Friday, September 24, 2010
I'll just add this brief comment to Afra's good post on the state of the proposed Potash/BHP transaction. Potash has sued BHP in federal court over this BHP's hostile offer (Download Potash complaint). It's worth noting that since the complaint alleges various violations of the Williams Act, which you'll remember is the disclosure regime that governs tender offers, Potash is limited in the remedies that it can ask for. The best remedy for inadequate or incorrect disclosure is .... well ... disclosure. That's why the injunction that Potash is asking for is tied to slowing the offer down until the disclosure can be corrected. In the real world of large NY law firms, that isn't a whole lot of time ... 24, 48 hours to kick out an amended Schedule TO?
I have no doubt that if Potash could get an injunction preventing the offer from going forward, it would. In fact, they hint at it in the complaint - suggesting the tender is coercive because BHP is only seeking 51% has not conditioned the offer on receiving more than 67% of the outstanding shares. I think they're hoping that a judge will agree with them and enjoin the whole deal. Well, that's not going to happen. There's no obligation under the Williams Act that an offerer buy 100% of the outstanding shares, and buying less than all, without more, is just not coercive. In any event, the courts have regularly ruled that the Williams Act is not intended to be a defensive weapon to protect management from unwanted bids. A plaintiff is only going to get an injunction to block a bid if the preferred remedy - disclosure - isn't enough to avoid irreparable harm (see Rondeau v Mosinee Paper), and I don't see the irreparable harm here.
Thursday, May 6, 2010
Maybe, but so what? The WSJ and Reuters are reporting that Berkshire Hathaway may have run afoul of the Williams Act's early warning disclosure requirements by not filing a timely amendment to its Schedule 13D in connection with its acquisition of Burlington Northern Santa Fe Corp last Fall. Berkshire filed its second amendment to its Schedule 13D in order to report that it had signed a merger agreement with Burlington Northern on November 3, 2009. Rule 13d-2 requires that if there are any material changes to the facts set out in the Schedule 13D that the filer is required to amend the filing. In this case, the original Schedule 13D filed in 2008 noted that the investment was for "investment purposes" and did not disclose any intention to acquire all of BNSF. Reading the rule strictly, the moment Berkshire's purpose for holding the shares turned from investment to acquiring control, Berkshire had an obligation to amend its 13D (within 10 days). Presumably the merger negotiations took longer than 10 days to initiate and complete.
OK, so maybe there was a technical violation. But, there's no NACCO-like fraud allegation or shareholder suit to go along with this violation. There's just discussion of the SEC looking into the matter. Is there any remedy worth pursuing here? I guess the SEC could seek an order to cause Berkshire to come into compliance. But, with its November 3, 2009 filing Berkshire is already in compliance. There isn't much to be done and there's hardly seems a remedy worth pursuing.