Saturday, May 5, 2012
Here's the 139 page (?!) opinion. I know, if you're like most people you have better things to do on a Spring weekend than read it, but the first few pages gives away the ending. Strine enjoined Martin Marietta from proceeding with its hostile tender offer for Vulcan after finding that when one reads the NDA together with the JDA, the two documents limit use of confidential information only to a negotiated transaction between MM and Vulcan. Strine found that MM had indeed relied on confidential evaulation material when it put together its hostile bid. Therefore, the hostile tender would be enjoined for four months.
That's a tough pill for MM, but there's a lesson here. The lesson has to do with the procedures for using and maintaining confidential evauluation materials. As we see from MM, it's hard, maybe impossible, to unring bells once they have been rung with respect to confidential information. Strine took from MM's own actions that at the time, MM believed that it could not use confidential evaluation material in putting together its hostile bid, but it did anyway. For example, there was evidence in the record that MM knew it was using confidential information (emails: "I don't think we should use this information...", board presentations, etc), but MM used it anyway.
One thing I think it suggests, if you move from a negotiated to a hostile deal, it may require an entirely clean team, including outside counsel and i-bankers for the hostile, rather than the friendly, deal. Keeping the board and c-level types from the acquirer untainted by confidential information is harder though. Board members who see a presentation with confidential evaluation material may not be able to expunge all they have seen from their minds when considering a subsequent hostile transaction.