In a May blog post we discussed several initial observations regarding the dozens of M&A transactions that were signed prior to March 2020 and that were in jeopardy as a result of COVID-19. Since that post, the Delaware Chancery Court has had the opportunity to consider some preliminary issues relating […]
Although its final episode aired more than a decade ago, there is still debate about the ending of HBO’s critically-acclaimed series, the Sopranos. In fact, as one critic notes, “the only objectively true statement that can be made about that ending is that it’s ambiguous.” This ambiguity was embraced and lauded […]
In Captain Phillips, a pirate hijacks a ship and turns to the captain and says (in what is an amazing improvised line) “Look at me, I’m the captain now.” While the comparisons between piracy and M&A will take us only so far, let us start with an observation: boards and […]
Whataday for Special Committees: Salladay v. Lev Clarifies Committee Formation Requirements in Non-MFW Scenarios
In late February as the COVID-19 pandemic was accelerating, the Delaware Chancery Court issued an important decision that is likely to impact transactions during the expected recession. In Salladay v. Lev, C.A. No. 2019-0048-SG (Del. Ch. Feb. 27, 2020) (“Salladay”), the court held that a conflicted transaction – not involving […]
MAEjor Ruling: Delaware Court of Chancery Finds Target Suffers Material Adverse Effect and Acquirer Could Back Out of Transaction
M&A practitioners have long advised boards of directors that the Delaware courts have never found that the events or circumstances in a particular transaction met the contractual standard of having a material adverse effect (or MAE) as defined in a merger or acquisition agreement. Therefore, the board should have a […]
How much disclosure of deal dirty laundry is necessary in order to fully inform a Corwin/Volcano cleansing vote?
In Elizabeth Morrison v. Ray Berry et. al., (dated July 9, 2018), the Delaware Supreme Court reversed the Delaware Chancery Court’s dismissal of deal litigation based on obtaining a cleansing vote under Corwin/Volcano because the defendants failed to show “as required under Corwin” that the vote was fully informed. The […]
Under new measures coming into force on 11 June, the UK government will have greater powers to intervene in mergers that potentially raise national security concerns due to the target’s involvement in military and dual-use technologies and certain categories of advanced computer technology. Such transactions will be reviewable by the […]
On April 20, 2018, the Ninth Circuit ruled that shareholder claims for false or misleading tender offer disclosures under Section 14(e) of the Securities Exchange Act of 1934 require a mere showing of negligence, rather than fraudulent intent (scienter). This holding departs from longstanding rulings by five other federal appeals […]
On January 22, 2016, Chancellor Bouchard rejected a proposed disclosure-only settlement in In re Trulia, Inc. Stockholder Litigation, 129 A.3d 884 (Del. Ch. 2016), marking the culmination of what has been a seismic shift over the past several months in the Delaware Chancery Court’s treatment of disclosure-only settlements in lawsuits challenging […]
Thinking about what may go wrong with a contract, can be as important as the planning to make it go right.Key issues such as where an arbitration should take place, the level of confidentiality required and what levels of evidential discovery are you likely to require, can all put you in a much better position to deal with a dispute if one should arise in the future.
Exclusive forum provisions (in a corporation’s bylaws or charter) designate a specific court(s) to serve as the exclusive venue(s) for intra-corporate litigation—e.g., derivative suits; actions (including class actions) asserting breach of fiduciary duty by a director, officer, or other employee to the corporation or its shareholders, and other disputes asserting […]
Recognizing the growing interest in using technologies such as social media to communicate with security holders and potential investors, the Securities and Exchange Commission released a new Compliance and Disclosure Interpretation addressing the use of hyperlinks in Tweets and other social media communications to satisfy the SEC’s legending requirements. Historically, […]
Summarized below are the currently proposed changes to the Delaware General Corporation Law (the “DGCL”) that, if enacted, would become effective on August 1, 2014.
In a much anticipated judicial development, the Delaware Supreme Court affirmed the holding of In re MFW Shareholders Litigation (Del. Ch. 2013) that if certain procedural protections are in place from the outset of a transaction, a controlling stockholder buyout otherwise subject to the entire fairness standard could be subject […]
In Rural Metro, the Delaware Chancery Court held that RBC Capital Markets, LLC, as financial advisor to the Rural Metro (Target), had aided and abetted Target’s directors in breach of their fiduciary duties in connection with its sale to Warburg Pincus (Buyer). This is the latest in a string of […]
Delaware law limits parties’ ability to contractually agree to lengthen the time period for making claims beyond the statute of limitations that would otherwise apply to the underlying claims. A line of Delaware cases (the most well known of which is GRT, Inc. v. Marathon GTF Technology, Ltd.) have held […]
Developments Under Delaware Law in the Enforceability of Non-Reliance Provisions Against Fraud Claims
A series of cases in 2013 refined the law in Delaware relating to the enforceability of non-reliance clauses. Non-Reliance clauses are generally intended to limit a buyer’s ability to make fraud claims based upon representations made outside of the acquisition agreement (e.g., in diligence materials in the data room, spoken […]
In Great Hill, the court held that the right to assert the privilege over attorney-client communications and ownership of such communications passes to the acquirer in acquisitions structured as mergers under Delaware law. This case clarifies the law in Delaware mergers by expressly refusing to follow prior New York case […]
In a case involving a common fact pattern, Trados “Part 2” provides a very helpful analysis of a board’s fiduciary obligations when common stockholders receive no consideration in an acquisition. Trados was acquired in 2005 for $60 million in cash and stock. The preferred stockholders received $52.2 million of the […]