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in with a spoiler bid of $3.50 a share and sued successfully to void the voting agreement.
But in Openlane, Noble held, the target’s shareholders did not agree to vote for the deal
when it was signed, and their execution of consents was perfectly legal under Delaware
law.

As a result, "Omnicare may be dead in practice, even if not in law for targets where
written consent by shareholders is permitted," wrote Kirkland & Ellis LLP partner Daniel
Wolf and associate David Feirstein in a memo to clients. That’s an important qualification
because many public companies do not allow shareholders to act by written consent.

Noble added in a footnote that regardless of what Omnicare says, it should come
into play only when a better offer for the target surfaces. "Hostile bidders are on notice
that Delaware courts may not enforce a merger agreement that lacks a fiduciary out if
they present a board with a superior offer," he wrote. "If, however, a merger agreement
lacks a fiduciary out and no better offer has emerged, why should the Court enjoin the
merger?"

The judge blessed the Openlane board’s decision not to use an investment banker,
though he strongly discouraged even small companies from following suit. If, the judge
wrote, "a small company is managed by a board with an impeccable knowledge of the
company’s business, the court may consider the size of the company in determining what
is reasonable and appropriate" in terms of hiring a banker to render a fairness opinion or
undertake a market check. "Impeccable knowledge" is a very high standard.

Noble also made two points that will be helpful for corporate defendants. The
Openlane plaintiffs claimed that the acceleration of the directors’ options in a sale
compromised their independence, but Noble held that the practice "is a routine aspect of
merger agreements" and rejected the claim. He also said that the sales process was not
tainted because Openlane CEO Peter Kelly had agreed to stay on with KAR after the
consummation of the transaction. The board knew of Kelly’s plans to stay on, and, Noble
wrote, the post-closing retention of "a competent executive may be viewed as value-
adding by an acquiror.” Finally, Kelly stood to receive $10 million from Openlane’s sale
versus a reported annual salary of $332,000 at KAR.

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