September 24, 2011
Arbitration for merger agreements
This just popped up on the PR Newswire:
SANTA CLARA, Calif., Sept. 23, 2011 /PRNewswire/ -- Advanced Analogic Technologies, Inc. (the "Company" or "AnalogicTech") (Nasdaq: AATI) today announced that it has filed a Petition for Arbitration in the Delaware Chancery Court (the "Court") seeking specific performance of the Company's merger agreement with Skyworks Solutions, Inc. ("Skyworks") (Nasdaq: SWKS) and to order Skyworks to close the transaction. AnalogicTech is seeking declaratory judgment from the Court that (1) AnalogicTech has not breached the merger agreement, (2) no "material adverse effect" has occurred with respect to AnalogicTech, and (3) Skyworks has breached its obligations under the merger agreement.
When these new aribtration rules were first announced in January, I hoped that it wouldn't be too successful. It looks like parties are starting to take advantage of the arbitration procedures. While that's not the end of the world, it might be cause for concern with respect to a particular aspect of deal litigation - contractual interpretation. In the case of AnalogicTech for example it looks like one of the issues is whether a MAC has been triggered. Now there's still enough ambiguitiy with respect to the MAC issue that it would be beneficial to have additional law on the question. If arbitration becomes more common, then there might be negative spillovers for the maintenance of the corporate law over time and that would be a problem.
This is an issue worth paying attention to, and perhaps re-visiting at some point.
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