minority. Only when the controller’s stake is relatively large, and a tender offer freeze-out
becomes more viable (H3), might we expect to see experienced law firms recommending tender
offers at a higher rate than other firms. I test this possibility in Part 4.4.
4.1. Data sources & methodology
I now test the hypotheses developed in Part 3 against a new database of all freeze-out
transactions since Siliconix. I begin with all transactions coded as “Acquisitions of Remaining
Interest” in Thomson Financial Corporation’s Mergers & Acquisitions database, announced and
resolved between June 19, 2001 (the date of the Delaware Chancery Court’s opinion in Siliconix)
and April 30, 2005.24 Although TFC uses a 50% cutoff to distinguish acquisitions of remaining
interests from acquisitions of a controlling interest, as a matter of Delaware corporate law (as
well as real-world practicality) a shareholder with as little as a 35% holding can be a controlling
shareholder.25 I therefore supplement TFC’s remaining-interest category with transactions in
which the acquirer held 35-50% when the freeze-out was initiated. I exclude transactions in
which the acquirer held 90% or more of the target’s voting shares, because such transactions can
remaining-interest acquisitions that are the second step of a third-party tender offer, because the
24 An earlier version of this paper was posted on SSRN on April 13, 2004. Practitioner-oriented articles in the American Lawyer, The Deal, and Corporate Control Alert appeared soon after the posting, highlighting earlier versions of the findings reported here. However, I find no evidence that subsequent data are contaminated by these practitioner reports. See infra Table 5.
25 See, e.g., In re Cysive Inc. Shareholders Litigation, 836 A.2d 531 (Del. Ch. 2003) (finding a 35% stockholder to be a controller).
See, e.g., DEL. GEN. CORP. L. §253; RMBCA §11.05.