Menlo Park, Calif.—Shareholders challenged more than 94 percent of U.S. merger and acquisition (M&A) deals valued over $100 million in 2013, according to Shareholder Litigation Involving Mergers and Acquisitions, the first in a series of two M&A reports to be issued by Cornerstone Research. This activity continues a four-year trend that began in 2010, with shareholders challenging 90 percent of deals in that year and 93 percent in 2011 and 2012. Deals worth $100 million or more attracted an average of five lawsuits, with the Dell Inc. buyout spawning 26 filings—the most of any M&A deal in 2013.
“As in prior years, litigation for the majority of 2013 M&A deals was resolved before the deal was closed,” noted Adel Turki
, a senior vice president of Cornerstone Research and head of the firm’s finance practice. “None of the lawsuits in our data went to trial, and all judgments, including summary judgments or judgments on the pleadings, were granted to the defendants.”
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Plaintiff attorneys filed 612 lawsuits challenging mergers and acquisitions in 2013.
The “race to file” appears to have subsided over the last five years. In 2013, the first lawsuit was filed an average of 12 days after the deal announcement, compared with 9 days in 2012, and 7 days in 2009.
Sixty-two percent of deal litigation was multi-jurisdictional, although the percentage of deals litigated in three or more jurisdictions declined by half over the last two years.
The most active courts for M&A litigation in the last four years (after Delaware Court of Chancery) were: New York County, NY; Santa Clara County, CA; and Harris County, TX.
Litigation was resolved before deal closing in 75 percent of the deals. The great majority of lawsuits settled.
is a principal in the Menlo Park office of Cornerstone Research.