High-Profile Merger in Media and Entertainment Industry

In a high-profile case, Cornerstone Research and two of its affiliated experts were retained to evaluate a fairness opinion relied upon by the board of a media and entertainment company.

In a high-profile case, Cornerstone Research and two of its affiliated experts were retained to evaluate a fairness opinion relied upon by the board of a media and entertainment company. The shareholders of the company filed a lawsuit in an attempt to stop the company’s acquisition by another firm in the same industry. The plaintiffs alleged that the target’s board relied on a financial advisor’s fairness opinion that was outdated, lacked certain necessary disclosures, and did not provide adequate information to evaluate the merger. Separately, the plaintiffs argued that shareholders could not effectively evaluate the merger because there was some possibility that regulators might require the company to divest certain assets. The defendants retained Cornerstone Research and a professor of law and economics to evaluate the adequacy of the fairness opinion from a corporate governance perspective, and a valuation expert to evaluate the adequacy of the valuation models in the fairness opinion.

The court allowed the vote to go ahead as scheduled and the shareholders approved the merger.

The law professor and Cornerstone Research examined an extensive sample of comparable mergers; based on this research, the valuation expert concluded that the level of detail and timeliness of the disclosures were consistent with standard industry practices. Working with Cornerstone Research, the valuation expert addressed the adequacy of the disclosures from a valuation perspective and rebutted certain valuation “adjustments” endorsed by an opposing expert. After expert reports and rebuttal reports were filed in quick succession, the court allowed the vote to go ahead as scheduled and the shareholders approved the merger.