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.
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…
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.
Here’s the intro for this WSJ article about this court order approving a settlement issued yesterday (also see this Gary Lutin report with more info):
T. Rowe Price Group Inc. shareholders are getting some of their money back after a proxy voting blunder cost the mutual-fund company nearly $200 million. Dell Inc. will pay T. Rowe about $25 million to settle a long-running lawsuit over the technology giant’s buyout, according to people familiar with the matter.
That is a fraction of the almost $200 million T. Rowe would have received had it not accidentally voted in favor of the 2013 deal. A Delaware judge ruled last month that founder Michael Dell and his private-equity backers underpaid for the company and ordered them to repay dissenting investors — a windfall that T. Rowe was ineligible for. In exchange, T. Rowe has agreed not to appeal a series of unfavorable court rulings that disqualified it from a larger payday, the people said.
This Wilson Sonsini memo does a great job of analyzing the antitrust implications of Brexit…
As noted in this Cooley blog, Corp Fin issued 7 new CDIs last week on Rule 701 issues – primarily in the M&A context…
Here’s a summary of this memo from Ropes & Gray:
On June 16, 2016, Delaware Governor Jack Markell signed into law House Bill 371, which amends the Delaware General Corporation Law (DGCL) with respect to, among other things, appraisal proceedings and “intermediate-form” mergers.
Specifically, the bill amends Section 262 of the DGCL to limit de minimis appraisal claims and to provide surviving corporations with the right to pay stockholders exercising appraisal rights prior to the time the Delaware Court of Chancery makes a final value determination, thereby limiting the amount of interest that would accrue on an appraisal award.
The legislation also clarifies the requirements and procedures relating to “intermediate-form” mergers under Section 251(h) of the DGCL, particularly those involving rollover of target equity.
Here’s news from this Wachtell Lipton memo:
Yesterday, the entire board of directors of FBR & Co. was overwhelmingly re-elected in the face of a bitter proxy fight waged by Voce Capital Management, an activist hedge fund. Voce committed strategic and tactical errors, costing its investors significant amounts of money, and unwittingly providing valuable lessons on responding to dissident shareholders.
In 2015, Voce and its affiliates purchased approximately 5% of FBR’s outstanding common stock. Consistent with FBR’s commitment to regular dialogue with its shareholders, FBR attempted on several occasions to solicit input from Voce. Voce did not provide any meaningful suggestions for improvements and instead, after a brief series of initial conversations, elected not to engage with the company for a period of almost five months.
After the protracted silence, surprisingly Voce nominated three candidates for election to FBR’s board and commenced a vitriolic and highly-charged proxy campaign. Voce’s campaign was noteworthy for its repeated unsupported attacks which demonstrated a fundamental lack of knowledge of, and sensitivity to, the people-intensive nature of a financial institution. Voce had no concern for the highly skilled professionals whose talents are required to operate an investment banking and broker-dealer business. Despite the lack of merit to its arguments or a coherent business strategy, Voce received the support of ISS and Glass Lewis.
The management and board of FBR wisely elected not to sink to Voce’s level. Voce issued numerous highly inflammatory “fight letters”, planted critical news stories in trade and other publications and provided misleading information as to the state of the voting to shareholders. FBR responded by taking the high road, it did not issue attack letters or commence litigation, rather it professionally and analytically presented its plans to shareholders.
Voce further evidenced its lack of commitment to its position by the fact that none of the Voce nominees or principals of the fund attended the FBR shareholder meeting and Voce’s representatives chose to forego the time allotted to them to address the meeting. The very next day Voce sold its shares of FBR common stock at a significant loss. Voce had purchased its position in FBR at a volume weighted average price of $22.37 per share and sold its shares for $16.40 per share. In addition to the loss on the position, the Voce investors will bear Voce’s fees and expenses.
FBR was successful not only because of Voce’s numerous failings but also because the FBR management team had spent years engaging with its retail and institutional shareholders. As a result when shareholders were presented with a choice between an activist running a destructive campaign and management’s clear strategy, they overwhelmingly supported the current FBR board. This campaign illustrates that careful shareholder engagement over many years can counteract the results of a negative campaign and reflexive ISS and Glass Lewis recommendations of activists.
Some great stuff in these takeaways from a recent Cleary Gottlieb/Berkeley event in San Francisco about “Antitrust, IP, Board Processes, and M&A in 2016: Challenges and Conundrums for the West Coast”…
Here’s a teaser from one of the memos posted in our “Attorney-Client Privilege” Practice Area about a new court decision:
In a decision with important consequences for merger and acquisition transactions and the litigation resulting from those transactions, a divided New York Court of Appeals held last week that the common interest doctrine applies only to post-signing, pre-closing communications between parties to a merger agreement if they relate to pending or anticipated litigation. Other communications between separately represented parties to a merger (or other commercial transaction) are not entitled to privilege under New York law.