) don't matter.
Chief Justice Steele:
Discussing the Seitz opinion in Essential Enterprises, again.
Berger asking questions that sound sympathetic to Airgas' position:
Discussions of the meaning of the ABA form book for public company charter docs.
Through all the back and forth, it's not exactly clear where the Supremes are in their thinking - whether they have latched onto Airgas' "it's all about the statute and common understanding" or with Air Products' "we're only doing a plain reading of the charter" argument. Then again ... they let Air Products' counsel make his argument almost unheeded for the last five minutes.
Mirvis is back now for a minute making the same common understanding argument. I think his argument that because Air Products has the same charter language as Airgas that it somehow disqualifies Air Products' interpretation of Airgas' charter isn't all that useful.
... and that's it!
November 2, 2010
Healthcare M&A Traps
McDermott's M&A Newsletter offers five traps in healthcare M&A. Down at number 5? Approval by the Pope! I'm not kidding:
A significant segment of nonprofit health care operations in the United States is affiliated with the Catholic Church. According to the Catholic Health Association, there are more than 600 Catholic hospitals and 1,400 long term care and other health care facilities operating in the United States. Health care entities affiliated with the Catholic Church must obtain the approval of the Holy See – the “headquarters” of the Catholic Church in Rome – before entering into certain transactions. This approval, called an “Indult,” is issued after the party selling or otherwise transferring property prepares an intricate application to the Holy See, usually under the guidance of an expert in Canon (church) law. Approval of Indult requests can take weeks or even months to obtain, potentially impacting the timing of a deal if not thought out in advance.
Airgas and the Supremes
You'll remember that Airgas lost in the Chancery Court on the question whether or not the terms of its staggered board were for three calendar years or for that period of time required for three shareholder meetings to occur. The two turn out to be different. They've taken that issue to the Delaware Supreme Court where no doubt they will be making another version of the argument that the court should not interpret the plain language of the charter but rather a more ... common understanding. As I noted before, that's not an argument that will likely carry the day. Nevertheless, they are before the court this morning and, thanks to the crew over at Courtroom View Network, I'll be watching live.
Given that the board of Airgas has already begun "discussions" of a sort with Air Products one wonders why they are pursuing this appeal. I suppose if they win, they think they can just walk away from the talks about the talks.
Anyway, oral argument is scheduled for 10:00am.
Update: 10:00am - tomorrow, Nov. 3! That's what happens when you're on leave. The calendar becomes a blur.
November 1, 2010
Of Loyalty and Buyouts
I don't know, but I always feel a little uneasy when the CEO announces that he'll pay a 38% premium to take the company private. If the company is so valuable, why not run it for the public shareholders?