Merger and Acquisition Litigation
The announcement of a corporate takeover involving a merger or acquisition can be a critical time for shareholders. Corporate directors and officers have a legal obligation to maximize shareholder value in considering and negotiating the terms of a proposed merger or acquisition. When executives fail to appropriately protect the financial stake of investors in such a transaction, shareholders often can bring a direct class action to seek more favorable terms, as well as the disclosure of material facts.
When a proposed transaction of a public company is announced, Motley Rice's Securities team conducts an investigation for shareholders to evaluate the fairness of the transaction. This investigation includes an analysis of the factors explained below, among other variables.
Evaluating the Offer
Shareholders of the target company must often make prompt decisions about whether to approve or reject the proposed offer. When making that decision, shareholders may evaluate numerous aspects of the deal, including:
1. Whether the offer maximizes the target company's share value. To make this determination, an investor might review:
- Analyst reports and company price targets
- Comparable prices of similar deals in the industry
- Other possible bidders that might make a superior proposal for the target company
- The target company's future growth prospects
2. What is proposed for each share of the target company stock. This consideration often takes the following forms:
- A combination of cash and the acquiring company stock in exchange for the target company stock
- Cash in exchange for the target company stock
- The acquiring company stock in exchange for the target company stock
There may be other issues with a proposed transaction that might make the deal unfair for shareholders. Deals are sometimes not made in the best interest of shareholders. For example, some fail to disclose material information that allows investors to make informed decisions. The terms of a deal may also be unclear concerning key factors such as:
- Conflicts with financial advisors
- Restrictive deal protections that deter competing bidders
- Self-dealing by officers, directors, or other insiders
- The adequacy of the sales process
Why Motley Rice
Motley Rice is a national law firm that litigates corporate takeover actions on behalf of shareholders seeking to:
- Address coercive terms designed to discourage competing bids
- Compel the disclosure of key facts to ensure a fair and informed shareholder vote
- Increase per-share consideration
Motley Rice attorneys have experience litigating corporate takeover actions, including litigating for shareholders through injunctive relief or post-transaction litigation for damages claims. The firm has helped investors recover millions of dollars in the last few years.
For example, in 2011, Motley Rice, as co-lead counsel in litigation challenging the buyout of RehabCare Group, Inc., by Kindred Healthcare, Inc., negotiated for a $2.5 million payment back to shareholders, modifications to key terms of the merger agreement and the disclosure of substantial additional information. Also in 2011, Motley Rice, as co-lead counsel in litigation challenging the going-private buyout of Allion Healthcare, Inc., negotiated a settlement providing for a $4 million payment to shareholders.*
Three times since 2007, Motley Rice attorneys have moved on behalf of shareholders to preliminarily enjoin merger class actions in Delaware's Court of Chancery regarding target companies of Atheros communications, Inc., PLATO Learning, Inc., and Lear Corp. Each time the Court agreed, requiring defendants to disclose additional information to shareholders ahead of the vote on the merger.*
To learn more about potential deal cases or merger and acquisition litigation, contact attorney Bill Narwold by email or call 1.800.768.4026
* Please remember that every case is different. Prior results do not guarantee a similar outcome.