Page 89 - מיזוגים ורכישות - פרופ' אהוד קמר 2022
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required to amend the corporate bye-laws, sell the company, or issue stock for a period
of five years; and preventing Nabors from acquiring additional shares or selling its shares
for the five year standstill period. Most important, the board negotiated for a bye-law
providing that all stockholders will receive pro rata consideration in any sale of the
company or its assets, a bye-law that cannot be repealed without unanimous stockholder
approval.
Although we are reluctant in the context of this expedited appeal to conclude that
these provisions were, in themselves, sufficient to take the transaction out of the reach
of Revlon, they do constitute important efforts by the C & J directors to protect their
stockholders and to ensure that the transaction was favorable to them.
It is also important to note that there were no material barriers that would have
prevented a rival bidder from making a superior offer. As discussed, the C & J board
negotiated for a broad "fiduciary out" that enabled the board to terminate the transaction
with Nabors if a more favorable deal emerged. This was an unusual protection for a buyer
of assets to secure, because sellers (for logical reasons) rarely give buyers such an out.
Consistent with his fiduciary duties as a C & J director, Comstock’s voting support
agreement would fall away upon a decision by the C & J board to exercise its out, leaving
him free to vote in favor of a higher priced deal. Therefore, if a competing bidder
emerged, it faced only the barrier of a $65 million termination fee. Further, the
transaction was announced on July 25, and was not expected to be consummated until
near the end of 2014, a period of time more than sufficient for a serious bidder to express
interest and to formulate a binding offer for the C & J board to accept.
In prior cases like In re Fort Howard Corporation Shareholders Litigation, this sort
of passive market check was deemed sufficient to satisfy Revlon. But as the years go by,
people seem to forget that Revlon was largely about a board’s resistance to a particular
bidder and its subsequent attempts to prevent market forces from surfacing the highest
bid. QVC was of a similar ilk. But in this case, there was no barrier to the emergence of
another bidder and more than adequate time for such a bidder to emerge. The Court of
Chancery was right to be "skeptical that another buyer would emerge.” As important, the
majority of C & J’s board is independent, and there is no apparent reason why the board
would not be receptive to a transaction that was better for stockholders than the Nabors
deal.
It is also contextually relevant that C & J’s stockholders will have the chance to
vote on whether to accept the benefits and risks that come with the transaction, or to
reject the deal and have C & J continue to be run on a stand-alone basis. Although the C
& J board had to satisfy itself that the transaction was the best course of action for
stockholders, the board could also take into account that its stockholders would have a
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of five years; and preventing Nabors from acquiring additional shares or selling its shares
for the five year standstill period. Most important, the board negotiated for a bye-law
providing that all stockholders will receive pro rata consideration in any sale of the
company or its assets, a bye-law that cannot be repealed without unanimous stockholder
approval.
Although we are reluctant in the context of this expedited appeal to conclude that
these provisions were, in themselves, sufficient to take the transaction out of the reach
of Revlon, they do constitute important efforts by the C & J directors to protect their
stockholders and to ensure that the transaction was favorable to them.
It is also important to note that there were no material barriers that would have
prevented a rival bidder from making a superior offer. As discussed, the C & J board
negotiated for a broad "fiduciary out" that enabled the board to terminate the transaction
with Nabors if a more favorable deal emerged. This was an unusual protection for a buyer
of assets to secure, because sellers (for logical reasons) rarely give buyers such an out.
Consistent with his fiduciary duties as a C & J director, Comstock’s voting support
agreement would fall away upon a decision by the C & J board to exercise its out, leaving
him free to vote in favor of a higher priced deal. Therefore, if a competing bidder
emerged, it faced only the barrier of a $65 million termination fee. Further, the
transaction was announced on July 25, and was not expected to be consummated until
near the end of 2014, a period of time more than sufficient for a serious bidder to express
interest and to formulate a binding offer for the C & J board to accept.
In prior cases like In re Fort Howard Corporation Shareholders Litigation, this sort
of passive market check was deemed sufficient to satisfy Revlon. But as the years go by,
people seem to forget that Revlon was largely about a board’s resistance to a particular
bidder and its subsequent attempts to prevent market forces from surfacing the highest
bid. QVC was of a similar ilk. But in this case, there was no barrier to the emergence of
another bidder and more than adequate time for such a bidder to emerge. The Court of
Chancery was right to be "skeptical that another buyer would emerge.” As important, the
majority of C & J’s board is independent, and there is no apparent reason why the board
would not be receptive to a transaction that was better for stockholders than the Nabors
deal.
It is also contextually relevant that C & J’s stockholders will have the chance to
vote on whether to accept the benefits and risks that come with the transaction, or to
reject the deal and have C & J continue to be run on a stand-alone basis. Although the C
& J board had to satisfy itself that the transaction was the best course of action for
stockholders, the board could also take into account that its stockholders would have a
85
