February 4, 2014

Takeover Litigation in 2013

This blog by Kevin LaCroix provides a pretty good summary of the state of affairs. The shocking stat is that 97.3% of all takeovers in 2013 with a value of over $100 million experienced a shareholder lawsuit, which represents the highest litigation rate recorded.

And here’s Keith Bishop’s proposal for preventing M&A deals with being such a litigation burden. The proposal boils down to:

Certificates of mergers include an additional box that may be checked. If this box is checked, an additional fee will be imposed for filing the certificate but stockholders will forfeit all rights to sue in relation to the merger. The amount of the fee will be based on a percentage of the merger consideration. The fees will be allocated to any plaintiffs’ firm providing useful suggestions for enhanced disclosures. A further refinement might be to apply a multiplier randomly to some fees so that the economic windfall attributes of the current system are preserved.