Thursday, September 13, 2012
Tom Hals at Reuters has a good piece on the potential for Chancery arbitration following the recent district court decision. Backers of Chancery arbitration are looking to appeal the ruling that struck down teh ability of parties to maintain confidentiality of the proceedings. That seems like the right result. Now, they are seeking to appeal the ruling and get Chancery arbitration back on track. This struck me in Hals' piece:
Supporters said that despite the legal setback, they expect that Delaware Chancery arbitrations, in some form, will likely take root in the coming years.
"In five years, we could see substantial growth in the number of these cases, said Gregory Varallo, of Richards, Layton & Finger in Wilmington, "It could even rival the number of public business cases."
That's what I'm afraid of. I'm working on a paper on Chancery arbitration (now have to rework parts of it given that it's been overtaken by events in the district court). The key problem as I see it with respect to arbitration for me is the long-term impacts of having a significant number of public business cases decided by arbitration before the Delaware courts rather than by the Delaware courts themselves. Though backers seem to think Chancery arbitration is critical to maintaining Delaware's competitive position, I take the position over the long term - or even five years if there is a significant move in that direction - Chancery arbitration could in fact weaken Delaware's position with respect to its corporate law franchise. Sure, there may be a lot of cases (arb/formal) being decided, but the number of precedents being set and the continued maintenance of the law will suffer. Good for the short term but bad for the long term -- and not just for Delaware if one thinks that there are positive network effects associated with the Delaware corporate law franchise.
But that's just me and I don't know much.
Tuesday, September 11, 2012
Our friends at LawMeets and Apprennet LLC are doing some interesting programming that should be of interest to law students and junior associates who might be just getting going. They are announcing “The Basics of Acquisition Agreements”. Faculty include our own Afra Afsharipour! See below.
The Basics of Acquisition Agreements
LawMeets is launching the first “MOOC” or massive open online course to teach transactional lawyering skills. LawMeets two-week online course on the Basics of Acquisition Agreements includes four video lectures, four interactive learning exercises and two panel discussions by leading transactional attorneys moderated by LawMeets faculty. The course is free and open to everyone.
WHO will teach the course?
The LawMeets® faculty for this course include:
- Afra Afsharipour, Professor of Law at UC Davis School of Law and former attorney at Davis, Polk & Wardwell LLP
- Jay Finkelstein, DLA Piper Partner and Adjunct Professor of Law at Stanford Law School and American University Washington College of Law
- Karl Okamoto, Professor of Law at Drexel University Earle Mack School of Law and former Dechert LLP and Kirkland & Ellis LLP Partner
Whitehead, Professor of Law at Cornell Law School and former senior counsel at
various international financial institutions
The faculty will be joined by a group of experts from law firms and corporate legal departments from around the world who will interact with the course participants through written feedback, online discussion boards and streaming video.
WHAT will the MOOC cover?
- The Why and How of Acquisitions
- A discussion of the economic and strategic motivations for acquisitions and the role lawyers play.
- Overview of the steps for completing acquisition transactions.
of an Acquisition Agreement
- An introduction to the provisions of an agreement and their interplay.
- An in-depth look at the primary “battleground” in the negotiation of an acquisition agreement.
- Due Diligence
- Why it matters. How it works. Common issues.
WHEN does the MOOC occur?
- October 23, 2012 through November 7, 2012
HOW do I participate?
- Interested participants can register for the MOOC by visiting www.LawMeets.com. Early registrants will receive email updates and the opportunity to complete a practice online exercise.
- To learn more, please visit www.LawMeets.com or email us at firstname.lastname@example.org.
Monday, September 10, 2012
Now, I don't often say that, but things are happening up there that we should pay a little attention to. Canada has for a long time been much less solicitous towards the poison pill than Delaware (or other US) courts. In Canada, boards have the authority to adopt poison pills, subject to review by the provincial securities commissions. The commissions have the authority to order pills redeemed. In making the determination with respect to whether or not to order a pill redeemed, the commissions consider, among other things, whether the shareholders have voted to ratify the adoption of the plan. (I've blogged about Candadian pill standards before, see here).
In any event, the Canadians take a position that is very Gilson/Bebchuk-like on the scale of things in the long-standing takeover debate: the corporation is ultimately owned by the stockholders. In response to an unsolicited offer, boards may use defensive measures in order to help negotiate a higher price, but in the end, a board may not stand between shareholders and the opportunity to tender into a non-coercive offer. I suspect there's a finance study out there on takeover premia in Canada. If not, that sounds like a study/summer project.
Contrast the Canadian position with the Delaware position, which, following Airgas and Versata, can only be called a reluctant endorsement by the Chancery Court of "just-say-no". In that long-standing debate, it's pretty clear that Marty Lipton has won the day.
So, and this is where Canada is interesting, it looks like Canada is making increasing noises about moving away from its long-standing position with respect to poison pills and its more shareholder-centric approach to the takeover law and towards a more Delaware-like approach. Already last year, it was bubbling under the surface. High profile takeovers of Canadian firms by foreign acquirers tends to ignite the passions of nationalism. Recently, it's been proposed acquisition of Rona Inc by Lowe's Co - we can't have the Yanks owning our big-box hardware stores afterall. In any event, the acquisition played an important role in the recent provincial elections in Quebec, which saw the Quebec nationalist party put back in power. During that election, both the Liberal and PQ included anti-takeover legislation in their party platforms. Liberal leader Charest went so far as to announce a $1 billion "foreign-takeover fund" that would be used to finance domestic acquisitions of Quebecois companies. No clue whether he intended to use the proposed fund to fend off interlopers from Alberta, but we won't ever find out. Charest lost and he's on his way out. The incoming PQ has already signaled that they aren't supportive of a Lowe's/Rona deal (and here). I suppose the PQ could try to stymie foreign takeovers by requiring that all tender offer documents be in French. Or, it could repeat what the Canadian government did last year in the proposed Potash aquisition - declare the Rona hardware retailer a vital national asset and a transaction not to Canada's benefit block the deal. Uh ... too much?
Short of that, it looks like the more obvious path would be to adopt a constituency statute that would place more power in the hands of the board and permit them to more aggresively resist unwanted offers.
So, something to watch. Of course, putting more power in the hands of boards doesn't ensure that Canadian businesses stay Canadian, but I suppose that's a lesson our friends up North will have to learn on their own.