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08/10/20

[UPDATED] Mergers & Acquisitions

NEW:  Boston College’s Professor Brian JM Quinn provides links to what he describes as a collection of “Rick Climan and Keith Flaum really useful cartoons. . . . These cartoons are really helpful, especially for junior associates looking to master the merger agreement. And, they’re entertaining in an M&A geek kind of way” in Prejudiced in the extreme . . .

Norton Rose Fulbright discusses recent survey results reflecting significant anticipated M&A activity, and the increasing importance of rigorous due diligence to mitigate business risk due to effects of the coronavirus pandemic in (Re) Starting-Up: Corporate records are the key to M&A in the age of COVID-19.

Sheppard Mullin discusses transactional practices in mergers and acquisitions relevant to conditions caused by the coronavirus pandemic in The Impact of COVID-19 on M&A Transactions — Part I: Due Diligence and Operational Issues and The Impact of COVID-19 on M&A Transactions — Part II: Deal Terms.

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[UPDATED] Board Diversity

NEW:  D&O Diary’s Kevin LaCroix discusses the latest stockholder action challenging alleged failures to achieve board diversity and misleading disclosures regarding commitments to diversity filed against NortonLifeLock in NortonLifeLock Hit with Board Diversity Derivative Suit.

Cleary Gottlieb discusses stockholder actions challenging alleged failure to uphold commitments to diversity at Oracle, Facebook, and Qualcomm in 3 Cases Spotlight Shareholder Interest In Public Co. Diversity.

The Origins and Real Effects of the Gender Gap: Evidence from CEOs’ Formative Years examines demographic data on the socioeconomic backgrounds of CEOs, finding CEOs raised in male-dominated families—those where the father was the only income earner and had more education than the mother—hire fewer women and allocate smaller capital budgets to female managers. 

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08/06/20

[UPDATED] Fox Corp. – Derivative Standing

The Delaware Court of Chancery, in Brokerage Jamie Goldenberg Komen Rev Tru U/A 06-10-08 Jamie L. Komen Trustee F/B/O Jamie Goldenberg Komen v. James W. Breyer, et al. and Fox Corp., C.A. No. 2018-0773-AGB, memo. op. (Del. Ch. June 26, 2020), found stockholder’s claims challenging directors’ and officers’ compensation in connection with a merger were derivative and did not come within exceptions permitting prosecution after the merger extinguished stockholder’s derivative standing.

NEW:  K&L Gates discusses the decision in Court of Chancery Addresses Direct-Derivative Suit Distinction in the Context of a Merger Transaction.

Morris James discusses the decision in Chancery Dismisses Challenge to Top Executives’ Stock Awards in Disney-Fox Merger, Finds Plaintiff Lacks Standing to Pursue Derivative Claim.

Shearman & Sterling discusses the decision in Delaware Court Of Chancery Dismisses Post-Merger Stockholder Challenge To Executive Incentive Compensation Stock Awards.

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[UPDATED] AgSpring – Material Adverse Effect

The Delaware Court of Chancery, in Agspring Holdco, LLC, et al. v. NGP X US Holdings, LP, et al., C.A. No. 2019-0567-AGB, memo. op. (Del. Ch. July 30, 2020), found contractual fraud claims brought by the buyer of a business against the seller well pled, including a claim that defendant fraudulently represented no Material Adverse Effects at closing despite knowledge of drastically reduced earnings.

NEW:  Kansas City Business Journal discusses the decision in Agspring founders lose effort to dismiss Delaware fraud case.

$$$ Law360 discusses the decision in Chancery Mostly Keeps Agribusiness Sale Fraud Suit Intact.

[UPDATED] Skye Mineral – Negative Control

The Delaware Court of Chancery, in Skye Mineral Investors, LLC, et al. v. DXS Capital (US), Ltd., et al. and Skye Mineral Partners, LLC, C.A. No. 2018-0059-JRS, memo. op. (Del. Ch. Feb. 24, 2020), found it conceivable that minority members of an LLC used contractual blocking rights and other means of negative control in a in a scheme to force an LLC subsidiary into bankruptcy and acquire its assets at a fraction of their worth, in breach of fiduciary duties.

NEW:  Gray Reed discusses the decision in Minority Members’ Contractual Blocking Rights Can Result in the Imposition of Fiduciary Duties.

Morris James discusses the decision in Minority Members Allegedly Exploited Contract Rights in Breach of Fiduciary Duties to Acquire Company Assets on the Cheap.

K&L Gates discusses the decision in Delaware Court of Chancery Finds That “Blocking Rights” Exercised By Minority Investors May Amount To An “Actual Control” Position.

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08/05/20

Books & Records

UCLA Law’s Professor Stephen Bainbridge discusses Delaware law on inspection of corporate books and records in A Mini-Treatise on DGCL Section 220 Books and Records Inspections Inspired by Woods v. Sahara Enterprises, Inc.

[UPDATED] Oracle – Special Litigation Committee Work Product

The Delaware Court of Chancery, in In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG (consol.), memo. op. (Del. Ch. July 9, 2020), found a special litigation committee properly withheld materials from an investigation of derivative claims under the work product doctrine, despite concluding the company’s interests would be best served by permitting plaintiff to litigate its claims.

NEW:  Morris James discusses the decision in Court of Chancery Dismisses Aiding and Abetting Claim Against NetSuite’s Fiduciaries for Role in Alleged Overpayment by Oracle.

K&L Gates discusses the decision in Oracle Special Litigation Committee Defeats Motion to Compel Production of Protected Work Product.

$$$ Law360 discusses the decision in Chancery OKs Oracle Panel Doc Hold-back In $9B Merger Suit.

[UPDATED] Gallagher – Deal Price Disclosures

The Delaware Court of Chancery, in Gallagher Industries, LLC v. William M. Addy, et al. [ISN], C.A. No. 2018-0106-SG, memo. op. (Del. Ch. May 29, 2020), dismissed a former stockholder’s breach of fiduciary duty claims challenging misleading and inadequate disclosures provided with a notice of merger, brought after purportedly learning that the disclosures were misleading in an appraisal action brought by dissenting stockholders, was untimely, finding that although defendants engaged in an unfair process and offered an unfair price, the former stockholder was on notice of the misleading disclosures when made.

NEW:  K&L Gates discusses the decision in Chancery Court Hold Late Breach of Fiduciary Duty Claim is Barred By Laches.

$$$ Law360 discusses the decision in Chancery Tosses Tardy Investor Suit Over Undervalued Biz.

[UPDATED] Dell Class V – Coercion

The Delaware Court of Chancery, inIn re Dell Technologies, Inc. Class V Stockholders Litigation, C.A. No. 2018-0816-JTL (consol.), memo. op. (Del. Ch. June 11, 2020), declined to dismiss breach of fiduciary duty claims challenging a transaction purportedly structured in accordance with M&F Worldwide, finding that the special committee formed to consider the transaction was bypassed, and that an aspect of the transaction what would require conversion of shares was coercive.

NEW:  K&L Gates discusses the decision in Delaware Court of Chancery Rejects Business Judgment Rule Protection For Stockholder-Negotiated Redemption.

Sheppard Mullin discusses the decision in Board Guidance: Getting To Business Judgment Rule Deference When You Have A Controlling Stockholder.

Ann Lipton discusses the decision in Judicial Primacy.

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08/04/20

Public Benefit Corporations

The D&O Diary’s Kevin LaCroix discusses the public benefit corporations and questions concerning duties and potential liabilities of directors raised by the benefit model in Will More Companies Adopt the Benefit Corporation Model?

[UPDATED] ESG

NEW:  Caremark and ESG discusses Employee, Environmental, Social, & Governance concerns as related to the duty of corporations and directors to implement and monitor compliance programs and the requirement that corporations operate lawfully, noting that by adopting EESG standards that require more than the legal minimum required to benefit employees, its consumers, the environment, and society, companies ensure compliance with minimum requirements.

Wachtell discusses proposed Department of Labor rules that would limit Employee Retirement Income Security Act-governed investment based on Environmental, Social, & Governance factors rather than solely on stockholder returns, noting that ESG funds have demonstrated superior performance, and speculating that the proposed rules would increase demand for ESG-related data to support investment decisions in DOL Proposes New Rules Regulating ESG Investments.

Tulane Law’s Professor Ann Lipton notes that the Department of Labor approved inclusion of private equity investments in 401(k) plans and proposed new rules that discourage Employee Retirement Income Security Act-regulated retirement plan investment based on Environmental, Social, & Governance factors by requiring that investments be based “solely on pecuniary factors that have a material effect on the return and risk of an investment” in Private Equity In, ESG Out.

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08/03/20

Braga – Board Observer Rights

The Delaware Court of Chancery, in Braga Investment & Advisory, LLC v. Yenni Income Opportunities Fund I, LP, C.A. No. 2017-0393-AGB, memo. op. (Del. Ch. June 8, 2020), construed investor’s entitlement to “Board packages” in connection with its board observer right to entitle investor only to materials that management determined in good faith were required by the board in connection with meetings.

Morris James discusses the decision in In Post-Trial Opinion, Chancery Finds for Defendant, Rejecting Claims Alleging Breach of Purchase Agreement and Right to “Board Packages”.

[UPDATED] DLO Enterprises – Asset Sale

The Delaware Court of Chancery, in DLO Enterprises, Inc. v. Innovative Chemicals Products Group, LLC, C.A. No. 2019-0276-MTZ, letter op. (Del. Ch. June 1, 2020), finds the rule that a merger target’s attorney-client privilege regarding merger negotiations passes by statute to the surviving corporation absent an express contractual carve out does not apply in the context of an asset sale.

NEW:  Freshfields discusses the decision in Delaware Chancery Court Rules That Pre-Closing Attorney Client Privilege Over Deal Related Communications Stays with Sellers in an Asset Purchase.

Morris James discusses the decision in Chancery Finds Pre-Closing Privilege Did Not Transfer to Buyer Under Asset Purchase Agreement.

McGuireWoods discusses the decision in Delaware Court Clarifies Retention of Privilege in Asset Sales.

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