X hits on this document

114 views

0 shares

0 downloads

0 comments

40 / 54

Despite this consistency with practitioner experience, the finding on deal outcomes is in

tension with some academic and judicial commentary that minority shareholders have equivalent

protections in freeze-out tender offers and freeze-out mergers. For example, in Siliconix itself,

Vice Chancellor Noble reasoned that “as long as the tender offer is pursued properly, the free

choice of the minority shareholders to reject the tender offer provides sufficient protection.”50

The evidence presented in this paper suggests that this is not the case, at least as measured

against the benchmark of the freeze-out merger process.

These findings on deal outcomes also introduce a puzzle: why would controlling

shareholders ever proceed via statutory merger? On this question the answer is less clear. I

present evidence that controllers are more likely to proceed via merger when they hold a

relatively small stake, presumably in order to avoid the high minority shareholder approval that

would be required in a tender offer. I also present some evidence that controllers are more likely

to proceed via tender offer when the controller’s outside counsel has substantial M&A

experience, particularly if the controller

is

large

and

the

target

is

a

Delaware

corporation.

Of

course, these results on law firm experience cannot, on their own, demonstrate the direction of

causation, and it remains possible that clients who were predisposed to go through the tender

offer route were more likely to hire outside counsel with more M&A experience. However,

informal discussions with New York City practitioners suggests that the causation runs from law

firms to transactional form, that is, a lawyer-driven effect rather than a client-driven effect, in

which certain law firms, primarily headquartered in New York City, are more aware of, or

comfortable with, “cutting edge” freeze-out techniques.51

If correct, this causal relationship

50 51 In re Siliconix, 2001 WL 716787, at *6. One commentator on this paper, who is a transactional lawyer at a firm not categorized as “highly experienced” in my sample, explained this conclusion with the point that larger firms with specialized M&A practices could invest in “M&A R&D,” while smaller, less specialized firms (such as his own) could not.

38

Document info
Document views114
Page views114
Page last viewedSun Dec 04 10:20:58 UTC 2016
Pages54
Paragraphs1765
Words17237

Comments