A frequent theme these days in the world of corporate and securities litigation is the complaint about merger objection litigation – how virtually every deal announced attracts at least one lawsuit, and how all too often the cases are resolved on the basis of a disclosure-only settlement and the payment of the plaintiffs’ attorneys’ fees, an arrangement that produce no benefit for anyone except the lawyers. However, a recent Delaware Chancery court post-trial opinion provides a sharp reminder that some merger transactions can include some real problems.
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Guest Post: Maximizing the Return on Your D&O Insurance for Merger Objection Lawsuit
One of the most distinctive corporate and securities litigation phenomena over the last several years has been the rise in merger objection lawsuits. We are now to the point that virtually every M&A transaction attracts at least one lawsuit. These suits present a number of challenges, including, among other things, questions arising in connection with D&O insurance coverage for the companies and individuals named as defendants in the lawsuits, particularly with respect to the price change exclusion, sometimes referred to as the “bump up” exclusion.
In the following guest post, Peter M. Gillon and Alexander Hardiman of the Pillsbury Winthrop Shaw Pittman LLP law firm take a look at the insurance coverage issues that frequently arise in these types of cases and offer some practical advice about the ways that insureds can maximize their insurance coverage when these claims arise, particularly in dealing with issues involving the bump up exclusion. Peter is a Partner and Alex is Counsel at the Pillsbury law firm. A version of this article was recently published as a Pillsbury client alert.
I would like to thank Peter and Alex for their willingness to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Peter and Alex’s guest post.
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With the explosion of “merger objection” lawsuits being filed by the plaintiffs’ securities bar in the last decade, policyholders seeking coverage under their directors’ and officers’ (D&O) liability insurance for those suits have increasingly been bumping heads with their insurance carriers over the application of the “price change exclusion” (also referred to as the “bump-up” exclusion). This has been a major source of frustration for companies reasonably expecting their policies to respond fully to merger objection suits – especially shareholder suits claiming breach of fiduciary duties by the target company’s Board of Directors in approving the sale of the target. Many companies and their securities defense counsel have capitulated in the face of their carriers’ declinations of coverage. But, as this note explains, it is critical to consult with coverage counsel on these matters as insurers’ assertion of the price change exclusion is often misplaced.
Continue Reading Guest Post: Maximizing the Return on Your D&O Insurance for Merger Objection Lawsuit
The Beginning of the End of the Merger Objection Lawsuit Curse?
One of the great curses of the corporate litigation environment in recent years has been the proliferation of merger objection suits, the incidence of which has gotten to the point that now just about every large merger deal draws at least one lawsuit, and sometimes several. However, if recent developments in the Delaware Chancery Court are any indication, the courts are as appalled by this seemingly undifferentiated mass of litigation as are the parties to the transactions. Two recent decisions may suggest that the Delaware courts, at least, are no longer willing simply to accept the standard “disclosure only” settlements that typically resolve these kinds of cases, which in turn may mean that the cases could become less attractive to the plaintiffs’ lawyers that bring these cases.
Continue Reading The Beginning of the End of the Merger Objection Lawsuit Curse?
Cornerstone Research Releases 2014 M&A Litigation Report
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”
Takeover Litigation Continued at Heightened Levels in 2014
One of the most distinctive corporate and securities litigation trend in recent years has been the surge in M&A-related litigation, with virtually every deal attracting at least one lawsuit. This trend continued again in 2014, according to a recently updated study from Matthew Cain, an economic fellow at the SEC, and University of California Berkeley law professor Steven Davidoff Solomon. As reflected their February 20, 2015 paper entitled “Takeover Litigation in 2014” (here), takeover litigation continued at a “steady state” and at an extremely high rate during 2014. Lawsuits were brought in 94.9% of takeovers in 2014 versus 39% in 2005. The 2014 figures are consistent with but slightly down from the filings in 97.3% of all takeovers in 2013.
Continue Reading Takeover Litigation Continued at Heightened Levels in 2014
One Plaintiff, Dozens of Merger Objection Lawsuits, Millions in Attorneys’ Fees, Zero for Shareholders
It is now well-established that pretty much every M&A deal attracts at least one lawsuit from a shareholder objecting to the transaction. According to research by Notre Dame business professor Matthew Cain and Ohio State law professor Steven Davidoff, 97.3% of all takeovers in 2013 with a value of over $100 million experienced at least
Two Recent Massive Merger Objection Lawsuit Settlements Include Significant D&O Insurer Contributions
One of the great litigation curses in recent times in the corporate litigation arena has been the rise of merger objection litigation. These kinds of lawsuits, which these days arise in connection with almost every M&A transaction, often are settled for nothing more than an agreement to make additional disclosures and to pay the
Takeover Litigation in 2013
One of the most distinctive corporate and securities litigation trend in recent years has been the surge in M&A-related litigation, with virtually every deal attracting at least one lawsuit. This trend continued again in 2013, according to a recently updated study from Notre Dame business professor Matthew Cain and Ohio State law professor Steven Davidoff.
The Curse of Post-Close Merger Objection Litigation
There days, virtually every M&A transaction attracts litigation, usually involving multiple lawsuits. These cases have proven attractive to plaintiffs’ lawyers because the pressure to close the deal affords claimants leverage to extract a quick settlement, often involving an agreement to publish additional disclosures and to pay the plaintiffs’ attorneys’ fees.
As Doug Clark
Cornerstone Research Releases 2012 M&A Litigation Report
Plaintiff law firms continued to file lawsuits in connection with virtually every mergers and acquisitions transaction in 2012, according to an updated report from Cornerstone Research. The February 2013 report, which is entitled “Shareholder Litigation Involving Mergers and Acquistions” and which was authored by Robert M. Daines of Stanford Law School and Olga Koumrian of