August 08, 2016 Articles

The Death of Merger Litigation?

Recent Delaware decisions and novel corporate bylaws may rein in—but won't eliminate—merger lawsuits

by Donald H. Tucker Jr. and Clifton L. Brinson

For many years, litigation inevitably followed close on the heels of a public company merger announcement. These lawsuits often led to a quick settlement in which the defendant made additional disclosures relating to the merger, the plaintiff released the defendant from all merger-related claims, and the plaintiff’s lawyers received a six-digit attorney fee award.  

But recently there has been a backlash against this process. Public companies have begun adopting corporate bylaws designed to manage risks associated with a merger lawsuit. In addition, the Delaware Court of Chancery has started refusing to approve disclosure-only settlements in a number of merger litigation cases. These developments have significantly affected the merger litigation landscape. 

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