In November 2018, the UK Takeover Panel published Panel Consultation Paper 2018/2 which set out proposed amendments to the UK Takeover Code as a result of the UK’s withdrawal from the EU.

This month, the Panel published its Response Statement in which it confirmed the changes that will come into effect after Brexit. The main change is that, following Brexit, the Panel will no longer regulate (in whole or part) offers for EEA-registered companies that previously fell under the shared jurisdiction regime.

Please click here to read the full alert memorandum.

On January 1, 2019, the “Act on Further Development of Part-Time Employment Law” (Gesetz zur Weiterentwicklung des Teilzeitrechts) entered into force in Germany.

The new legislation implements considerable changes to the German Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz ) and introduces (i) an entitlement to work part-time on a temporary basis, coupled with (ii) an entitlement to return to full-time employment (so-called “Bridge Part-Time Work” (Brückenteilzeit)). Continue Reading “Bridge Part-Time Work” in Germany

German M&A market makes solid start to the new year. Pharma and chemicals specialist Merck announces cash offer to take over Versum Materials, a US semiconductor company, in a deal valued at approx. USD 5.9 billion. Merck’s aim is to forestall the agreed merger between Versum and Entegris. Merck had only recently entered into a multi-billion cooperation agreement with GlaxoSmithKline in the field of cancer immunotherapy. Symrise wants to take over nutritional products supplier ADF/IDF for around $900 million. Family company Kathrein divests its antenna business to Ericsson. Fashion label Tom Tailor sees major shareholder Fosun increase its shareholding by way of a capital increase, followed by a public tender offer. Continue Reading.

In recent years, in part in response to decisions like Corwin that have raised the pleading standard for stockholder plaintiffs, the Delaware courts have encouraged stockholders to seek books and records under Section 220 of the Delaware General Corporation Law (DGCL) before filing stockholder derivative or post-merger damages suits, and – in response – each year more stockholders have done so.  As a result of this trend, we have already seen several important decisions addressing books and records demands in 2019.  These decisions have (i) clarified the types of documents that may be obtained, including (in some limited circumstances) personal emails or text messages; (ii) explained when a stockholder’s demand will be denied as impermissibly lawyer-driven (and when it will not be); and (iii) described the threshold showing of suspected wrongdoing that stockholders must make.  As the plaintiffs’ bar makes more use of Section 220, these are important issues for boards of directors to consider. Continue Reading The Rise of Books and Records Demands Under Section 220 of the DGCL

Last week, the Delaware Court of Chancery found that a target company in an agreed merger properly terminated the merger agreement following the passage of the specified “end date” where the buyer failed to exercise its right under the agreement to extend the end date.  See Vintage Rodeo Parent, LLC v. Rent-a-Center, Inc., C.A. No. 2018-0927-SG (Del. Ch. Mar. 14, 2019).  The decision is a stark reminder that courts will enforce the terms of a merger agreement as written, and that the failure to comply with seemingly ministerial formalities can have severe consequences.    Continue Reading Target’s Termination of Merger Agreement Approved Based on Plain Contract Language

“If your experiment needs statistics, you ought to have done a better experiment.”  Ernest Rutherford

Sometimes you need to get into the fundamentals to understand if your belief system is sound.  In corporate governance literature of the last two decades, there is no more fundamental concept than Tobin’s Q, which legions of law professors have used as a proxy for firm value.  Based on regression analyses examining variations in Tobin’s Q, they have made definitive pronouncements about any number of corporate governance topics, from staggered boards to the value of activism.  Yet tracing the evolution of Tobin’s Q to its current state—a state completely alien to the original conception—reveals a twisted tale, proceeding like an epidemiological disaster in which Tobin’s Q transforms from an innocent and useful organism in macroeconomics to an unrecognizably mutated and widespread disease in corporate governance literature, infecting policies and practices throughout the corporate governance world. Continue Reading Mutant Q – The Superbug Infecting Foundational Studies on Entrenchment, Staggered Boards, and Activism

We were grateful that about 200 of you participated in Cleary Gottlieb’s fifth annual M&A, Antitrust, and the Board Room conference in San Francisco, hosted and co-sponsored by our friends at UC Berkeley School of Law, as well as sponsors Abernathy MacGregor, Finsbury, Gladstone Place Partners, Joele Frank, MacKenzie Partners, and Okapi Partners, and chaired by Cleary partner Ethan Klingsberg and Berkeley Professor Steven Davidoff Solomon. Continue Reading Key Takeaways: M&A, Antitrust, and the Board Room in 2019: Challenges and Conundrums for the West Coast

Cleary Gottlieb and The Conference Board recently hosted the webcast “A Discussion on Long-Termism, Activist Hedge Funds and Staggered Boards”.  The webcast was moderated by Doug Chia of The Conference Board Governance Center, and the panelists were:

  • Arthur Kohn, Partner, Cleary Gottlieb
  • Neil Whoriskey, Partner, Cleary Gottlieb
  • Ken Bertsch, Executive Director, Council of Institutional Investors
  • Professor Charles Elson, Weinberg Center at the University of Delaware

Topics discussed included:

  • Whether or not activists are good (or not-so-good) for US public companies
  • The history of staggered boards
  • The role staggered boards play in discouraging – or attracting – activists
  • The impact activism has on short- and long-term corporate performance

For access to the recording of the webcast, please click here.

It has become customary, over the last few years, for companies and other stakeholders to await annual letters from large institutional investors that provide insight into investor views about companies’ long-term strategy, messaging, goals and shareholder engagement, among other topics.

BlackRock and State Street recently released their letters, and shared similar views: BlackRock reiterated its focus on the need for corporate purpose and the link to successful pursuit of profit and State Street focused on the need for a meaningful corporate culture as a significant driver of intangible value.  In addition, in a recent interview with Gladstone Partners, Donna Anderson, the head of T. Rowe Price’s governance policy and engagement, focused on the need to deliver financial results instead of worrying about fending off the next activist investor. Continue Reading How to Practically Synthesize Investor Messages From BlackRock, State Street, and T. Rowe Price

The overarching goal of incentive compensation plan design is, of course, to incentivize management to focus on value creation for shareholders.  Recent developments concerning corporate “sustainability” suggest that compensation committees of public company boards of directors, as well as human resources executives, should consider the use of metrics developed to measure sustainability in incentive compensation plans.  By way of illustration, Chevron Corporation’s latest climate report, released last week, notes that it plans to set greenhouse gas emissions targets and said the goal would be added to the scorecard that determines incentive pay for executives and approximately 45,000 employees. Continue Reading Using Sustainability Metrics in Incentive Compensation Plans