DealLawyers.com Blog

May 11, 2015

Opposing a Deal (But Voting For It)

Here’s an excerpt from this BloombergView piece:

Are activists an important check on shareholder complacency? Left to their own devices, would big institutional shareholders be insufficiently protective of their own interests? Well I don’t know but here is a story about how T. Rowe Price consistently opposed the 2013 leveraged buyout of Dell, of which it was a big shareholder, but somehow voted for the deal. Like, as far as I can tell, by accident. Like the guy in charge of telling everyone what a bad deal it was never talked to the guy in charge of hitting the vote button. “We are aware of a discrepancy in the communication of our voting instruction on the Dell buyout,” says T. Rowe. What?

This is immediately relevant because T. Rowe is a plaintiff in an appraisal lawsuit, and the appraisal statute requires that you “neither voted in favor of the merger or consolidation nor consented thereto in writing.” So T. Rowe would seem to be out of luck in its appraisal demand, though it has a pretty amusing reading of the statute to mean the opposite of what it says, which happens to be supported by case law. But the broader issue is: How do you vote the wrong way on a merger? What does this story say about the need for activist investors? About T. Rowe’s concerns about high-frequency trading? About the efficiency of our public equity markets?