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20 / 54

companies

during

the

period

1990-2003.

I

use

this

measure

as

a

rough

proxy

for

each

law

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

negotiation.

[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.

18

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