M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, October 31, 2013

Dole sneaks through

This just coming in....

The buyout passed with the support of 50.9% of the shares not held by CEO David Murdock, who owns 39.5 percent of Dole and is trying to take it private for the second time in 20 years.

Like Dell, unaffiliated stockholders in Dole seem to be just a little less than enthusiastic about the buyout.  Also like Dell, there's talk of appraisal. Of course, with Dell all that talk was for naught after Carl Icahn took his money and moved on.  No clear sense yet whether the hedge funds in Dole are serious about hanging around.  



P.S.  Duck boats on Saturday morning ... Go Sawx!! 

October 31, 2013 in Going-Privates, Hedge Funds | Permalink | Comments (0) | TrackBack (0)

Dell goes dark

In case you missed it, Dell completed its going private transation on Wednesday. On Thursday it requested deregistration of its securities and so...poof. It's gone. Now there's a lengthy blow-by-blow offered up by Bloomberg on the deal went down. I guess it's appropriate that they publish it on Halloween, cause this is how investment banker Jimmy Lee described Dell's going private journey:

“This is a guy from Austin who founded his own technology company and now he is on Wall Street trying to buy it out and he is entering an unknown world,” Lee, 61, said.

“It’s like going into a haunted house,” he said, “and every time you go around a corner some ghost pops up, and then a witch flies down on a broom, and then you go into another room and some devil tries to stab you with a pitchfork.”

Boo!  Happy Halloween to the kiddies.



P.S.  Go Sawx!

October 31, 2013 in Going-Privates | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 23, 2013

Delaware Arbitration Procedure Unconstitutional

So there you have it.  Just hit PACER today (h/t  KWC).  Here's  the opinion (DCOGvStrine).  Lengthy exploration of civil trials and arbitrations in the opinion.  I'm reading now...



From the opinion:

Finally, Appellants argue that opening the proceeding would effectively end Delaware’s arbitration program. This argument assumes that confidentiality is the sole advantage of Delaware’s proceeding over regular Chancery Court proceedings. But if that were true—if Delaware’s arbitration were just a secret civil trial—it would clearly contravene the First Amendment right of access. On the contrary: as the Appellants point out in the rest of their brief, there are other differences between Delaware’s government-sponsored arbitration and regular Chancery Court proceedings. Arbitrations are entered into with the parties’ consent, the parties have procedural flexibility, and the arbitrator’s award is subject to more limited review. Thus, disputants might still opt for arbitration if they would like access to Chancery Court judges in a proceeding that can be faster and more flexible than regular Chancery Court trials.

Funny, I think someone I know argued just that same argument not long ago.... More from the opinion:

Delaware’s proceedings are conducted by Chancery Court judges, in Chancery Court during ordinary court hours, and yield judgments that are enforceable in the same way as judgments resulting from ordinary Chancery Court proceedings. Delaware’s proceedings derive a great deal of legitimacy and authority from the state. They would be far less attractive without their association with the state. Therefore, the interests of the state and the public in openness must be given weight, not just the interests of rich businesspersons in confidentiality.

Like history, logic weighs in favor of granting access to Delaware’s government-sponsored arbitration proceedings. The benefits of access are significant. It would ensure accountability and allow the public to maintain faith in the Delaware judicial system. A possible decrease in the appeal of the proceeding and a reduction in its conciliatory potential are comparatively less weighty, and they fall far short of the “profound” security concerns we found compelling in North Jersey Media Group. See 308 F.3d at 220.

Because there has been a tradition of accessibility to proceedings like Delaware’s government-sponsored arbitration, and because access plays an important role in such proceedings, we find that there is a First Amendment right of access to Delaware’s government-sponsored arbitrations. We will therefore affirm the order of the District Court.

Boom.  There you have it.  A resounding victory for my profession...in that there will continue to be a corporate law for me to teach going forward... 

October 23, 2013 in Delaware | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 22, 2013

TRO Halts Globe Sale

Uh-oh... a crisis just a day before the World Series!  As you may remember, the NY Times agreed to sell its Boston Globe division to John Henry, the principal owner of the Red Sox.  Owning the local newspapers, obviously, makes for excellent coverage when it comes October and your team IS PLAYING IN THE WORLD SERIES.  So, you'd think everybody in Massachusetts would be on board.  Apparently, there are some Yankee fans in central Mass who disagree.  A judge today issued a TRO halting the sale

"The defendant ... is hereby enjoined and restrained from transferring ownership or interest in any of its assets... until further order of this court," Judge Frison wrote in her temporary restraining order. "The court retains the prerogative to inspect the financial documents of the defendant in order to resolve any disputes." 

In her temporary restraining order, Judge Frison put the "maximum end" of a settlement in the case at $60 million. In essence, the entire sale price of The New England Media Group could be set aside in an escrow account until the case is completed. The case has been in litigation since 2009. 

The New York Times Co. and Mr. Henry had scheduled to close their reported $70 million sale of The New England Media Group — which includes the Globe, the Telegram, boston.com, and telegram.com — to Mr. Henry on Friday, according to Judge Frison's restraining order. 

The issue here is who will be liable for the costs in a potential settlement of litigation against the Worcester Telegram and Gazette and independent newspaper carriers that has been ongoing since 2009.   The carriers are seeking to be treated as employees and not independent contractors.  The carriers want access to the NY Times' assets in the event they get a judgment or settlement.  They fear that following the sale to John Henry, one of the richest men in America, that Worcester Telegram and its parent will be left without sufficient assets to pay a settlement should it be reached.  The Times, obviously, wants to leave this particular liability with its Worcester subsidiary.

Although the question of which assets and liabilities will move in an asset purchase is often a difficult one, this one seems a little more straightforward.  The Times sold its New England Media Group entity to Henry. That holding company includes the T&G as well as the Globe entitities.  The present suit against the T&G corporate entity gets transferred along with entity.  Absent facts that might suggest T&G has been deliberated undercapitalized to perpetuate a fraud against the carriers why does the TRO issue?  In any event, does anyone really believe that the Times is in a better financial condition to make good on any judgment than John Henry? 



October 22, 2013 in Asset Transactions | Permalink | Comments (0) | TrackBack (0)

Tomato, Tomahto

Last month, I posted a little blurb on Vice Chancellor Laster's denial of a motion to consolidate based in part entirely on the fact that plaintiffs had captioned the consolidated case "shareholder litigation" and not "stockholder" litigation.  The Vice Chancellor's comments were succinct, "Under whose law do you think you are litigating?"  

Me?  I find that kind of thing entertaining and on the whole not troublesome.  Afterall, I remember my brief experience as an associate.  In my first drafting project, I used shareholder and stockholder interchangeably.  Using the same word all the time seemed so ... boring.  Of course, there was a sea of red ink on the document when it came back.  OK, lesson learned - consistency in drafting.  The next version of the document went up and came back in another sea of red ink!  Stockholder, not shareholder.... grumbles among the associate ranks, but okay.  In a later assignment, I decided to show how much I learned, so I was consistent and only used 'stockholder'.  The joke was on me, though.  More red ink ... it's shareholder for California corporations!  

What? You've never had an experience like this?  I find that odd.  Of course you have.  Who instructs their associates to draft in any which way they please?  No one, that's who.  

In any event, the whole tomato/tomahto thing generated a little bit of a kerfluffle in ways that my regular posts of insider trading or LBOs just don't.  

My take?  This is an internal affair of the State of Delaware.  If the courts of Delaware have decided that plaintiffs should caption their litigation "stockholder litigation" and not "shareholder litigation", so be it.  Who am I to complain?   No substantive rights are affected either way, so let Delaware have its way.  

It's not like last month's denial was the first time Vice Chancellor Laster has been tilting at this particular windmill.   Last year, he observed  in a settlement hearing in Adams Shareholder Litigation:

 "Today's hearing is so that I can consider the proposed class action settlement in In re Adams Golf Shareholder Litigation, C.A. No. 7354.  I note, for the benefit of everyone who captions these cases, that with the 2010 amendments to the Delaware General Corporation Law, there are no longer any stray references in the DGCL that use the term 'shareholder.'  The DGCL uniformly uses the term 'stockholder.'  'Shareholder' is a model act concept, although it did slip in in Section 203 for a few years.  And certainly our decisions are not always scrupulous in observing the distinction.  Nevertheless, I will humor myself, if no one else, by thinking of this privately as In re Adams Golf Stockholder Litigation."

A check of the Delaware code turns up only one reference to shareholder -- a stray parenthetical reference in the new Section 251(g) (hey, someone get on that!).  Otherwise, the word shareholder is nowhere to be found.  

What to make of all this?  It's not as if stockholders of Delaware corporations lose or are otherwise denied substantive rights if they call themselves shareholders.  The two words are, afterall, synonyms in normal parlance.  However, if attention to detail is the stock and trade of a transactional lawyer's craft -- and it is, it is -- then it's surprising to me that there might be even the slightest pushback in a demand that we pay attention to detail.  

So...tomato, tomahto I guess...but if you are in front of a Delaware court, you better make sure it's stockholder all the same.


October 22, 2013 in Delaware | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 16, 2013

Exclusive Forum Appeal

Am I the only one slightly disappointed that the plaintiffs in the Chevron exclusive forum bylaw provision case decided not to pursue their appeal to the Delaware Supreme Court?  I'm interested in the question of how the court would treat forum provisions mostly because I'm thinking about the next step:  firms electing to adopt mandatory shareholder arbitration, either through Delaware's confidential arbitration procedure or private arbitration.   If public firms take their cue from Chevron and begin to adopt such provisions, that's probably not going to be in Delaware's long-term interest.  In any event, this is an issue I am interested in following for a host of reasons - many of them totall self-serving.  I teach corporate law afterall. What would I possibly do with myself if all teh corporate law cases went to arbtration?!  (Don't answer that!)


October 16, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, October 14, 2013

Handicapping Delaware

The Delaware News Journal (via Delaware Online) handicaps the pick for Chief Justice of the Delaware Supreme Court.  Although there are a number of possibles, the News Journal thinks it comes down to a choice between Chancellor Leo Strine and Justice Randy Holland.  Of course, a selection of Randy Holland as Chief Justice doesn't preclude elevating Chancellor Strine to the Supreme Court.  More and more signs seem to be pointing to Strine at least getting elevated to the Supreme Court.  I wonder if he even wants that particular job.  I suppose he might.  If he does get a nod, then that leaves his seat as Chancellor open.  Any takers there? 


October 14, 2013 in Delaware | Permalink | Comments (0) | TrackBack (0)

Friday, October 11, 2013


Stumbled across this little bit of news - USA Truck is complaining about Knight Transportation.   The two companies had been in confidential talks about possibly doing a friendly deal.  Knight had signed a confidentiality and standstill agreement, but now, according to USA Truck, Knight has been using its confidential information to pursue a creeping acquisition of the company.  In response USA Truck has filed a suit - in Arkansas - seeking an order prohibiting Knight from acquiring more stock and divesting itself of the stock it acquired.  I suppose USA will be making arguments simlar to those in Vulcan/Martin Marietta.   But, my first thought was well, why doesn't the board adopt a pill?  Turns out USA Truck has both a pill and a staggered board - a pretty insurmountable defense.  And that's not enough to dissuade a creeping acquisition?  Interesting.  Something else must be going on here.


October 11, 2013 | Permalink | Comments (0) | TrackBack (0)

Poor Prognosticator

OK, so one reason number why I no longer try to call cases before judges hand down their opinion: I'm usually wrong!  Not always, but often enough that people will start to doubt my credibility if I do it too often.  Thank goodness I didn't try to call the Activision/Blizzard appeal that was heard by the Delaware Supreme Court yesterday.  I missed the hearings, though I had the opportunity to watch them via our friends at Courtroom View Network.

In any event, the issue on appeal was whether the Vice Chancellor erred when he issued a preliminary injunction requiring a shareholder vote to approve a transaction involving Activision and Vivendi, its controlling shareholder.   The certificate of incorporation (9.1) required that the majority of the minority of unaffiliated shareholders approved "any merger,  business combination, or similar transaction" involving Activision and Vivendi.  OK, so this wasn't a merger. It was a series of transactions involving a sale of Vivendi's stock in Activision back to the company and to managers.  In effect, the transactions will change control of the transaction from one controller to another.   

To me, that looks like a "similar transaction" but apparently, that's just me.  The court went the other way and overturned the Vice Chancellor's order on the grounds that the transaction is not the kind that would not fall under the protection of 9.1.  Hmm.  For what it's worth, here's the order. Oh well.  There you go.


October 11, 2013 | Permalink | Comments (0) | TrackBack (0)

Friday, October 4, 2013

Icahn says no appraisal

Ho-hum...who is surprised by this tweet that just popped up in my timeline?  Not me.




October 4, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 3, 2013

The Transactions Tax

Browning Jeffries adds to the discussion on the litigation game and multipforum litigation in his new paper The Plaintiff Lawyer's Transaction Tax.

This article addresses the proliferation of frivolous litigation in the context of public company deals. In 2012 93% of public company mergers and acquisitions valued at over $100 million and 96% of such transactions valued over $500 million incurred litigation. Through these “merger objection suits,” plaintiffs’ attorneys have successfully attached a transaction tax – in the form of attorneys’ fees – as the cost of doing business for public company mergers and acquisitions. Armed with the knowledge that time is of the essence in these transactions, plaintiffs’ attorneys understand the leverage they have to force a quick settlement with a defendant company’s board. Adding to the attorneys’ leverage and the pressure on defendants to settle is the threat of larger-than-normal litigation costs since most large public company deals that attract litigation incur more than one suit, often in several different jurisdictions. When given the choice of either paying plaintiffs’ attorneys’ fees – particularly when the settlement is typically otherwise non-monetary – or jeopardizing a multi-million dollar transaction, boards of defendant companies seem, understandably, eager to choose the former.

This article explores the reasons for the increasing overabundance of merger objection litigation and the solutions that have been proposed or adopted to address it. Previous scholarship in this area has focused on the need to eliminate the multi-jurisdictional aspect of this litigation by funneling all such cases to the state of the target’s incorporation or otherwise easing the consolidation of cases across jurisdictions. Eliminating the multi-jurisdictional aspect of merger litigation would, no doubt, be a step toward curbing abusive strike suits in this arena by alleviating some of the settlement pressure imposed on defendants by the high costs of litigating a case in multiple forums. However, the other incentives to settle, particularly those imposed by the pressure of the deal timeline, would remain. As such, this article suggests that, in addition to funneling merger objection suits to the state of incorporation of the target, there need to be state solutions, beginning with Delaware, to further deter strike suits in this area. This article describes a combination of legislative reform and enhanced oversight of merger objection settlements by the Delaware Chancery Court as a possible solution to the merger objection litigation problem.

I get the sense that the increasing attention to this issue is leading us somewhere.  Not quite sure where, but the needle is moving.  For now, more ideas, please. 


October 3, 2013 | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 1, 2013


Ok, so the impacts of this 'shutdownado' are far and wide and sometimes a little unpredictable.  As you probably know, the DOJ has been challenging the American Airlines/US Air merger on antitrust grounds in court.  The trial is set to start on Nov. 25.  Now,  though, the DOJ is seeking stay during the government shutdown because government lawyers won't be available to prepare their case:

Absent an appropriation, the Department of Justice attorneys and employees are generally prohibited from working, even on a voluntary basis.

Not the worst thing in the world, I suppose.  But, judges are still working  and getting paid, though (thanks to their permanent appropriation).  Somehow, the SEC is operational according to an announcement of the SEC's site.  PCAOB is open because, well, it's not really a Federal agency (I know, there's a constitutional question there).  FINRA is still open for business; it's an SRO afterall.  But, the big news?  That's right.  BC's football game against Army this weekend might cancelled/postponed because of the 'shutdownado.'   What?!  

Hmm.  Hey Congress!  You suck!


October 1, 2013 in Antitrust | Permalink | Comments (0) | TrackBack (0)