April 5, 2012
Express Scripts and private antitrust risk
Just because you received clearance to close from the FTC/DOJ through the Hart-Scott-Rodino process, don't think you're necessarily in the clear if your transaction is antitrust sensitive. Take the current case Express Scripts/Medco as an example. Express Scripts/Medco was cleared by the FTC with no conditions earlier this week, but it still faces the hurdle of a possible injunction in a private action brought by the National Association of Chain Drug Stores and the National Community Pharmacists Association under Section 16 of the Clayton Antitrust Act. The plaintiffs are seeking to hold up the transaction from closing, or in the event it closes to force the parties to hold separate all the merged assets until the case has been resolved. Here's their complaint.
The big lesson from the Express Script/Medco? Don't think that since the FTC passes on the deal that there are no more antitrust risks out there.
April 4, 2012
Chevron forum bylaw challenged
A new shareholder challenge to Chevron's exclusive forum bylaw has been filed in Federal district court in the northern district of California. You'll remeber that last year in Galaviz v Berg, shareholders succesfully challenged a similar exclusive forum bylaw in Oracle's bylaws. Federal coruts are not opposed to forum selection provisions in principle. In fact, the policy of the Federal courts since Bremen v Zapata is to defer to the selection of a forum in a contract. In Galaviz, the court looked at a bylaw that was unilaterally by a board after the acts challenged in the lawsuit and found that such a bylaw lacked suffcient indicia of consent to establish a contract and therefore the selection of Delaware as an exclusive forum was not binding on the shareholders. The court pointed out that had the forum provision been included in the firm's certificate of incorporation that the court would likely have reached a different result.
In this case, the court is asked to look at a narrower question than in Galaviz, namely absent bad acts, does a unilaterally adopted forum bylaw exhibit suffficient indicia of consent to be considered a contract. My guess is that the court will follow Galaviz in this case.
April 3, 2012
More El Paso analysis
John Reed of DLA Piper provides some additional analysis on the El Paso decision and what it may mean for boards and potential banker conflicts:
April 2, 2012
Proskauer on the JOBS Act
Canadian profile of Strine
Since the El Paso opinion, the Chancery Court and Chancellor Leo Strine, in particular, have been receiving much more mainstream attention than is usual. Here's a profile of Chancellor Strine by Canadian CTV. They also picked up on Strine's manner. Referring to his recent bench ruling to dismiss all but two directors of Barnes & Noble, they write:
[Chancellor] Strine quickly waves off evidence against four of the directors, but zeroes in on two who have benefited from new business or bonuses from Mr. Reggio (sic). When the lawyer for one director, Lawrence Zilavy, protests his client did not know Mr. Reggio (sic) would bless him with a $1-million bonus after the merger, the horseshoe bald judge registers his disbelief with a tart, withering comment.
“Strine may have lost his hair, but it wasn’t from falling off the vegetable truck,” he says.
Vegetables, turnips, whatever.
3rd biennial conference on teaching transactional law and skills
Emory University School of Law has announced that it will host its third biennial conference on the teaching of transactional law and skills on Friday and Saturday, November 2 and 3, 2012. A request for proposals will be distributed soon.
UK Takeover Code Changes: 6 Months On
Six months ago the UK Takeover Panel implemented changes, including elimination of essentially all deal protection measures. So, what's the impact been? Have deals vanished because sellers and buyers have been unable to protect the deals they negotiate? According to Linklaters:
The current level of UK public M&A activity is low and it is therefore difficult to discern lasting trends. However, not surprisingly, practitioners and the Takeover Panel are navigating through the new Takeover Code rules and finding ways to do deals.
OK, so deal volume is low all around. So, what does one take from that? Probably not much. Of course, what's important to note is that complaints notwithstanding deals get done in the UK without the layers upon layers of deal protection devices that have become commonplace in US deals. Now, do we (US shareholders) get value from those extra layers of deal protections in negotiated deals? I think the best answer there is probably not, but that's an empirical question. We'll get an answer to that sooner rather than later.