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E-MailThis post is from Charles M. Nathan of Latham & Watkins LLP. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.
Latham & Watkins has recently issued this Client Alert on Vice Chancellor Strine‘s recent decisions in Topps and Lear. These two new opinions, also covered here and here, offer critical guidance to directors going through the acquisition process, and particularly boards contemplating going-private transactions. The Alert offers clients a number of considerations to guide deal processes in the wake of these decisions, concluding that:
From a process perspective, in both Topps and Lear, the court expresses significant concern regarding the discussions between management and the successful bidder in advance of the board becoming aware of the bidder’s interest. The consequences of leaving the bag early can be twofold:
–The court is likely to order additional disclosure if contacts between management and the private equity sponsor are not fully articulated, with attendant delay in the proxy solicitation process; and
–Such activities can play a significant role in changing the court’s perception of the process from one properly led by independent directors to one dominated by management and/or the interested directors, such that the entire process loses credibility.
More details on the implications of these decisions for directors and practitioners alike are described in the full Client Alert, which is available here.
