Resolute’ s battle for ownership of 100% of Fibrek Inc. recently came to an end with a friendly “white knight” offer from Mercer being withdrawn after a lengthy court battle. Resolute’s hostile bid for Fibrek was successful, notwithstanding that Fibrek’s board had endorsed Mercer’s offer at a 40% premium to the hostile bid. The Fibrek saga causes us to ask whatCanadian regulators are trying to achieve with the regulation of defensive tactics, and where they may go next.
The recent saga of Fibrek Inc. has been of great interest to those in the M&A community. Many hoped that it would lead to the Supreme Court of Canada giving its view of defensive tactics and strengthen the hand of boards of directors seeking ways to maximize shareholder value in the face of an unsolicited offer. This would have been very timely as regulators have recently been considering the future of certain defensive tactics (for more on this, please see one of our earlier posts: here). Despite the SCC dismissing Fibrek’s application for leave to appeal, the regulatory and … Continue Reading
The Ontario Securities Commission issued an order this week in connection with a shareholder rights plan adopted by the board of directors of MOSAID Technologies Incorporated in response to a hostile bid made by Wi-LAN Inc. The OSC ordered that effective November 1, 2011 (i.e. 70 days after the commencement of Wi-LAN’s unsolicited offer), MOSAID’s shareholder rights plan must go. The key factors considered by the OSC in arriving at its decision to allow the rights plan to stick around for another couple of weeks (not as long as MOSAID had wanted) included:
- MOSAID was continuing to run an auction
A poison pill, or shareholder rights plan, is a device implemented by a company’s board of directors in order to deter unsolicited or hostile acquisition proposals. The rights plan originated in the United States and was introduced in Canada in 1988 when Inco adopted its first rights plan. The introduction of poison pills in both countries was met with questions as to their legality. In the divergent approaches through which these questions were resolved in Canada and the United States (in particular Delaware), the rights plan and its effectiveness as a take-over defence have followed divergent paths.
In Delaware, the … Continue Reading
Contested shareholder meetings are often dramatic events which have the potential to result in, among other things, enhanced scrutiny of a board of directors, increased media coverage and litigation. Emotions tend to run high and decisions often need to be made quickly (particularly for those facing a dissident group who followed the advice given in Matthew Cumming’s blog post, Dissident Ambush of a Shareholders’ Meeting – Tactics to Consider).
If faced with a dissident proxy battle, a careful and deliberate approach can mitigate reputational risk, result in an orderly meeting and assist in avoiding unnecessary costs and litigation. The … Continue Reading
A select group of senior executives and in-house counsel interested in cross-border M&A disputes recently had a special opportunity to hear Vice Chancellor Travis Laster of the Delaware Court of Chancery speak in Toronto about his thoughts on some thorny M&A issues and their treatment under a continuum of legal regimes ranging from Pennsylvania, to Delaware of course, to Canada and to the United Kingdom. VC Laster was invited by McCarthy Tétrault to provide the keynote speech at a seminar put on for its clients and friends entitled M&A Disputes: Perspectives from Both Sides of the Border. Participants were … Continue Reading
A common technique by dissidents seeking to replace a board of directors is to nominate a rival slate of directors from the floor at the company’s annual meeting. The dissident group might succeed because the target company has not had time to round up support from friendly shareholders who did not bother to vote.
The key to any good ambush, of course, is the element of surprise. This certainly holds true for an ambush by dissident shareholders.
If the target company catches wind of the dissidents’ plan in advance of the meeting, the target’s board might be able to adjourn … Continue Reading