Monthly Archives: July 2016

July 8, 2016

Social Media: Deal Announced By Blog Post!

As noted in this blog by Steve Quinlivan:

Tesla, in an offer to acquire SolarCity, appears to be the first to announce a major proposed acquisition by a blog post. Since an 8-K was also filed, it can’t be sole proof that social media is a recognized distribution channel for Regulation FD. But dissemination was nonetheless rapid, with the first news apparently appearing on Twitter at about 4.11 pm, the 8-K being filed at 4.13 pm, and the first Wall Street Journal e-mail alert being received at 4.58 pm (all times Central).

There had to be some advance coordination between the parties, because SolarCity filed an 8-K almost simultaneously. The exhibit includes an email from SolarCity’s CEO, in which he wisely advises employees not to comment on social media.

The Tesla 8-K also discloses that Tesla adopted an exclusive forum by-law the day before the acquisition was announced.

July 7, 2016

HSR Violation Penalties More Than Doubled by FTC

Last week, as noted in these memos, the Federal Trade Commission announced an increase in the maximum civil penalties it may impose for violations of the Hart-Scott-Rodino Act and various other rules and orders governed by the FTC. The maximum civil penalty for HSR violations has increased from a daily fine of $16,000 per day to $40,000. While these higher maximum civil fines will apply to any penalties assessed after August 1st, they will also apply to violations that predate the effective date…

July 6, 2016

Medium Form Mergers: In re Volcano

Last week, the Delaware Court of Chancery held – In re Volcano Corp. Stockholder Litig. – held that the acceptance of a first-step tender offer by fully informed, disinterested, uncoerced stockholders representing a majority of a corporation’s outstanding shares in a two-step merger under Section 251(h) of the Delaware General Corporation Law had the same cleansing effect as a fully informed, uncoerced vote of a majority of the disinterested stockholders of a target in a merger. In other words, a third-party, cash-out merger accomplished through a fully informed tender offer will be governed by the business judgment standard of review, requiring dismissal of all litigation challenges to the transaction unless a plaintiff can establish corporate waste. Upon the receipt of the required tendered shares, the business judgment rule “irrebuttably” applied to the merger and the plaintiff could only challenge it on the basis that it constituted waste.

We’re posting memos in our “Fiduciary Duties” Practice Area. As one of the memos notes, the decision extends an important line of recent Delaware case law that substantially inoculates transactions other than controlling stockholder squeeze-out mergers from litigation challenge so long as they have been approved by a majority of the independent shares outstanding on the basis of proper disclosure.