Mergers and acquisitions may present conflicts of interest that cause directors and officers to breach their fiduciary duties to public shareholders. Because of the economic significance of such transactions and the fact that conflicts between insiders and public shareholders are exacerbated by the termination of the ongoing relationship, latent conflicts that are tolerated in day-to-day management are closely scrutinized by courts in the context of mergers and acquisitions. The same issues are presented by other forms of transactions designed to transfer corporate ownership and control, such as tender offers and reverse stock splits.
Merger and acquisition cases typically involve intensive litigation prior to the closing of the transaction, oriented to uncovering process flaws that can be remedied through injunctive relief. Claims for damages based on an inadequate price are then litigated after closing. Individual claims demanding appraisal are also litigated post-closing, often in a consolidated action with class claims asserting breach of fiduciary duty.
We concentrate our M&A practice on cases where members of management face conflicts of interest that prevent them from acting in the best interests of shareholders.
As examples of our M&A litigation work, we represented:
- policyholders-members of Harleysville Mutual arising from its proposed acquisition by Nationwide (settled for $26 million);
- minority public unitholders of NTS Realty Holdings Limited Partnership challenging the entire fairness of a proposed going-private squeeze-out merger by NTS’s controlling unitholder (settled for a $7.4 million gain in consideration); and
- public shareholders of Parametric Sound Corporation to enjoin its proposed merger, with VTB Holdings, Inc. and its subsidiary Voyetra Turtle Beach, Inc. (settled for $9.65 million)
To discuss an M&A matter, please contact us and an attorney will reach out to evaluate the transaction with you.