firm’s M&A experience. I also classify the fifteen law firms that have advised on the largest
number of deals as “highly experienced” M&A law firms.33
4.2. Data overview & summary statistics
Figure 1 shows the breakdown of the transactions in the sample based on the transaction
form used, the resulting negotiation between the controller and the target, and the outcome of the
[insert Figure 1 here]
At the highest level, Figure 1 shows that 70% of post-Siliconix freeze-outs are initially
pursued as mergers, and, conversely, only 30% of deals have taken advantage of the “get-out-of-
jail-free card” (Gilson & Gordon 2003) and “fire sale” (Pritchard 2004) that Siliconix seems to
provide. This split represents a substantial increase over the pre-Siliconix era: using the same
methodology I find that only 14 out of 242 freeze-outs (6%) were executed as tender offers
between January 1996 and June 2001.34 A Chow test for a break at a known date indicates that
this difference in tender offer incidence is statistically significant at 99% confidence (Chow
1960). While some practitioners trace the roots of the Siliconix decision back to the Delaware
Supreme Court’s decision in Solomon v. Pathe Communications in 1996 (e.g., Wolfe 2002;
33 In descending order, these law firms are (number of deals in parentheses): Skadden, Arps, Slate, Meagher & Flom (798), Sullivan & Cromwell (671), Simpson, Thacher & Bartlett (486), Dewey Ballantine (450), Morris, Nichols, Arsht & Tunnell (436), Wachtell, Lipton, Rosen & Katz (432), Shearman & Sterling (430), Richards, Layton & Finger (316), Cravath, Swaine & Moore (315), Fried Frank (311), Davis, Polk & Wardwell (276), Latham & Watkins (274), Gibson, Dunn & Crutcher (263), Cleary Gottleib (258), and Jones Day (239).
34 This calculation counts nine tender offer freeze-outs announced by ThermoElectron on a single day (January 31, 2000) as a single freeze-out. If these nine transactions are counted separately, the fraction of tender offer freeze-outs in the sixty-six months prior to Siliconix increases to 9% (22 out of 250), still substantially lower than the 28% rate
for tender offers in the thirty months after Siliconix.
Furthermore, I find no statistically significant differences in
outcomes between tender offer freeze-outs and merger freeze-outs before Siliconix. In fact, though statistically insignificant, I find that premiums were slightly higher in tender offer freeze-outs than in merger freeze-outs in this pre-Siliconix period.