Thursday, November 24, 2011
Wednesday, November 23, 2011
More turkey time reading! Ahern and Sosyura have an interesting finance, Who Writes the News? Corporate Press Releases During Merger Negotiations, examing strategies acquires might be using to run up stock prices in the short term before announcement of an acquisition. It's an interesting issue.
Abstract: Firms have an incentive to manage media coverage to influence the outcome of important corporate events. We investigate this hypothesis by studying corporate press releases during mergers. Using comprehensive data on media coverage and novel data on merger negotiations, we find that bidders in stock mergers originate substantially more news stories after the start of merger negotiations, but before the public announcement. This strategy generates a short-lived run-up in bidders’ stock prices during the period when the stock exchange ratio is determined. The run-up and reversal in media coverage and stock prices cannot be explained by merger rumors, passive media management, or opportunistic merger timing. Overall, we present the first evidence on active media management in M&A.
Tuesday, November 22, 2011
Our friends at Fordham Law have asked for some help in reaching out to our readers. If you are in NYC and can find time to participate, these are great experiences for students. See below:
Each spring, Fordham University School of Law hosts the Irving R. Kaufman Memorial Securities Law Moot Court Competition. Held in honor of Chief Judge Kaufman, a Fordham Alumnus who served on the United States Court of Appeals for the Second Circuit, the Kaufman Competition has a rich tradition of bringing together complex securities law issues, talented student advocates, and top legal minds.
The year’s Kaufman Competition will take place on March 23, 2012 to March 25, 2012.
Our esteemed final round panel includes Judge Paul J. Kelly, Jr., of the Tenth Circuit; Chief Judge Alex Kozinski, of the Ninth Circuit; Judge Boyce F. Martin, Jr., of the Sixth Circuit; Judge Richard A. Posner, of the Seventh Circuit; Judge Jane Richards Roth, of the Third Circuit; and Commissioner Troy A. Paredes, of the United States Securities and Exchange Commission.
We are currently soliciting practitioners and academics to judge oral argument rounds and grade competition briefs. No securities law experience is required to participate and CLE credit is available.
Information about the Kaufman Competition and an online Judge Registration Form is available on our website, www.law.fordham.edu/kaufman. Please contact Michael A. Kitson, Kaufman Editor, at KaufmanMC@law.fordham.edu or (212) 636-6882 with any questions.
Happy Thanksgiving! Go eat some turkey.
Monday, November 21, 2011
Yesterday’s New York Times carried another in a long line of articles (which go back at least to the 1980’s) complaining that law schools emphasize the theoretical over the useful and, as a result, don’t teach law students how to be lawyers. As is typical, the author concludes that law schools need to increase their emphasis on skills training.
The article starts off with (and seems to rest on) an example that is pretty lame. Apparently, three first year associates at Drinker Biddle didn’t know that you file a certificate of merger with the secretary of state to effectuate a merger.
Let’s assume for arguments sake that this lack of knowledge is representative of the typical law school graduate going into a transactional practice. So what?
As I have discussed before, law schools have a comparative advantage of teaching certain competencies; law firms have a comparative advantage of teaching others. Each should do what they do best.
Among other things, law schools have a comparative advantage over law firms in teaching deep substantive knowledge of complex subjects necessary to practice law. For example, law firms simply cannot teach securities law the way a law school can (if at all). A thorough understanding of complex material like this requires voluminous outside readings and in-class lectures for a concentrated period of time.
On the other hand, you know what law firms can teach pretty quickly? How to call an outside service to file a certificate of merger.
Of course law schools also may have a comparative advantage in teaching certain practical skills. I’m all for courses in contract drafting and negotiation, and I teach a transactional skills course myself. But the issue is a little more complex than the NYT article suggests.
For more of my thoughts on this perennial topic, see What Law Schools Should Teach Future Transactional Lawyers: Perspectives from Practice.
Validus' efforts to acquire Transatlantic Holdings have taken another turn. When we last checked in on this hostile acquisition attempt, we found out that Chancellor Strine is a fan of Hillbilly Handfishin'. Oh, and the Chancellor also ruled on the appropriateness of standstill provisions in confidentiality provisions, deal protections and fiduciary outs (In re Transatlantic Holdings). It's worth reading.
Now, we have a new turn. Validus has put forward its own directors in a proxy contest. In addition to asking shareholder to vote for its three nominees adn to oust the current directors, Validus is asking for shareholders to vote on an amendment to Transatlantic's bylaws. The bylaw change would permit the shareholders to set the number of directors on the board. By doing so, it would prohibit the incumbent board from increasing the size of the board and thereby maintain control. OK, all well and good.
But, Transatlantic has filed a suit against Validus seeking a declatory ruling from the court that Validus' proposed bylaw amendment is illegal. Specifically, Transatlantic's certificate of incorporation reads:
Article Fifth, para 1: The number of directors of the Corporation shall be such as from time to time shall be fixed solely by the Board of Directors.
The Transatlantic board is arguing that only the board has the right to set the size of the board, and that an effort by shareholders to set the number of directors is contrary to the articles and thus not permisssible. In that regard, the directors have the better argument. Of course, if the incumbent board were simply to increase its size for the sole purpose of thwarting outsiders from obtaining control via a proxy contest, that would raise all sorts of Blasius-related issues. For that reason, this case is an interesting one to start to follow. Here's the complaint in the bylaw litigation.
Sunday, November 20, 2011