Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
DE Court Applies Business Judgment Rule in Reviewing LBO
M&A transactions involving publicly traded companies with controlling stockholders often present thorny issues for dealmakers and their legal counsel. Even in the case of a purchase by an unaffiliated third party, controlling stockholders understandably may seek to leverage their control positions to achieve results that best suit them. Further, private equity buyers in particular often require controlling stockholders to “roll over” a portion of their stock into equity of the continuing corporation and/or enter into other arrangements to facilitate the transaction.
As a result, litigation challenging the fairness of these transactions to the public stockholders is a staple of M&A practice. In an effort to assure a degree of fairness to the public stockholders, the Delaware courts traditionally have imposed more intrusive standards of review than are customarily employed in buyouts of companies without controlling stockholders.
Recently, in Southeastern Pennsylvania Transportation Authority v. Volgenau, C.A. No. 6354-VCN (Del. Ch. Aug. 5, 2013), Vice Chancellor John W. Noble of the Delaware Court of Chancery had an opportunity to weigh in on the process followed in a third-party buyout of SRA International, a controlled corporation. Vice Chancellor Noble ruled that, in such a case, “robust procedural protections” can achieve business judgment rule review, even where the controlling stockholder retains a material interest in the ongoing company following the buyout. If utilized, this approach will secure a more limited degree of judicial scrutiny and thereby enable the deal proponents to achieve early dismissal of stockholder litigation.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Warehouse Liability: Know Before You Stow!
As consumers continue to shift purchasing and consumption habits in the aftermath of the pandemic, manufacturers are increasingly reliant on third-party logistics and warehousing to ensure their products timely reach the market.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.