According to the latest report from Cornerstone Research, during 2014, over 90 percent of M&A transactions resulting in at least one lawsuit, but each deal attracted a smaller average number of lawsuits and in fewer jurisdictions than in past years. The report, entitled “Shareholder Litigation Involving Acquisitions of Public Companies: Review of 2014 M&A Litigation” can be found here. Cornerstone Research’s February 25, 2015 press release about the report can be found here.
The research reported in the Cornerstone Research study is generally consistent with the updated research that Professors Cain and Davidoff released earlier this week, as discussed here.
According to the Cornerstone Research report, 93 percent of M&A transactions during 2014 valued at over $100 million were litigated. The report does note that plaintiffs challenged fewer deals valued below $1 billion. 96 percent of deals valued at $1 billion drew at least one lawsuit, but for deals valued under $1 billion, the percentage of deals attracting a lawsuit declined slightly to 89 percent in 2014 from 94 percent in 2013.
By contrast to recent years, the majority of deals (60%) attracted litigation in just one jurisdiction (perhaps, the report speculates, because of the adoption of forum selection bylaws). Just four percent of deals were challenged in more than two courts, the lowest level since 2007. The average number of lawsuits per deal declined from 5.2 in 2013 to 4.5 in 2014. Interestingly, there were still a number of transactions that attracted quite a number of lawsuits; the Fusion-io/San Disk deal attracted 22 lawsuits, and the International Game Technology/GTECH deal attracted 21.
Fewer suits were resolved prior to the deal closing in 2014. Only 59% of lawsuits were resolved before deal close, compared to 74 percent in 2013.
Of the 78 settlements reached in 2014, only six percent provided monetary consideration to shareholders. 80 percent of settlements involved only the provision of additional disclosure.