The Ever-Changing Nature of Public Company M&A Litigation

February 26, 2020

In public company M&A, litigation has become as prevalent as term sheets. Virtually every public company merger gives rise to multiple lawsuits challenging the disclosures associated with the deal, typically resolved by the target providing additional disclosures and the payment of a “mootness fee” to the plaintiff’s lawyers. Less frequently, but with greater in terrorem impact, stockholders are also pursuing post-closing damages cases, typically preceded by sprawling books and records demands under Section 220 of the Delaware General Corporate Laws. Going private and controlling stockholder transactions are among the most frequently litigated, and the law concerning business judgment protection and appraisal claims continues to evolve. In any case, the litigation attacks on deals and the law governing such claims continues to evolve at a blistering pace.

What do you need to know about the current state of public company M&A litigation?

Some key considerations include:

  • Disclosure litigation regarding mergers is fading in state court and facing serious resistance in federal courts
  • 1933 Act cases are being filed in state courts in record numbers, and we will soon know if Delaware will provide a remedy with forum selection bylaws
  • Control/going private transactions remain subject to entire fairness absent MFW protections
  • Appraisal litigation remains alive, but a clean sale process stands a good chance of the sale price equating to fair value

This presentation was part of the Morgan Lewis M&A Academy webinar series. We invite you to subscribe to Morgan Lewis publications to receive updates on trends, legal developments, and other relevant areas.