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+--- Thread: Court Of Appeal Confirms Importance Of Proper Corporate Process And Disclosure In M&A (/showthread.php?tid=11499)
Court Of Appeal Confirms Importance Of Proper Corporate Process And Disclosure In M&A - AU74 - 11-18-2016
Not sure if this article by PM's lawyers on the legal issues raised by the IOC/XOM failed merger has already been posted. If not, here it is:
RE: Court Of Appeal Confirms Importance Of - bdahl385 - 11-18-2016
'AU74' pid='77705' datel Wrote:Not sure if this article by PM's lawyers on the legal issues raised by the IOC/XOM failed merger has already been posted. If not, here it is:
I had not seen that posted, it was a good read - now what I would really, really love to see is the financial analysis report done by Paradigm Capital Inc. What kind of valuation did their analysis lead to - hmmmm, inquring minds want to know .....
RE: Court Of Appeal Confirms Importance Of - davidhmtk - 11-18-2016
'bdahl385' pid='77707' datel Wrote:and I would also like to know what the offer to the dissenting shareholders was - JFT?
'AU74' pid='77705' datel Wrote:Not sure if this article by PM's lawyers on the legal issues raised by the IOC/XOM failed merger has already been posted. If not, here it is:
I had not seen that posted, it was a good read - now what I would really, really love to see is the financial analysis report done by Paradigm Capital Inc. What kind of valuation did their analysis lead to - hmmmm, inquring minds want to know .....
RE: Court Of Appeal Confirms Importance Of - Stavros - 11-18-2016
'davidhmtk' pid='77717' datel Wrote:
'bdahl385' pid='77707' datel Wrote:and I would also like to know what the offer to the dissenting shareholders was - JFT?
'AU74' pid='77705' datel Wrote:Not sure if this article by PM's lawyers on the legal issues raised by the IOC/XOM failed merger has already been posted. If not, here it is:
I had not seen that posted, it was a good read - now what I would really, really love to see is the financial analysis report done by Paradigm Capital Inc. What kind of valuation did their analysis lead to - hmmmm, inquring minds want to know .....
On November 4, 2016, the Court of Appeal of Yukon overturned the decision of the Supreme Court of Yukon approving the proposed US$2.3 billion acquisition of InterOil Corporation (InterOil) by ExxonMobil Corporation (Exxon) by way of a plan of arrangement (the Exxon Arrangement). Philippe E. Mulacek, the founder and the former Chairman and CEO of InterOil, objected to the proposed acquisition on the basis that, among other things, the process undertaken by InterOil demonstrated deficient corporate governance and inadequate shareholder disclosure and the proposed acquisition was not substantively or objectively fair and reasonable.
Cassels Brock & Blackwell LLP represented Mr. Mulacek both in the Supreme Court of Yukon and in the Court of Appeal of Yukon.
Key Findings
The Court of Appeal refused to approve the Exxon Arrangement principally due to failures in InterOil's corporate governance and deficiencies in the information provided to its shareholders. The Court of Appeal confirmed and clarified the importance of the role of the court in connection with arrangement transactions - a statutory mechanism which permits transformative changes while ensuring that all those whose rights may be affected are treated fairly – and the importance of a rigorous application of the BCE test for court approval of transactions as fair and reasonable. In particular:
· Shareholder vote – Although the shareholder vote is an indicia of fairness, the Court must be satisfied that shareholders were in a position to make an informed choice. In this case, InterOil failed to provide sufficient meaningful information to shareholders on the financial impact of the terms of the proposed acquisition, and the value of its oil and gas assets – "the value they would be giving up and the value they would be receiving" - and given these disclosure deficiencies the court could not rely on the shareholder vote.
· Court role – Notwithstanding the shareholder vote, it is "the Court's task to decide whether the purposed arrangement has been shown to be fair and reasonable." An auction process with a second superior bid does not relieve the Court of its duty to examine all of the circumstances and engage in the complex weighing necessary to determine whether the arrangement is fair and reasonable.
· Corporate process – The failure to follow a robust corporate governance process is a factor in a fairness hearing. A compromised corporate process for review and approval of the transaction will impact the Court's reliance on a board's recommendation as an indicia of fairness. In this case the lack of an independent review and consideration of the proposed arrangement, including retention of independent advisors and obtaining an independent financial fairness opinion, were all "red flags" that required the Court to do more than accept the shareholder vote as a "proxy" for fairness.
· Financial Fairness – A fairness opinion by a financial advisor with a substantial success fee and a restricted review is of little assistance in assessing financial fairness. A fairness opinion that is devoid of facts or analysis will not suffice on its own to establish financial fairness.
In all of the circumstances of this proposed acquisition, discussed further below, the Court of Appeal found that it could not pay deference to the business judgment of the Board, the verdict of the market or to the shareholder vote. The Court itself had to be satisfied that the arrangement was objectively fair and reasonable.
The decision of the Yukon Supreme Court in the fairness hearing can be found here. The decision of the Court of Appeal in Chambers granting a stay of the fairness approval pending the appeal can be found here. The decision of the Court of Appeal overturning the fairness approval can be found here.
RE: Court Of Appeal Confirms Importance Of - CAC - 11-19-2016
'davidhmtk' pid='77717' dateline='<a href="tel:1479472 Wrote:
'bdahl385' pid='77707' dateline='<a href="tel:1479407 Wrote:and I would also like to know what the offer to the dissenting shareholders was - JFT?
'AU74' pid='77705' dateline='<a href="tel:1479404 Wrote:Not sure if this article by PM's lawyers on the legal issues raised by the IOC/XOM failed merger has already been posted. If not, here it is:
I had not seen that posted, it was a good read - now what I would really, really love to see is the financial analysis report done by Paradigm Capital Inc. What kind of valuation did their analysis lead to - hmmmm, inquring minds want to know .....
*********
There's no dissent (and thus no offer) unless there's an approved deal. We never got that far.
RE: Court Of Appeal Confirms Importance Of - CAC - 11-19-2016
'davidhmtk' pid='77717' dateline='<a href="tel:1479472 Wrote:
'bdahl385' pid='77707' dateline='<a href="tel:1479407 Wrote:and I would also like to know what the offer to the dissenting shareholders was - JFT?
'AU74' pid='77705' dateline='<a href="tel:1479404 Wrote:Not sure if this article by PM's lawyers on the legal issues raised by the IOC/XOM failed merger has already been posted. If not, here it is:
I had not seen that posted, it was a good read - now what I would really, really love to see is the financial analysis report done by Paradigm Capital Inc. What kind of valuation did their analysis lead to - hmmmm, inquring minds want to know .....
*********
There's no dissent (and thus no offer) unless there's an approved deal. We never got that far.