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Recenti evoluzioni giurisprudenziali in materia di doveri fiduciari degli amministratori nel diritto degli Stati Uniti d´America: lo standard of review applicabile alle operazioni di private equity buyout e alle clausole di go-shop [nota al caso In re Lear Corp. Shareholder Litigation 926 A.2d 94 (Del. Ch. 2007)] (di Corrado Malberti)

Court of Chancery of Delaware
C.A. No. 2728-VCS *

Società per azioni – Fusione – Doveri e responsabilità degli amministratori – Revlon duty

Nelle operazioni di private equity buyout può trovare applicazione il Revlon duty. Di conseguenza le scelte degli amministratori dovranno essere riesaminate secondo un criterio di ragionevolezza (1).

Società per azioni – Fusione – Doveri e responsabilità degli amministratori – Revlon duty

È possibile soddisfare il Revlon duty anche quando una società decida di non compiere un market check prima di sottoscrivere un merger agreement che preveda una clausola di go-shop e un termination fee di importo non elevato (2).

Società per azioni – Fusione – Doveri e responsabilità degli amministratori – Deal protection

Per valutare la portata dell’effetto preclusivo e la legittimità di un termination fee, occorre prendere in considerazione non il valore delle azioni oggetto dell’operazione, bensì il valore complessivo di quest’ultima (3).

Società per azioni – Fusione – Doveri e responsabilità degli amministratori – Duty of disclosure

Un azionista razionale è interessato a conoscere gli interessi economici della persona a cui il consiglio di amministrazione ha affidato il compito di negoziare un’operazione di private equity buyout, che potrebbero portare a preferire una controparte a scapito di un’altra (4).

Submitted: June 8, 2007.
Decided: June 15, 2007.



STRINE, Vice Chancellor.

I. Introduction

Lear Corporation is one of the world’s leading automotive interior systems suppliers. It is among the Fortune 200, and its shares trade on the New York Stock Exchange. Although Lear is a large corporation, it remains highly dependent on the success of the corporations who sell cars and trucks – as those corporations are Lear’s customers. In particular, although Lear has broadened its customer base to become more global, the majority of its revenues continue to be derived from sales to American manufacturers, and within that sector, Lear’s revenues also tilt toward supplying components for SUVs and light trucks. As is widely known, the American automobile industry has suffered during the past several years and sales of SUVs and light trucks have declined as gas prices have increased. Lear suffered along with it, as the ratings given to its debt and as the bankruptcy rumors concerning the company reflected. In the midst of a restructuring to keep itself healthy, along came Carl Icahn.

In early 2006, Icahn took a large, public position in Lear stock. Given Icahn’s history of prodding issuers toward value-maximizing measures, this news bolstered Lear’s flagging stock price. Later in 2006, Icahn deepened his investment in Lear, by purchasing $200 million of its stock – raising his holdings to 24% – through a secondary offering. The funds raised in that private placement were used by Lear to reduce its debt and help with its ongoing restructuring.

Icahn’s purchase led the stock market to believe that a sale of the company had become likely. Icahn’s investment also combined with another reality: Lear’s board had eliminated the corporation’s poison pill in 2004, and promised not to reinstate it except in very limited circumstances.

In early 2007, Icahn suggested to Lear’s CEO that a going private transaction might be in Lear’s best interest. After a week of discussions, Lear’s CEO told the rest of the board. The board formed a Special Committee, which authorized the CEO to negotiate merger terms with Icahn.

During those negotiations, Icahn only moved modestly from his initial offering price of $35 per share, going to $36 per share. He indicated that if the board desired to conduct a pre-signing auction, it was free to do that, but he would pull his offer. But Icahn made it clear that he would allow the company to freely shop his bid after signing, during a so-called go-shop period, but only so long as he received a termination fee of approximately 3%.

The board did the deal on those terms. After signing, the board’s financial advisors aggressively shopped Lear to both financial and strategic buyers. None made a topping bid during the go shop period. Since that time, Lear has been free to entertain an unsolicited superior bid. None has been made.

Stockholders plaintiffs have moved to enjoin the upcoming merger vote, arguing that the Lear board breached its Revlon [1] duties and has failed to disclose material facts necessary for the stockholders to cast an informed vote.


III. Legal Analysis

The plaintiffs seek a preliminary injunction against the merger. The legal framework for evaluating such a motion is well-established, and requires the plaintiffs to convince the court that their claims have a reasonable likelihood of ultimate success, that they face irreparable injury if an injunction does not issue, and that the balance of the equities favors the grant of an injunction 4.

The plaintiffs’ lengthy claims boil down to two alleged categories of breaches of the Lear board’s fiduciary obligations. The first category involves a contention that the Lear board did not comply with its fiduciary duty to disclose all material facts relevant to the stockholders’ decision whether to approve the merger. The second category of fiduciary breaches alleged by the plaintiffs comprises the various reasons the plaintiffs contend that the directors failed to take reasonable efforts to secure the highest price reasonably available for Lear shareholders.


I will begin those tasks by grappling with the plaintiffs’ disclosure claims.

A. The Plaintiffs’ Disclosure Claims

Both parties acknowledge that directors of Delaware corporations have a duty to disclose the facts material to their stockholders’ decisions to vote on a merger 5. The debate here is whether the supposed facts the plaintiffs claim are omitted meet the legal definition of materiality. That definition is also well-established and is one embraced by both our Supreme Court and the United States Supreme Court:

An omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote ... Put another way, there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available 6.

In their complaint, the plaintiffs purport to set forth a Denny’s buffet of disclosure claims. But, in their briefs, the plaintiffs argue only three of these supposed deficiencies in disclosure. I therefore only address those contentions, as the others have been waived.

The first disclosure claim the plaintiffs press involves the failure of the proxy statement to disclose one of the various DCF models run by JPMorgan during its work leading up to its issuance of a fairness opinion. ...


... On this record, the plaintiffs have failed to demonstrate a reasonable likelihood of success on their claim that the proxy statement failed to disclose material facts regarding the value of Lear’s future cash flows.

The plaintiffs’ second disclosure claim, which faults the Lear board for not disclosing certain aspects of the pre-signing and post-signing market checks, is equally without merit. ... [T]he plaintiffs allege that the proxy statement does not fairly indicate how Icahn’s tough negotiating posture limited Lear’s ability to conduct a pre-signing market check. But the key facts are disclosed. It is clear that the only pre-signing market check was a very discrete solicitation of financial buyers, conducted in a hurried fashion beginning on February 4. The Merger Agreement was signed by February 9. No reasonable stockholder reading the proxy statement would likely be deceived into believing that any of those solicited would have had a rational ability to make a bid before February 9, unless they had already been coiled to strike. Any reasonable stockholder would read the proxy statement and conclude that the only genuine market check was the one conducted after the Merger Agreement was executed.

... Given that the proxy statement makes plain that Icahn did not give Lear everything it desired in terms of its ability to shop after signing the Merger Agreement, it makes even more obvious that Icahn was not willing to be an amateur stalking horse – i.e., one without a definitive acquisition agreement containing a termination fee if another bidder ultimately prevailed. ...

The reality is that the proxy statement fairly discloses that Lear did not do any meaningful pre-signing market check, that it merely made a few hasty phone calls to see whether it was missing any imminently available opportunity, and that Lear was depending on the post-signing go-shop process to be its real market check. The proxy statement also fairly discloses that the Lear board realized the importance of the post-signing shopping period, and sought to lengthen it and to strengthen its utility through means such as getting Icahn to promise to vote his shares in favor of a superior proposal embraced by Lear. ...

The plaintiffs’ final disclosure argument has more force, and is founded on a less argumentative, and more factually objective, variation of their concerns about Rossiter’s motivations. The proxy statement fails to disclose the fact that, in late 2006, Lear’s CEO Rossiter approached the board expressing a serious concern about whether it was in his best interest to continue as CEO in light of the financial risks that presented. In particular, Rossiter was concerned about having so much of his net worth tied up in Lear. So long as he continued to work as CEO, Rossiter could not cash in his substantial retirement benefits. If he retired immediately, having worked for Lear for 35 of his 60 years but not yet having fully vested by attaining the age of 65, Rossiter’s accrued retirement benefits would be reduced by a 29% early withdraw penalty, and he would reap approximately $10.4 instead of $14.6 million. Because the bulk of those retirement benefits were not secured by any specific assets, Rossiter feared that he could be at risk in the event that an industry downturn – a realistic possibility for the American automotive industry, history suggests – forced Lear into bankruptcy, as he would just be an unsecured creditor.

Likewise, Rossiter owned a lot of Lear stock. As CEO, he faced two trading problems. For starters, he was locked out from selling in many periods because of concerns about insider trading liability. Relatedly, as CEO, if he took steps to sell large amounts of stock, it could signal a lack of confidence in the company, and lead to a decline in the stock price that would hurt his holdings and the company’s future prospects. Although Rossiter, like most CEOs, was simply facing the portfolio risks that come with wealth attributable largely to labor at one firm, those risks were real, especially as he faced an age at which it would be more difficult for him to locate another CEO position. Put another way, Rossiter knew that his retirement nut was what it was from his years of labor, and he was wondering whether it was time to cash it out and take it with him.

Rossiter’s concern was serious enough that he engaged his board, and the board, fearing his departure, employed an expensive compensation consultant, Towers Perrin, to provide it with options. Towers Perrin generated a formal report, which included options that were financially attractive to Rossiter. By these options, Rossiter’s financial concerns would have been addressed. He would have secured his fortune for his family, and been able to continue as CEO without worrying that the bulk of his net worth remained at risk.

The Lear board seems to have been willing to provide these benefits to Rossiter but – and that “but” is important – the Towers Perrin report indicated that changes of this kind were likely to raise eyebrows among institutional investors and the proxy advisory firms who advise them. In an environment in which executive compensation was viewed with great suspicion generally, Lear was advised by Towers Perrin that it would have to do a selling job in order to avoid adverse consequences, which could include the possibility of a withhold vote campaign. Although not made explicit, one also suspects that industry conditions made these changes problematic. ... In that environment, the desire of a well-compensated, Michigan-based CEO to secure his multi-million dollar retirement nest egg from the risks of a continuing industry downturn might not have been well received.

As of the end of 2006, Rossiter had therefore not embraced the board’s willingness to provide him relief of the kind he desired. The defendants make much of this and say that Rossiter’s non-acceptance makes the non-disclosure of his request to the board and its reaction immaterial.

I draw an entirely different inference. One can assume that Rossiter’s motives for not accepting the options Towers Perrin presented were entirely worthy of respect and still conclude that these facts are material. It may well be that Rossiter believed that it would be bad for Lear for him to accept these concessions and subject Lear to the distractions of institutional investor objections and community criticism.

But if that was indeed the case, the materiality of these facts becomes even more obvious. So long as Lear remained a public company, Rossiter faced a conflict between his desire to secure his retirement nut and his desire to continue as a CEO. Yet, if a going private transaction was presented that cashed out the public stockholders at a premium, Rossiter could strike a deal with the buyer that allowed him to accomplish both of his desires. So long as the going private was consummated, Lear would no longer face the intense corporate governance and social responsibility scrutiny directed at public corporations. Likewise, a going private would allow Rossiter to turn his locked-up equity stake into liquid American greenbacks along with all the other public stockholders but with the chance (not available to them) for a future equity stake in Lear.


Put simply, a reasonable stockholder would want to know an important economic motivation of the negotiator singularly employed by a board to obtain the best price for the stockholders, when that motivation could rationally lead that negotiator to favor a deal at a less than optimal price, because the procession of a deal was more important to him, given his overall economic interest, than only doing a deal at the right price. By saying this, I do not find that Rossiter acted in any way inappropriately, I am only saying that the stockholders would find it material to know the motivations he harbored that substantially differed from someone who only owned equity in Lear or who only served as an independent director of Lear.

For these reasons, I conclude that the plaintiffs have established a reasonable probability of success on the merits as to one of their disclosure claims. Delaware corporation law gives great weight to informed decisions made by an uncoerced electorate 9. When disinterested stockholders make a mature decision about their economic self-interest, judicial second-guessing is almost completely circumscribed by the doctrine of ratification 10. For that reason, our law has also found the irreparable injury prong of the preliminary injunction standard satisfied when it is shown that the stockholders are being asked to vote without knowledge of material facts, because it deprives stockholders of the chance to make a fully-informed decision whether to vote for a merger, dissent, or make the oft-related decision (relevant here) whether to seek appraisal 11. ...

Here, those factors counsel in favor of a very limited injunction prohibiting the procession of the merger vote until supplemental disclosure is made.

B. The Plaintiffs’ Revlon Claims

The other substantive claim made by the plaintiffs arises under the Revlon doctrine 13. Revlon and its progeny stand for the proposition that when a board has decided to sell the company for cash or engage in a change of control transaction, it must act reasonably in order to secure the highest price reasonably available 14. The duty to act reasonably is just that, a duty to take a reasonable course of action under the circumstances presented 15. Because there can be several reasoned ways to try to maximize value, the court cannot find fault so long as the directors chose a reasoned course of action 16.

The plaintiffs contend that the negotiation of the merger was tainted by the Special Committee’s decision to leave to Rossiter the challenging task of extracting from Icahn the best price and most beneficial terms. According to the plaintiffs, Rossiter’s interest in securing his personal finances by obtaining a payout of his retirement nest egg (without penalty or adverse reaction) and by liquidating his equity stake in Lear (promptly and without a decline in share price) gave him a rational incentive to ensure a merger agreement that would help him achieve those objective was inked regardless of whether the merger was at the highest price or best terms that might be obtained.

When Icahn floated the idea of a going private deal in January to Rossiter, he presented Rossiter with the chance to have his major desires met. Because such a merger would allow all stockholders to sell at a premium, Rossiter could sell out his equity stake without a negative effect on Lear or running afoul of trading restrictions. Further, because Lear would cease to be a public company after a going private transaction, Rossiter’s new employer would not care what ISS or other corporate governance commentators thought about its handling of its executives’ retirement plans. If that employer believed it was in its interest to allow Rossiter to cash out his equity and benefits while continuing to work, it could do that without worrying about a withhold vote or other consequences.

Icahn’s proposal, therefore, placed Rossiter in a fiduciary quandary. Although his equity interest in Lear gave him an incentive to increase its stock price, it also left him with non-diversifiable risk. While remaining as CEO, Rossiter could not simply sell out his entire equity stake, lest he signal a lack of confidence in the company. But, by leaving his equity in, a very large part of his personal wealth was entirely tied up in, and therefore dependent on, Lear’s performance. Moreover, if Rossiter expected (as would be reasonable) to receive options in the equity of the company after the merger closed, the failure to get the optional price for Lear now would not hurt him as much as the public stockholders, because the lower merger price would likely set a lower strike price for the options he received in the post-merger Lear.

Retirement benefits presented a similar issue. As has been fully discussed, a going private transaction gave Rossiter a unique opportunity to reconcile his conflicting desires to secure his retirement nest egg from the risk of a future Lear bankruptcy and to remain as a Lear executive.

As a result of these internal conflicts, the plaintiffs submit that Rossiter was willing to accept any deal at a defensible price that allowed him to achieve his personal objectives rather than to hold out for (or trade away his personal benefits in exchange for) an increase in the deal price. As such, they say, his motives were not identical to those of Lear’s public stockholders who single-mindedly want the highest price for their equity. For that reason, the plaintiffs argue that it was wrong for the Special Committee to charge Rossiter with dealing with a tough negotiator like Carl Icahn, because Rossiter’s own self-interest (even if he strove to keep it under control) rendered him less likely to handle the task with the steely resolve required to garner a great price.

In response, the defendants claim that there is no evidence that Rossiter did anything improper. To the contrary, they point to Rossiter’s proven record of fidelity to Lear and its stockholders and assert that given his experience and skill set, he was best positioned to skillfully advocate for the best merger price. The Special Committee also says that kept Rossiter under tight control. To find that the Special Committee fell short of its fiduciary obligations duty to pursue the highest value reasonably possible because they employed Rossiter as their bargaining agent would, the defendants believe, elevate a persnickety sense of Ivory Soap purity over business logic. Rossiter knew more about the company than anyone, was doggedly loyal, and was a persuasive salesman. Who better to do the job, especially given the Special Committee’s close communications with him during the process?

This debate is an interesting one in which each side makes telling points. I agree with the plaintiffs that the Special Committee’s approach was less than confidence-inspiring. Although I do not embrace the notion that persons suffering from conflicts are invariably incapable of putting them aside, I cannot ignore the reality that American business history is littered with examples of managers who exploited the opportunity to work both sides of a deal. In fact, it would be silly to premise a decision on the notion that compensation schemes intended to have powerful incentive effects – such as SERP programs and equity awards – are wholly benign and never, despite their intended purpose of creating alignment between the interests of managers and other stockholders, create incentives that actually give managers reasons to pursue ends not shared by the corporation’s public stockholders. Therefore, I will not. Instead, I decide this motion recognizing that Rossiter, while negotiating the merger, had powerful interests to agree to a price and terms suboptimal for public investors so long as the resulting deal: (1) allowed him to promptly liquidate his equity holdings; (2) secured his ability to accelerate and cash-out his retirement benefits; and (3) gave him the chance to continue in his managerial positions for a reasonable time, with a continued equity stake in Lear that would allow him to profit from its future performance. Given those considerations, a merger at a price lower than the $36 per share that Icahn is paying might well make personal economic sense for Rossiter, when the risks to him of managing Lear as a standalone public company are taken into account 18.

For these reasons, I believe it would have been preferable for the Special Committee to have had its chairman or, at the very least, its lead banker participate with Rossiter in the negotiations with Icahn. By that means, there would be more assurance that Rossiter would take a tough line and avoid inappropriate discussions that would taint the process. Similarly, if the Special Committee was to proceed as it did, by leaving the negotiations to Rossiter without direct supervision, it could have provided him with more substantial guidance about the strategy he was to employ. The defendants applaud Rossiter for getting Icahn to bid against himself, by increasing his offer in one call by a quarter, and then another seventy-five cents. What they slight is that Icahn both opened and closed the price negotiations by rapidly moving to $36, declaring that his best and final offer, and steadfastly refusing any further price negotiation. Indeed, when Icahn first did that in a call on the evening of February 2, Rossiter did not reconvene the Special Committee, which had just finished meeting telephonically, to discuss what to do with Icahn’s new offer. Instead, he slept on it, then called Icahn in the morning to plead for a higher bid without a specific counter to make. Icahn told him the price negotiations were over. And they were. They ended without the Special Committee ever making a counter on price, leaving the Special Committee only to make specific suggestions regarding the deal protections Icahn would receive for his agreement to pay $36.

Although I do not, as will soon be seen, view this negotiation process as a disaster warranting the issuance of an injunction, it is far from ideal and unnecessarily raises concerns about the integrity and skill of those trying to represent Lear’s public investors. In reflecting on why this approach was taken, I consider it less than coincidental that Rossiter did not tell the board about Icahn’s interest in making a going private proposal until seven days after it was expressed. Although a week seems a short period of time, it is not in this deal context. In seven days, a newly formed Special Committee’s advisors can help the Committee do a lot of thinking about how to go about things and what the Committee should seek to achieve; that includes thinking about the Committee’s price and deal term objectives, and the most effective way to reach them.

The Lear Special Committee was deprived of important deliberative and tactical time, and, as a result, it quickly decided on an approach to the process not dissimilar to those taken on most issues that come before corporate boards that do not involve conflicts of interest. That is, the directors allowed the actual work to be done by management and signed off on it after the fact. But the work that Rossiter was doing was not like most work. It involved the sale of the company in circumstances in which Rossiter (and his top subordinates) had economic interests that were not shared by Lear’s public stockholders.

Acknowledging all that, though, I am not persuaded that the Special Committee’s less-than-ideal approach to the price negotiations with Icahn makes it likely that the plaintiffs, after a trial, will be able to demonstrate a Revlon breach. To fairly determine whether the defendants breached their Revlon obligations, I must consider the entirety of their actions in attempting to secure the highest price reasonably available to the corporation. Reasonableness, not perfection, measured in business terms relevant to value creation, rather than by what creates the most sterile smell, is the metric 19.

When that metric is applied, I find that the plaintiffs have not demonstrated a reasonable probability of success on their Revlon claim. The overall approach to obtaining the best price taken by the Special Committee appears, for reasons I now explain, to have been reasonable.

First, as many institutional investors and corporate law professors have advocated that all public corporations should do, Lear had gotten rid of its poison pill in 2004. Although it is true that the Lear board had reserved the right to reinstate a pill upon a vote of the stockholders or of a majority of the board’s independent directors, it was hardly in a position to do that lightly, given the potential for such action to upset institutional investors and the influential proxy advisory firm, ISS. At the very least, Lear’s public elimination of its pill signaled a willingness to ponder the merits of unsolicited offers. That factor is one that the Lear board was entitled to take into account in designing its approach to value maximization.

Relatedly, Icahn’s investment moves in 2006 also stirred the pot, as the plaintiffs admit. Indeed, they go so far as to acknowledge that Lear could be perceived as having been on sale from April 2006 onward. As the plaintiffs also admit, Icahn has over the years displayed a willingness to buy when that is to his advantage and to sell when that is to his advantage. The M & A markets know this. Icahn’s entry as a player in the Lear drama would have drawn attention from buyers with a potential interest in investing in the automobile sector.

In considering whether to sign up a deal with Icahn at $36 or insist on a full pre-signing auction, these factors were relevant. No one had asked Lear to the dance other than Icahn as of that point, even though it was perfectly obvious that Lear was open to invitations. Although a formal auction was the clearest way to signal a desire for bids, it also presented the risk of losing Icahn’s $36 bid. If Icahn was going to be put into an auction, he could reasonably argue that he would pull his bid and see what others thought of Lear before making his move. If the response to the auction was under whelming, he might then pick up the company at a lower price.

The Lear board’s concern about this possibility was, in my view, reasonable, given the lack of, with one exception, even a soft overture from a potential buyer other than Icahn in 2006.

Also relevant to the question of whether an auction was advisable was the lack of ardor that other major Lear stockholders had for the opportunity to buy equity in the secondary offering along with Icahn. Although some of them are now touting the idea that Lear is worth $60 per share, an idea whose implications I will discuss, they passed on the chance to buy additional stock at $23 per share in October 2006. Given this history, I cannot conclude that it was unreasonable for the Lear board not to demand a full auction before signing its Merger Agreement with Icahn. There were important risks counseling against such an insistence, especially if the board could to some extent have it both ways by locking in a floor of $36 per share while securing a chance to prospect for more.

Second, I likewise find that the plaintiffs have not demonstrated a likelihood of success on their argument that the Lear board acted unreasonably in agreeing to the deal protections in the Merger Agreement rather than holding out for even greater flexibility to look for a higher bid after signing with Icahn. In so finding, I give relatively little weight to the two-tiered nature of the termination fee. The go-shop period was truncated and left a bidder hard-pressed to do adequate due diligence, present a topping bid with a full-blown draft merger agreement, have the Lear board make the required decision to declare the new bid a superior offer, wait Icahn’s ten-day period to match, and then have the Lear board accept that bid, terminate its agreement with Icahn, and “substantially concurrently” enter into a merger agreement with it. All of these events had to occur within the go-shop period for the bidder to benefit from the lower termination fee. This was not a provision that gave a lower break fee to a bidder who entered the process in some genuine way during the go-shop period – for example, by signing up a confidentiality stipulation and completing some of the key steps toward the achievement of a definitive merger agreement at a superior price. Rather, it was a provision that essentially required the bidder to get the whole shebang done within the 45-day window. It is conceivable, I suppose, that this could occur if a ravenous bidder had simply been waiting for an explicit invitation to swallow up Lear. But if that sort of Kobayashi-like buyer existed, it might have reasonably been expected to emerge before the Merger Agreement with Icahn was signed based on Lear’s lack of a rights plan and the publicity given to Icahn’s prior investments in the company.

That said, I do not find convincing the plaintiffs’ argument that the combination of the fuller termination fee that would be payable for a bid meeting the required conditions after the go-shop period with Icahn’s contractual match right were bid-chilling. The termination fee in that scenario amounts to 3.5% of equity value and 2.4% of enterprise value. For purposes of considering the preclusive effect of a termination fee on a rival bidder, it is arguably more important to look at the enterprise value metric because, as is the case with Lear, most acquisitions require the buyer to pay for the company’s equity and refinance all of its debt. But regardless of whether that is the case, the percentage of either measure the termination fee represents here is hardly of the magnitude that should deter a serious rival bid. The plaintiffs’ claim to the contrary is based on the median of termination fees identified in a presentation made by JPMorgan in two-tiered post-signing processes of 1.8% of equity value during the go-shop period and 2.9% thereafter. The plaintiffs also state that Icahn should have gotten a lower fee because he would profit from a topping bid through his equity stake. These factors are not ones that I believe would, after trial, convince me that the board’s decision to accede to Icahn’s demand for a 3.5% fee (2.8% during the go-shop) was unreasonable. Icahn was tying up $1.4 billion in capital to make a bid for a corporation in a troubled industry, was agreeing to allow the target to shop the company freely for 45 days and to continue to work freely with Lear concerning any emerging bidders during that process, and was agreeing to vote his shares for any superior bid accepted by the Lear board.

Likewise, match rights are hardly novel and have been upheld by this court when coupled with termination fees despite the additional obstacle they are present 20. And, in this case, the match right was actually a limited one that encouraged bidders to top Icahn in a material way. ... Given all those factors, and the undisputed reality that second bidders have been able to succeed in the face of a termination fee/matching right combination of this potency 21, I am skeptical that a trial record would convince me that the Lear board acted unreasonably in assenting to the termination fee and match right provisions in the Merger Agreement.


Finally, the plaintiffs have attempted to persuade me that the Lear board has likely breached its Revlon duties because the it had hoped that Icahn would offer more than $36 per share, that some Lear stockholders think that $36 per share is too low, and because the plaintiffs have presented a valuation expert opining that the value of Lear was in the high-$30s to mid-$40s range. This is not an appraisal proceeding, and I have no intention to issue my own opinion as to Lear’s value.

But what I have done is reviewed the record on valuation carefully. Lear is one of the nation’s largest corporations. Before Icahn emerged, the stock market had abundant information about Lear and its future prospects. It valued Lear at much less than $36 per share – around $17 per share in March and April 2006. After Icahn emerged, the stock market perceived that Lear had greater value based on Icahn’s interest and the likelihood of a change of control transaction involving a purchase of all of the firm’s equity, not just daily trades in minority shares.

Although the $36 price may have been below what the Lear board hoped to achieve, they had a reasonable basis to accept it. The valuation information in the record, when fairly read, does not incline me toward a finding that the Lear board was unreasonable in accepting the Icahn bid. ...

At this stage, the more important point is this. The Lear board had sufficient evidence to conclude that it was better to accept $36 if a topping bid did not emerge than to risk having Lear’s stock price return to the level that existed before the market drew the conclusion that Lear would be sold because Icahn had bought such a substantial stake. Putting aside the market check, the $36 per share price appears as a reasonable one on this record, when traditional measures of valuation, such as the DCF, are considered. More important, however, is that the $36 price has been and is still being subjected to a real world market check, which is unimpeded by bid-deterring factors.

If, as the plaintiffs say, their expert is correct that Lear is worth materially more than $36 per share and that some major stockholders believe that Lear is worth $60 per share, a major chance to make huge profits is being missed by those stockholders and by the market for corporate control in general. While it may be that that is the case, I cannot premise an injunction on the Lear board’s refusal to act on an improbability of that kind 22. Stockholders who have a different view on value may freely communicate with others, subject to their compliance with the securities laws, about their different views on value. Stockholders may vote no and seek appraisal 23. But the plaintiffs are in no position ask me to refuse the Lear electorate the chance to freely determine whether a guaranteed $36 per share right now is preferable to the risks of continued ownership of Lear stock.

VI . Conclusion

For the foregoing reasons, the plaintiffs’ motion for a preliminary injunction is largely denied, with the exception that a preliminary injunction will issue preventing the merger vote until supplemental disclosure of the kind required by the decision is issued. The defendants shall provide the court on June 18 their proposal as to the form of that disclosure, and the timing of its provision to stockholders. So long as the court is satisfied about substance and timing, the merger vote may be able to proceed as currently scheduled. The plaintiffs and defendants shall collaborate on an implementing order, which shall be presented on June 18 as well.


(1-2-3-4) Recenti evoluzioni giurisprudenziali in materia di doveri fiduciari degli amministratori nel diritto degli Stati Uniti d’America: lo standard of review applicabile alle operazioni di private equity buyout e alle clausole di go-shop


1. Il caso - 2. La normativa di riferimento - 3. I precedenti giurisprudenziali pių recenti - 4. Brevi cenni al contesto dottrinale - 5. Il commento - NOTE

1. Il caso

Con la sentenza in epigrafe del 15 giugno 2007 la Court of Chancery dello stato del Delaware ha in parte respinto e in parte accolto una richiesta di preliminary injunction [2] che si poneva come obiettivo quello di impedire che gli azionisti della Lear Corporation (Lear) si potessero pronunciare sulla fusione tra questa società e AREP Car Acquisition Corp., una società controllata da American Real Estate Partners, LP (AREP), la quale è una limited partnership facente a sua volta capo a Carl Icahn, noto finanziere di Wall Street. Lear è una società che opera nel settore della fornitura di interni per automobili quotata sul New York Stock Exchange e facente parte dell’indice S&P 500. Nel corso del 2005 e del 2006 la società si è venuta a trovare in considerevoli difficoltà finanziarie dovute, da un lato, alla contrazione del mercato dell’automobile e, dall’altro, alla sua esposizione nei confronti dei creditori. In questo periodo la situazione finanziaria di Lear appariva essere talmente grave al punto da temere che tali difficoltà avrebbero potuto portare anche all’insolvenza della società [3]. Nel marzo del 2006 Lear iniziò quindi a considerare possibili soluzioni per uscire dalla fase di crisi che stava attraversando. Nello stesso periodo apparve sulla scena Carl Icahn, il quale manifestò interesse per la società, che riteneva essere sottovalutata dal mercato. Ichan decise di acquistare una partecipazione pari a circa il 4,9% [4] delle azioni della società per un prezzo compreso tra $16 e $17 per azione. Successivamente, nel ottobre del 2006, Icahn decise di incrementare la propria partecipazione procedendo ad acquisti sul mercato fino a raggiungere una quota pari al 10% delle azioni della società. In seguito Ichan aumentò ancora la propria partecipazione in Lear acquisendo ulteriori azioni mediante un collocamento riservato concordato con il consiglio di amministrazione della società, nel quale venne previsto, tra l’altro, un prezzo per azione pari a $23, nonché la rinuncia da parte della società a quanto previsto dalla § 203 del DGCL in materia di business combination [5]. A seguito di queste ulteriori acquisizioni Icahn giunse a possedere una quota complessiva di partecipazione in Lear pari al 24%. Nel collocamento riservato, tuttavia, non venne prevista anche [continua ..]

2. La normativa di riferimento

I doveri degli amministratori nel diritto degli Stati Uniti d’America vengono tradizionalmente ricondotti a due diverse categorie. Da una parte vi sono gli obblighi che possono essere ricollegati al duty of care, il quale impone agli amministratori di agire in modo diligente. Dall’altra, vi sono quelli che costituiscono espressione del cosiddetto duty of loyalty, il quale rappresenta un principio di ampio respiro che impone agli amministratori di non anteporre il proprio interesse a quello della società [7]. In estrema sintesi il duty of loyalty e il duty of care costituiscono due diversi criteri di condotta che gli amministratori delle società statunitensi sono tenuti a rispettare [8]. Per comprendere la disciplina dei doveri fiduciari degli amministratori nel diritto nordamericano è necessario introdurre anche un’altra distinzione, vale a dire quella esistente tra standard di condotta (standard of conduct) e standard di riesame (standard of review) delle decisioni assunte dagli amministratori nell’esercizio delle proprie funzioni. In sostanza, mentre lo standard of conduct riguarda il criterio di condotta utilizzato dagli amministratori di una società nell’adottare una scelta imprenditoriale, lo standard of review riguarda, invece, il criterio con cui le corti riesaminano le scelte compiute dagli amministratori. I due standard di riesame più comuni sono la business judgment rule e il fairness test. Questi criteri di riesame delle decisioni degli amministratori, ovviamente, hanno stretti legami con il duty of care e con il duty of loyalty. In effetti è possibile affermare che – almeno in linea di massima – le corti nordamericane esaminano un atto compiuto in violazione del duty of care alla luce dello standard of review della business judgment rule. Nel caso in cui, invece, un atto sia compiuto in violazione del duty of loyalty, lo standard of review che gene­ralmente trova applicazione nelle corti è quello del cosiddetto fairness test [9]. Un altro elemento di distinzione tra la business judgment rule e il fairness test può essere individuato nella disciplina dell’one­re della prova. Nel primo caso, infatti, l’onere della prova viene posto a carico dell’attore, mentre, nel caso in cui venga sottoposta all’esame di una corte una fattispecie che richiede l’applicazione del fairness test, toccherà [continua ..]

3. I precedenti giurisprudenziali pių recenti

Per comprendere appieno il caso Lear è necessario esaminare anche altre due recenti decisioni della Court of Chancery del Delaware, che, come il caso in oggetto, hanno affrontato il tema dei doveri fiduciari degli amministratori nell’ambito di operazioni di going private [81] compiute da fondi di private equity. Il riferimento è al caso Netsmart [82] e al caso Topps [83] entrambi decisi dal Vice Chancellor Strine [84]. Queste due decisioni risultano essere di particolare interesse in quanto insieme a quella in epigrafe delineano lo standard of review applicabile a queste ope­razioni, che negli ultimi anni sono diventate sempre più comuni nei mercati azionari degli Stati Uniti d’America [85]. Tali acquisizioni, come rilevato in precedenza, presentano numerosi profili in comune con il management buyout e con esso condividono i potenziali rischi che si possa verificare un conflitto di interessi in capo ai componenti del consiglio di amministrazione della società bersaglio. Come avviene nell’ipotesi in cui si intenda realizzare un manage­ment buyout anche nel caso in cui un fondo di private equity intenda acquisire il controllo di una società, i componenti del consiglio di amministrazione della società bersaglio possono trovarsi in una situazione di conflitto di interessi. Di regola, infatti, tali fondi prendono accordi con il management della società bersaglio nel tentativo di assicurare la continuità imprenditoriale. Di conseguenza, il consiglio di amministrazione della società oggetto dell’ope­razione, che si trova a vagliare anche offerte diverse rispetto a quella del fondo di private equity “amico”, potrebbe trovarsi in conflitto di interessi e non essere, quindi, particolarmente propenso ad accettare eventuali offerte concorrenti che potrebbero risultare anche più vantaggiose per gli azionisti [86]. In aggiunta a questi problemi legati al latente conflitto di interessi, che potrebbe colpire gli amministratori delle società oggetto di questo tipo di operazioni, occorre rilevare anche che questo tipo di acquisizioni presenta un ulteriore profilo problematico che potrebbe renderle affini, almeno per certi versi, alle operazioni di cash-out merger condotte da soci di maggioranza. Di frequente, infatti, l’obiettivo di queste operazioni è l’acquisto della totalità delle azioni [continua ..]

4. Brevi cenni al contesto dottrinale

La giurisprudenza in materia di operazioni di going private condotte da fondi di private equity deve essere esaminata anche alla luce delle più recenti evoluzioni della dottrina statunitense. Una delle chiavi di lettura dei casi Netsmart, Topps e Lear può quindi essere ricondotta al classico tema del bilanciamento tra authority e accountability tra i diversi soggetti e organi che, nel diritto del Delaware, sono chiamati a valutare le decisioni imprenditoriali, vale a dire il consiglio di amministrazione, i soci e le corti. Queste decisioni, inoltre, con tutta probabilità risentono anche delle recenti proposte di parte della dottrina nordamericana che si pone come obiettivo quello di potenziare il ruolo degli azionisti nel diritto societario degli Stati Uniti d’America [89]. Pur prescindendo in questa sede da una dettagliata analisi di questi temi di ampio respiro, non si può tuttavia non notare lo stridente contrasto tra quanto in precedenza affermato dalla Corte Suprema del Delaware in QVC, caso in cui venne riconosciuto il ruolo preminente del consiglio di amministrazione rispetto a quello degli azionisti, e quanto affermato, ad esempio, nel più recente caso Topps. In QVC, infatti, il giudice Veasey manifestò uno scetticismo di fondo verso la possibilità che gli azionisti siano effettivamente in grado di assumere scelte imprenditoriali migliori di quelle che potrebbero essere prese dagli amministratori: «shareholders might elect to tender into Paramount’s cash offer in ignorance or a mistaken belief of the strategic benefic which a business combination with Warner might produce» [90]. Al contrario, se si esamina il caso Topps, è possibile rilevare che la Court of Chancery sembra accogliere un’impostazione in parte differente. Secondo l’opi­nione del Vice Chancellor Strine, infatti, sono proprio i soci a trovarsi nella posizione migliore per valutare le diverse proposte di acquisizione della società: «[w]hat this decision does conclude is that, on this record, there is no reasonable basis for permitting the Topps board to deny its stockholders the chance to consider for themselves whether to prefer Upper Deck’s higher-priced deal, taking into account its unique risks, over Eisner’s lower-priced deal, which has its own risks» [91]. L’importanza del contesto dottrinale in cui queste decisioni sono [continua ..]

5. Il commento

È opportuno incominciare l’analisi di questa decisione, esaminando quale sia il criterio di riesame applicato dalla Court of Chancery per valutare le scelte adottate dal consiglio di amministrazione di Lear. Anche in questo caso Strine ritiene che lo standard of review che sia più opportuno applicare sia quello riconducibile al Revlon duty. Un primo profilo problematico è quello relativo alle modalità con cui si sono svolte le negoziazioni con Ichan. In particolare viene contestato dagli azionisti attori il fatto che lo special committee, costituito in seno al consiglio di amministrazione di Lear, abbia rinunciato al compito di condurre le trattative in prima persona, affidandole, invece, a Rossiter, il quale non risultava essere completamente immune dal rischio di trovarsi in conflitto di interessi [93]. A questo riguardo la Court of Chancery afferma che sicuramente sarebbe stato desiderabile che le trattative fossero state condotte dal presidente dello special committee oppure da un componente di questo. Tuttavia, nonostante la presenza di questo rilevante difetto di fondo e il fatto che altre piccole imperfezioni abbiano reso le trattative tra Lear e Ichan «far from ideal», il Vice Chancellor ritiene che non si possa parlare di una violazione del Revlon duty. Applicando il criterio di ragionevolezza alle scelte degli amministratori e senza entrare nel merito delle decisioni prese, Strine ritiene che nel caso specifico non vi sia stata una violazione del Revlon duty, in quanto lo special committee, nell’affidare le trattative a Rossiter, ha operato nei limiti del principio di ragionevolezza [94]. Per giungere a questa conclusione Strine sostiene che debbano essere prese in considerazione soprattutto due diverse circostanze: (a) il fatto che la società abbia rinunciato a rinnovare il proprio shareholder rights plan e (b) il ripetuto interesse manifestato per Lear da parte di Ichan. Queste due circostanze, secondo il Vice Chancellor, avevano ormai reso evidente il fatto che la società era disposta ad essere oggetto di un’acquisizione. Di conseguenza, sebbene il comportamento tenuto dal consiglio di amministrazione di Lear risulti essere discutibile, non è possibile ritenere che gli amministratori si siano comportati in modo irragionevole in quanto essi avevano cercato di perseguire l’offerta più vantaggiosa per gli azionisti in modo da soddisfare il [continua ..]