In re Appraisal of Jarden Corporation

Lowenstein Sandler writes:

By a July 19, 2019 ruling, Vice Chancellor Slights set the fair value of Jarden Corporation at its unaffected market price of $48.31, below the $59.21 per share value of cash and stock that Newell Rubbermaid had paid to acquire it. The court also performed a DCF analysis that corroborated its valuation. The court was critical of the merger process leading up to this deal and questioned the reliability of a merger-price-less-synergies approach given that factor as well as its findings that there was no pre-signing or post-signing market check and the evidence regarding deal synergies and how much, if at all, was received by Jarden, was conflicting and especially difficult to measure.

いわゆるuniversal proxyを用いて委任状勧誘を行い株主側の取締役が会社側の取締役と同時に選任された事例

WSJ:

EQT Corp. and the Rice group of shareholders, led by Toby Rice and Derek Rice, said shareholders at the company’s annual meeting Wednesday elected all seven Rice-nominated directors and five nominees supported by both entities. …

EQT is using a universal ballot for its shareholder vote, setting it up to be one of the few high-profile proxy fights to use such cards, which allow shareholders to pick from both sides’ nominees. Universal ballots can make it more likely a company will lose some board seats to a dissident but less likely they’ll lose a majority of seats.

 

 個人的に興味を持ったのが,会社側の取締役が選任されなかったこととによって株価が上昇したことです(直ぐに元の水準に戻ったようですが)。

The Street:

The stock of natural gas giant EQT Corp. (EQT – Get Report) jumped Wednesday after shareholders handed control of the board to an activist group led by former owners. Shares of the Pittsburgh company rose 2.5% to $16.05 after holders voted to award seven seats on the 12-member board to a group called the Rice Team.

via Pittsburgh Post-Gazette, Bloomberg, Bloomberg, Bloomberg, WSJ, EDGAR, SandRidge

効率的な契約違反—Leaf Invenergy Co. v. Invenergy Renewables LLC, No. 308, 2018 (Del. May 2, 2019)

Limited Delaware case law exists on the “efficient breach” theory. A new Delaware Supreme Court ruling examines that theory and confirms it is not a bar to recovery or an avenue for modifying damages calculations. Rather, efficient breach is the legal concept that a party might find an intentional breach to be economically advantageous if the breach’s benefits exceed the damages it might owe. Efficient breach aside, the task of Delaware courts is to interpret contracts to fulfill parties’ shared expectations at time of contracting. That is a concept the Supreme Court emphasized when reversing the Court of Chancery’s nominal damages award in this case.

Plaintiff Leaf Invenergy Company invested $30 million in Invenergy Wind LLC. As part of the investment, Leaf secured a Consent Provision that prohibited Invenergy from conducting a “Material Partial Sale” without Leaf’s consent, unless Invenergy acquired Leaf’s interest at a premium, referred to as the “Target Multiple.” Several years into the investment, Invenergy closed a $1.8 billion asset sale without first obtaining Leaf’s consent and without redeeming Leaf’s interest at the Target Multiple. Leaf sued in Delaware.

The Court of Chancery determined Invenergy had breached the Consent Provision but that Leaf was not entitled to the Target Multiple. The Court reasoned that the Consent Provision was not an either-or provision, even though, until late in the litigation, both parties had understood a failure to obtain Leaf’s consent would require redemption at the Target Multiple. Instead, the Court reasoned that Leaf was entitled only to nominal damages, given the Court’s view that Invenergy likely would not have made the Material Partial Sale if it had to pay the Target Multiple and that, in any event, Leaf was no worse off with the transaction. Applying the “efficient breach” theory, the Court of Chancery imagined a hypothetical negotiation exercise in which Leaf would have to show that it would have secured additional consideration if given the opportunity to negotiate for its consent. Ultimately, the Court of Chancery ordered the parties to complete a buyout of Leaf’s interests pursuant to a put-call provision in the operative agreement, which Invenergy exercised during the suit.

On appeal, the Supreme Court reversed, explaining that the Consent Provision was an either-or structure requiring Leaf’s consent or payment, as evidenced by the parties’ own longstanding shared interpretation. The Supreme Court also explained the trial court’s misapplication of the efficient breach theory. Centrally, damages are an issue of contractual expectations. Here, the parties’ expectations were that, for a Material Partial Sale to close, Leaf either would give consent or be redeemed at the Target Multiple. Since Leaf did not give its consent, the appropriate expectation damages were receiving the Target Multiple. Accordingly, the Supreme Court reversed the nominal damages award, substituting an award of the Target Multiple, conditioned on Leaf surrendering its membership interests.

 効率的な契約違反に興味がある方で、この判例の研究をしようと思う研究者は、いらっしゃいませんかね。効率的な契約違反についての理論的な論文は、大掛かりなので難しいとしても、どのような点が現実の事案で問題となったのかを法と経済学の観点から(どの程度、裁判官が法と経済学の議論を理解しているのかを含めて)分析すれば、面白いように思えます。

Regulation S-XのRules 3-05及び Article 11の改正提案

The Securities and Exchange Commission proposed amendments to the financial disclosure requirements in Rules 3-05, 3-14, and Article 11 of Regulation S-X, as well as related rules and forms, for financial statements of businesses acquired or to be acquired and for business dispositions. The Commission also proposed new Rule 6-11 of Regulation S-X and amendments to Form N-14 for financial reporting of acquisitions involving investment companies.

When a registrant acquires a significant business, other than a real estate operation, Rule 3-05 of Regulation S-X generally requires a registrant to provide separate audited annual and unaudited interim pre-acquisition financial statements of that business. The number of years of financial information that must be provided depends on the relative significance of the acquisition to the registrant. Similarly, Rule 3-14 of Regulation S-X addresses the unique nature of real estate operations and requires a registrant that has acquired a significant real estate operation to file financial statements with respect to such acquired operation.

 わが国で米国証券取引委員会への登録が強制されるのは、様式F–4による組織再編に関するものだというワーキング・ペーパーを書いたことがありますが、それとの関係で、今回の規則提案は、実務に影響を与えるように思えます。

Lorenzo v. Securities and Exchange Commission, 587 U.S. —, 2019 WL 1369839 (Mar. 27, 2019)

In this case, we consider whether those who do not ‘make’ statements (as Janus defined ‘make’), but who disseminate false or misleading statements to potential investors with the intent to defraud, can be found to have violated the other parts of Rule 10b–5, subsections (a) and (c), as well as related provisions of the securities laws, §10(b) of the Securities Exchange Act of 1934, 48Stat. 891, as amended, 15 U.S.C. §78j(b), and §17(a)(1) of the Securities Act of 1933, 48Stat. 84–85, as amended, 15 U.S.C. §77q(a)(1). We believe that they can.

  • Kavanaugh裁判官は、下級審の判決に参加しているため不参加。6対2で、原審を維持。

via Lyle Roberts, Kevin M. LaCroix, Sheppard Mullin, SCOTUSblog, Oyez, Fried Frank, Reuters, Cleary Gottlieb, Ropes & Gray, WSJ, Skadden, Willkie Farr & Gallagher, S&C, GD&C

Barbara A. Bliss et al., Negative Activism, 97 Washington University Law Review (forthcoming)

  • Barbara A. Bliss et al., Negative Activism, 97 Washington University Law Review (forthcoming)

Shareholder activism has become one of the most important and widely studied topics in law and finance. To date, popular and academic accounts have focused on what we call “positive activism,” where activists seek to profit from positive changes in the share prices of targeted firms. In this Article, we undertake the first comprehensive study of positive activism’s mirror image, which we term “negative activism.” Whereas positive activists focus on increasing share prices, negative activists take short positions to profit from decreasing share prices.

via Harvard