M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, February 18, 2010

BKS replies to Burkle

Dear Mr. Burkle:

Thanks for your letter.  If you don't like our shareholder rights plan, just vote against it when we submit to the shareholders for a vote some time in the next 12 months.  Anyway, we think you don't understand the rights plan, so we amended it to make it clearer for you.  Oh, and you can't add.


BKS Board

That's my version of the Barnes & Noble board's response to investor Ron Burkle.  You can read their version here.  The amendment to the rights plan is here.


February 18, 2010 in Takeover Defenses | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 17, 2010

K&E on "Just Say No"

According to this client memo from K&E, recent takeover battles are bringing into question the continued vitality of the “just say no” defense, which allows the board of a target company to refuse to negotiate (and waive structural defenses) to frustrate advances from unwanted suitors.

According to the authors, "just say no" is more properly viewed as a tactic rather than an end, and when viewed this way,

it is apparent that the vitality of the “just say no” defense is not and will not be the subject of a simple “yes or no” answer from the Delaware courts. Instead, the specific facts and circumstances of each case will likely determine the extent to which (and for how long) a court will countenance a target’s board continuing refusal to negotiate with, or waive structural defenses for the benefit of, a hostile suitor.



February 17, 2010 in Current Events, Deals, Merger Agreements, Mergers, Takeover Defenses, Takeovers, Transactions | Permalink | Comments (0) | TrackBack (0)

Termination Fees in US and UK - standards vs. rules

John Coates' new paper, M&A Break Fees: US Litigation vs. UK Regulation, takes a look at the question ex ante rules vs ex post standards with respect to break fees.  One of the numerous results worth noting was that in the US Coates observed an increase in the size of break fees (presumably as parties litigated and searched for a level that courts would accept).  In the UK on the other hand, Coates reports that break fees started near the permitted cap and stayed there.

Abstract:  This paper contrasts UK and US governance of M&A break fees to see what the contrast can teach us about trade-offs between litigation and regulation as modes of governance, including how laws change under each regime over time. Data on 1,136 bids in 1989-2008 and 61 fee disputes show: (1) the UK caps fees at a low level with a simple ex ante rule based not on regulatory expertise but on an arbitrarily chosen percentage of bid value, which nonetheless has the virtues of clarity and lower litigation costs, and enhances competition conditional on an initial bid, and (2) US courts evaluate fees ex post with a complex and vague standard, allowing for greater variation and higher average fees, reducing bid competition and increasing bid completion rates, and possibly increasing M&A overall, at the cost of legal uncertainty and litigation (although less than might be expected), in part because courts resist articulating clear rules. Laws in each nation exhibit inertia; are protected by entrenched interest groups (institutional investors in the UK, lawyers in the US); and co-exist with the opposite approach (litigation in the UK, regulation in the US), even within the domain of M&A law. Subject to strong limits on external validity, the case study suggests that interest groups may be the most important factors shaping the initial choice between regulation and litigation, even for otherwise similar nations in a similar context, and that a combination of interest groups formed in response to a given choice, as well as lawmaker incentives, may preserve those choices even after the conditions giving rise to the initial choice have passed away.


February 17, 2010 in Break Fees | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 16, 2010

Russian Pre-Clearance Procedures

You might remember that the Oracle-Sun deal filed and then pulled its pre-clearance notification in Russia when it ran into difficulties with EU anti-trust authorities.  At the time, I was a little mystified.   Now, Clifford Chance is setting us all straight.  Here's their memo on the Russian merger pre-clearance process and part of their assessment of notification requirements for transactions involving a foreign buyer and seller: 

Russian competition law follows the "effects doctrine" and the notification requirements may also apply in case of foreign-to-foreign mergers.

Until August 2009, merger clearance in Russia was required if a foreign-to-foreign transaction met both of the following criteria: (1) it resulted in the acquisition of shares or assets of Russian companies, or direct or indirect control over Russian companies; and (2) it results or may result in the restriction of competition in Russia.

This structure was, however, reformed as a part of the Second Antimonopoly Package, which turned these two formerly cumulative criteria into alternative requirements. In addition, the second criterion was modified, which is expected to result in broader application of the Russian merger control rules by FAS. It is now sufficient that a transaction "affects" competition in Russia, while, previously, it was required that the transaction "restricts or may restrict" competition.

To date FAS has not issued any official clarification as to how it interprets the revised requirement. Based on its current practice, one may, however, surmise that a foreign-to-foreign transaction falls within the Russian merger control regime where the target entity directly or indirectly controls any Russian entities, owns assets located in Russia or has substantial turnover from operations in Russia

February 16, 2010 in Antitrust, Miscellaneous Regulatory Clearances | Permalink | Comments (0) | TrackBack (0)

Monday, February 15, 2010

Joining the M&A Party

Many thanks to the M&A Law Prof Blog for inviting me to be a contributor.  A devoted reader, I am very flattered to be among such fabulous company.  Hopefully there will be much to blog about in the M&A world.  At least according to the March 2010 issue of Bloomberg Markets Magazine, a recent survey of M&A professionals indicates that almost all expect a resurgence in M&A activity in 2010.  Of course, no one expects a quick return to the dizzying heights of 2007, but hopefully 2010 will beat the dismal 2009 numbers.  Given my interest in comparative law and outbound M&A deals, I was happy to see that the Asia-Pacific region is expected to be the leading hot spot for M&A activity in 2010.  Asian companies have been quite active in cross-border M&A activity in this first quarter, see for example the recent $10.5 billion bid by Bharti Airtel, an Indian telecom company, for Zain’s African assets.  I think that these types of South-South deals, and their political/legal challenges, will continue to be a major feature of M&A news in 2010.  I'll try to keep our readers updated on the legal angles of these and other hot M&A stories.


February 15, 2010 in Asia, Cross-Border | Permalink | Comments (0) | TrackBack (0)

Sunday, February 14, 2010

Welcome to Afra Afsharipour

I'd like to welcome Afra Afsharipour to the M&A Law Prof blog.  Afra will be joining Michael and I as a contributing editor here at the M&A Law Prof blog.  Afra is an Acting Professor of Law (in non-UC speak, that's an Assistant Professor of Law) at UC-Davis School of Law.   At Davis, Afra teaches corporations, M&A, and antitrust.  Prior to taking up her post at Davis, Afra was a transactional attorney at Davis, Polk, & Wardell in both their NYC and Bay Area offices.  

Welcome Afra!  I left a set of spare keys under the mat for you!


February 14, 2010 | Permalink | Comments (0) | TrackBack (0)