Corporate finance : cases and materials / by William W. Bratton.
2012
KF1428.A7 B78 2012 (Map It)
Available at Cellar
Formats
| Format | |
|---|---|
| BibTeX | |
| MARCXML | |
| TextMARC | |
| MARC | |
| DublinCore | |
| EndNote | |
| NLM | |
| RefWorks | |
| RIS |
Items
Details
Author
Title
Corporate finance : cases and materials / by William W. Bratton.
Published
New York : Foundation Press ; [St. Paul, Minn.] : Thomson/West, [2012]
Copyright
©2012
Call Number
KF1428.A7 B78 2012
Edition
Seventh edition.
ISBN
9781609300593
1609300599
1609300599
Description
1 volume (various pagings) : illustrations ; 26 cm.
System Control No.
(OCoLC)805892861
Bibliography, etc. Note
Includes bibliographical references and index.
Series
Record Appears in
Portion of Title
Cases and materials, corporate finance
Table of Contents
Preface to the Seventh Edition
iii
Acknowledgments
v
Table of Cases
xxxi
pt. I
VALUING THE FIRM AND ITS SECURITIES
Introduction
1
Section A
Market Value and Fundamental Value
7
1.
Introduction
7
Tri-Continental Corp. v. Battye
7
Note: Funds
13
Note: Merger Appraisal Rights and the Closed-End Fund Discount
14
2.
Market Efficiency
16
(A).
The Efficient Market Hypothesis
16
Brealey, Myers, and Allen, Principles of Corporate Finance
16
Note: Speculative Efficiency, Allocative Efficiency, and Incentive Problems
23
Note: Empirical Testing of the EMH
25
(B).
Noise Trading, Behaviorism, and Other Alternatives to the Efficient Market Hypothesis
29
Shleifer and Summers, The Noise Trader Approach to Finance
29
Note: Behavioral Theory
34
Note: Bubbles and Crashes
37
Note: Heterogeneous Expectations Models
41
Section B
Elements of Fundamental Value
42
1.
The Time Value of Money
42
Alchian and Allen, University Economics
43
Note: The Role of Discounting in Bond Valuation
48
Note: Discounting in Capital Budgeting Decisions
49
2.
Expected Returns
51
(A).
The Composition of "Returns"
51
Warren Buffett, The Essays of Warren Buffett: Lessons for Corporate America
51
Note: Accounting Earnings, "Owner Earnings," and Net Cash Flows
57
(B).
Future Returns and Probability Distributions
62
Grayson, The Use of Statistical Techniques in Capital Budgeting
63
3.
Risk and the Capitalization Rate
67
(A).
Risk as Degree of Dispersion
68
Lewellen, The Cost of Capital
68
Note: Risk and Return Characteristics of Different Securities
74
(B).
Comparable Firms and Market Capitalization Rates: The Price/Earnings Ratio
75
Francis I. duPont & Co. v. Universal City Studios, Inc
75
Universal City Studios, Inc. v. Francis I. duPont & Co
81
Note: Inferred Capitalization Rates and Constant Growth Valuation
83
Note: Price/Earnings Ratios and Investment Strategy
86
(C).
Measures of Risk---The Capital Asset Pricing Model and Beta
87
(1).
Portfolio Theory
87
(a).
portfolio selection
87
Sharpe, Portfolio Theory and Capital Markets
87
(b).
diversification as a means of reducing risk
95
Brealey, Myers, and Allen, Principles of Corporate Finance
98
(c).
choosing a "best portfolio"---the critical ratio and the separation theorem
106
Lintner, A Model of a Perfectly Functioning Securities Market
107
Lorie, Dodd and Kimpton, The Stockmarket: Theories and Evidence
108
(2).
The Capital Asset Pricing Model
112
(a).
derivation
112
Modigliani and Pogue, An Introduction to Risk and Return: Concepts and Evidence
112
Note: Arbitrage
118
(b).
using the CAPM in appraisal
118
Cede & Co. v. Technicolor, Inc.
119
Note: The Judicial Role in Appraisal
122
Global GT LP v. Golden Telecom Inc.
123
(c).
using the CAPM in capital budgeting
132
Brealey, Myers, and Allen, Principles of Corporate Finance
132
Note: Shareholder Value, Risk Aversion, and Risk Neutrality
134
(d).
empirical testing of the CAPM and multiple factor models
135
4.
Premiums and Discounts in Mergers and Acquisitions
140
Kraakman, Taking Discounts Seriously: The Implications of "Discounted" Share Prices as an Acquisition Motive
140
Note: Downward-Sloping Demand
147
Rapid-American Corp. v. Harris
147
Problem
152
Note: Premiums, Discounts, and Merger Gain
153
Le Beau v. M.G. Bancorporation, Inc.
156
Note: Valuation Concepts Introduced in Le Beau
166
Note: The Implicit Minority Discount
169
Note: The Marketability Discount
170
5.
Risk Reduction through Hedging
172
(A).
Risk Exposure
174
(B).
Hedging
175
(1).
Forward Contracts
175
(2).
Futures Contracts
177
(3).
Swaps
179
(4).
Options
183
(C).
Option Strategies and Put-Call Parity
185
(1).
Using Options
185
(2).
Put-Call Parity
187
Note: Financial Engineering
191
(D).
Call Option Valuation
192
Note: Equity Swaps
194
(E).
Regulation of Derivatives
198
(1).
Overview
199
The Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States
199
Note: Early Warnings
201
(2).
Pre-Crisis Initiatives
203
(3).
Dodd-Frank
205
(4).
Counterparty Relationships
206
Caiola v. Citibank, N.A.
206
Note: Proceedings Respecting Bankers Trust
214
(2).
Hedging and Corporate Law Rights and Duties
215
Brane v. Roth
215
Note: Hedging, Shareholder Value, The CAPM, and the Irrelevance Hypothesis
218
Deephaven Risk Arb Trading Ltd. v. UnitedGlobalCom Inc.
219
Note: Empty Voting
224
(F).
Regulation of Systemic Risk
225
(1).
The Scope of the Problem
225
Timothy F Geithner, Changes in the Structure of the US Financial System and Implications for Systemic Risk
225
(2).
The Financial Crisis of 2008 and Reform
232
UK Financial Services Authority, The Turner Review: A Regulatory Response to the Global Banking Crisis
232
Chairman Ben S. Bernanke, Financial Reform to Address Systemic Risk
241
Note: The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
249
pt. II
DEBT FINANCING
Introduction
255
Eliasen v. Itel Corporation
255
Note: Priority of Claim
262
Section A
Capital Structure and Leverage
264
1.
Leverage and Value
265
(A).
The Cost of Capital and the Value of the Firm
265
Durand, Costs of Debt and Equity Funds for Business: Trends and Problems of Measurement
266
(B).
The Modigliani-Miller Position and the Revised Concept of Optimal Capital Structure
271
(1).
The M-M Thesis and Its Assumptions
271
Van Horne, Financial Management and Policy
272
(2).
Relaxing M-M's Assumptions
275
(a).
institutional constraints
276
(b).
taxes
277
Van Horne, Financial Management and Policy
277
Note: Taxation and the M-M Theorem
279
(c).
bankruptcy costs
281
(d).
agency costs
283
Note: Fiduciary Law and Capital Structure
285
(e).
information asymmetries
286
Myers, Capital Structure
286
Note: The Pecking Order
288
Section B
Basic Terms and Concepts
291
1.
Introduction
291
(A).
Bonds, Debentures, and Notes
291
(B).
Loans
301
(C).
Points of Comparison
305
2.
Corporate Trust and the Trust Indenture Act of 1939
306
Elliott Associates v. J. Henry Schroder Bank & Trust Co.
306
Note: Corporate Trust
308
Note: The Trust Indenture Act of 1939
309
3.
The Bondholder and the Going Concern
311
(A).
The Promise to Pay
311
1 Dewing, The Financial Policy of Corporations
311
Van Horne, Financial Management and Policy
312
Note: Redemption Rights and Duties
314
Morgan Stanley & Co., Inc. v. Archer Daniels Midland Co.
316
Note: Refunding Cases
323
Note: Bondholder Remedies Upon Default
325
(B).
Promises That Protect the Value of the Promise to Pay
326
(1).
Business Covenants
326
(a).
debt contracts and debtor misbehavior
326
(b).
principal covenants
328
(c).
studies and commentaries
331
(2).
Judicial Interpretation of Covenants
332
Sharon Steel Corp. v. The Chase Manhattan Bank, N.A.
332
Affiliated Computer Services, Inc. v. Wilmington Trust Company
338
Note: Boilerplate Indenture Terms
343
Section C
Security and Seniority
345
1.
Mortgage Bonds
346
2.
Leases
348
3.
Asset Securitization
349
(A).
Overview
351
Lupica, Asset Securitization: The Unsecured Creditor's Perspective
351
Note: Risk and Return
355
(B).
Transaction Structure
356
(C).
Accounting Treatment
358
(a).
prior to 2010
359
(b).
since 2010
361
(D).
Bankruptcy Risks
362
In re LTV Steel Company, Inc.
363
Note: Subsequent Proceedings
366
Note: Policy Debates
366
(E).
Securitized Mortgages and the Financial Crisis of 2008
367
The Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States
369
Note: Collateralized Debt Obligations-Operative Assumptions
377
Congressional Oversight Panel, Special Report on Regulatory Reform, Modernizing the American Financial Regulatory System: Recommendations for Improving Oversight, Protecting Consumers, and Ensuring Stability
378
Note: Dodd-Frank and Securitization
380
4.
Subordination
381
(A).
Seniors, Juniors, and Subordinated Lenders
381
(B).
Subordination of Unsecured Claims
382
(C).
Second Lien Loans and Intercreditor Agreements
383
(D).
Asset Securitization
386
Concord Real Estate CDO 2006-1, LTD. v. Bank of America N.A.
386
Section D
Credit Derivatives
393
1.
The Contracts and the Players
393
Eternity Global Master Fund Limited v. Morgan Guaranty Trust Company of New York
397
Note: The ISDA Agreement
403
2.
Counterparty Relationships
404
VCG Special Opportunities Master Fund Ltd. v. Citibank, N.A.
404
Note: In Over Their Hedge
407
3.
Credit Default Swaps and Collateralized Debt Obligations
408
The Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States
408
Note: Litigation
414
4.
Credit Default Swaps and the Financial Crisis of 2008
418
The Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States
419
Section E
High Leverage Restructuring
426
1.
Leverage and Management Discipline
426
Jensen, Agency Costs of Free Cash Flow, Corporate Finance and Takeovers
428
2.
The Rise, Decline, and Reappearance of Leveraged Restructuring
429
Holmstrom and Kaplan, Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s
430
Note: The High Leverage Restructurings of the 1980s
436
Note: The Private Equity Restructurings of the 2000s
438
Note: Performance
441
3.
Event Risk and Bond Contracts
443
Metropolitan Life Insurance Company v. RJR Nabisco, Inc.
445
Note: The Aftermath of the RJR Nabisco Restructuring
456
Note: Spin Offs
457
Note: Fiduciary Theory, Good Faith Duties, and Other Bases for Judicial Protection of Bondholders
458
Note: Lender Liability Compared
460
Section F
Debtor Distress
462
1.
Altering the Bond Contract-Amendment and Exchange, Coercion and Holding Out
462
Aladdin Hotel Co. v. Bloom
463
Note: Amendment Under the Trust Indenture Act
467
Katz v. Oak Industries Inc.
469
Note: Coerced Votes and Hold Outs
477
Note: Vulture Investors
480
Note: Prepackaged Bankruptcy
481
2.
Creditor Protection in Law
482
(A).
Regulation of Capital Structure
482
(1).
Public Utilities
482
(2).
Investment Companies
483
(3).
Margin Requirements
486
(4).
Bank Capital
487
Tarullo, International Harmonization of Banking Regulation and Agency Accountability
488
Note: Basel III and Dodd-Frank
490
Basel Committee on Banking Supervision, Consultative Document, International framework for liquidity risk measurement, standards and monitoring
492
(B).
Corporate Law Legal Capital Rules
495
(1).
The Stated Capital Requirement
496
(2).
Dividends and Distributions
498
(a).
traditional statutes
498
Klang v. Smith's Food & Drug Centers, Inc.
500
Note: Restrictions on Distributions
504
(b).
new model statutes
504
(C).
Fraudulent Conveyance Law
505
In re Color Tile, Inc.
506
Wieboldt Stores, Inc. v. Schottenstein
509
Note: Fraudulent Conveyance Avoidance of Leveraged Buyouts
518
(D).
Fiduciary Duty
521
Credit Lyonnais Bank Nederland N.V. v. Pathe Communications Co.
521
Note: Pre-Bankruptcy Fiduciary Duties to Creditors
522
North American Catholic Educational Programming Foundation, Inc. v. Gheewalla
523
Section G
Insolvency Reorganization
527
1.
Introduction: The Reorganization Bargain and the Limits of the Parties' Bargaining Freedom
527
(A).
Reorganization By Judicial Proceeding
527
(B).
The Parameters of the Bankruptcy Bargain
529
2.
The Rise and Decline of Absolute Priority
531
(A).
Absolute Priority Under the Bankruptcy Act of 1938
531
Ayer, Rethinking Absolute Priority After Ahlers
531
Note: A Contrasting Account
536
Consolidated Rock Products Co. v. Du Bois
537
Note: The Aftermath of the Consolidated Rock Products Company Case
544
Note: Issues Under Absolute Priority
544
Note: The Composition Tradition and the Best Interest of Creditors Standard
547
(B).
The Bankruptcy Act of 1978
548
House Report No. 95-595
548
3.
Reorganization under the Bankruptcy Code
550
(A).
Overview
550
In re Zenith Electronics Corporation
550
Note: Proceedings Under Chapter 11
560
(B).
Absolute Priority Under Chapter 11
564
House Report No. 95-595
564
Excerpt From Debates on Bankruptcy Reform Act of 1978
567
Note: Issues Under the Code
569
Note: Empirical Results---Deviations From Absolute Priority
571
(C).
Rethinking Traditional Reorganization
572
(1).
Rethinking Creditors' Rights-The Common Pool and the Creditors' Bargain
573
(2).
Rethinking the Reorganization Process-Alternative Approaches
574
(a).
market-based proposals
575
(1).
cash auction
575
(2).
securities market test
576
(3).
options
576
(4).
judicially-supervised auction
577
(b).
contractual proposals
578
(1).
automatic conversion
578
(2).
contractual choice
578
4.
Creditor Control and Asset Sales
579
Skeel, Creditor's Ball: The "New" New Corporate Governance in Chapter 11
579
Note: Restrictions on Executive Pay
587
Note: Incidents of Creditor Control
588
In re Chrysler LLC
590
Note: Section 363 Sales
602
pt. III
FINANCING WITH HYBRID SECURITIES
Introduction
607
Section A
Preferred Stock Financing
607
1.
Rights and Preferences
607
(A).
Preferred Stock Defined
607
(B).
The Preferred Stock Contract
609
(C).
Issuer Motivations and Holder Expectations
618
2.
Claims to Dividends
620
(A).
Preferred Stock Dividend Provisions
620
(B).
Board Discretion to Withhold Payment
621
(1).
Cumulative Preferred
621
(2).
Noncumulative Preferred
622
(3).
Issuer Tender and Exchange Offers to Holders of Preferred in Arrears
624
Eisenberg v. Chicago Milwaukee Corp.
624
Note: Denver Tramway
626
(4).
Board Discretion and Voting Control
626
3.
Claims to Principal, Including Arrearages
628
(A).
The Liquidation Preference
628
(B).
Redemption Rights
629
Mueller v. Kraeuter & Co.
630
SV Investment Partners, LLC v. ThoughtWorks, Inc.
634
4.
Alteration of Financial Rights
644
(A).
By Charter Amendment
644
Goldman v. Postal Telegraph
644
Note: Junior Hold Ups
647
(B).
By Merger
648
Bove v. The Community Hotel Corporation of Newport, Rhode Island
648
Note: The Investment Value Doctrine
654
Note: Drafting
656
Note: Preferred Class Voting in Respect of Mergers
658
5.
Judicial Review of Allocations in Mergers
662
(A).
De Facto Theories
662
Rothschild International Corporation v. Liggett Group Inc.
662
Note: "De Facto" Theories
665
(B).
Fairness Scrutiny
666
Dalton v. American Investment Co.
668
Note: FLS Holdings
671
LC Capital Master Fund, Ltd. v. James
672
Section B
Convertible Securities and Warrants
683
1.
Terms and Valuation
683
(A).
The Value of a Call Option
683
(B).
Convertible Bond Features and Valuation Variables
684
(1).
Traditional Convertibles
684
(a).
elements of convertible bond value
685
(b).
the conversion premium
686
(c).
issuer call rights
687
Note: The Convertible Bond Puzzle
688
(2).
Variations on the Traditional Convertible
691
(a).
original issue discount convertibles
691
(b).
puttable convertibles
691
(c).
equity-linked securities
692
(d).
floating price ("toxic") convertibles
692
2.
Conflicts of Interest
695
(A).
Protective Contract Provisions
695
Note: Implied in Fact Antidilution Protection
697
Note: Authorized Stock
699
HB Korenvaes Investments, L.P. v. Marriott Corporation
699
Note: Convertible Hedges
712
Note: Interpretation Contra Proferentum
712
Note: Convertible Bond Contracts
714
(B).
Duties Implied in Law
717
Van Gemert v. Boeing Co.
717
Note: Van Gemert's Operative Theory
721
Note: The Duty to Notify in Delaware
722
Broad v. Rockwell International Corp.
723
Note: Fair and Unfair Dividends
731
Note: Fair and Unfair Mergers
733
Note: Appraisal Rights
734
3.
Contingent Convertibles in Bank Capital Structures
736
Basel Committee on Banking Supervision
736
Note: CoCos
738
Section C
Venture Capital Finance
738
1.
Overview
738
(A).
History and Characteristics
738
(B).
Securities and Documentation
741
(C).
Control Arrangements
742
Equity-Linked Investors, L.P. v. Adams
744
Note: Case for Comparison
757
Note: Opportunism
757
In re Trados Incorporated Shareholder Litigation
759
Note: The Duty to the Common When the Common is Under Water
765
Note: Drafting
770
pt. IV
EQUITY CAPITAL STRUCTURE---PAYOUT POLICY AND OWNERSHIP STAKES
Introduction
773
Section A
Payout Policy---Dividends, Repurchases, and Retained Earnings
774
1.
Cash Dividends and Dividend Policy
775
(A).
A Theory of Stock Valuation
775
(1).
Dividend Capitalization Model
775
(2).
The Retention Ratio
777
(B).
The Role of Dividend Policy
778
(1).
Traditional Dividend-Practice
779
Lintner, Distributions of Incomes of Corporations Among Dividends, Retained Earnings and Taxes
779
Note: Payout Practices
782
(2).
Dividends as a Financing Decision---The Dividend Puzzle
783
(a).
dividend policy under the irrelevance hypothesis
784
(b).
taxes, other imperfections, and the low payout hypothesis
786
(3).
Information Asymmetries, Signaling, and Pecking Order Theory
789
(4).
Management Dividend Policies and Agency Theory
791
(5).
The Trend toward Cash Retention
793
2.
Applicable Legal Standards
794
Berwald v. Mission Development Company
795
Note: Dividends and "Corporate Opportunity"
799
Wertheim Schroder & Co. Incorporated v. Avon Products, Inc.
800
Note: Special Dividends
806
Note: Disclosure on the Downside
807
Note: Dividends and Conflicts of Interest
808
3.
Stock Dividends
811
Lewellen, The Cost of Capital
811
Note: Explaining Stock Splits and Stock Dividends
813
Note: Stock Dividends As Information and the Regulation of Disclosure
814
New York Stock Exchange, Listed Company Manual
814
Note: Reverse Splits and Fractional Shares
816
4.
Restructuring by Dividend---Spin Offs and Tracking Stock
819
(A).
Spin Offs
820
(B).
Tracking Stock
821
5.
Repurchase of Outstanding Shares
823
(A).
The Economics of Share Repurchases
823
(1).
Repurchase Transactions
823
(2).
Theoretical Irrelevance Between Dividends and Repurchases
824
(3).
Agency Costs and Information Asymmetries
826
(4).
Taxation
827
Note: Repurchases---Volume and Stated Purpose
827
(B).
Repurchases---Fiduciary and Disclosure Obligations
831
(1).
The Scope of the Problem
831
(2).
Fiduciary Duties
833
Strassburger v. Earley
833
Note: Regulation of Repurchases
840
Note: Greenmail and Defensive Repurchases
841
(3).
Federal Securities Laws---Repurchase Tender Offers
843
Note: Federal Regulation of Repurchase Tender Offers
845
(4).
Federal Securities Laws---Open Market Repurchases
846
(a).
manipulation---Securities Exchange Act Section 9(a)(2)
847
(b).
safe harbor for potentially manipulative repurchases
849
Note: OMRs and Market Transparency
852
(5).
Dividends, Repurchases, and Corporate Governance
853
Bratton, The New Dividend Puzzle
853
Section B
Equity Ownership and the Value of the Firm
856
1.
Executive Stock Options
857
(A).
Stock Options and Incentive Alignment
858
Thomas and Martin, The Determinants of Shareholder Voting on Stock Option Plans
860
Note: After Exercise
863
AT & T Corp. v. Lillis
865
Note: Subsequent Proceedings
869
Note: Tax and Accounting
869
(B).
Policy Debates
870
(1).
Pay without Performance
870
(2).
The Defense
872
(3).
The Financial Crisis of 2008
875
Bratton and Wachter, The Case Against Shareholder Empowerment
875
Note: Executive Pay Under Dodd-Frank
880
(C).
Fiduciary Duties
881
Lewis v. Vogelstein
881
Note: Stock Options under Delaware Fiduciary Law
890
Ryan v. Gifford
893
Note: Spring-Loading
896
2.
Blockholding
898
(A).
Blockholding, Corporate Governance, and Shareholder Value
898
(1).
Blockholders as Monitors
898
(2).
Comparative Corporate Governance: Market Versus Blockholder Systems
900
(3).
Implications
901
(4).
Activist Hedge Funds
903
(B).
Regulation of Blockholders
905
(1).
Regulation as a Barrier to Blockholding
905
CSX Corporation v. The Children's Investment Fund Management (UK) LLP
906
CSX Corporation v. The Children's Investment Fund Management (UK) LLP
924
(2).
Fiduciary Regulation of Blockholders
936
(a).
noncontrolling blockholders
936
Rock, Controlling the Dark Side of Relational Investing
937
(b).
controlling blockholders
941
Levco Alternative Fund v. The Reader's Digest Association, Inc.
942
Note: The Tele-Communications-AT & T Merger
943
Note: Regulatory Barriers: The "One Share, One Vote" Controversy
947
Perlman v. Feldmann
948
Note: The Proposed Rule of Equal Opportunity
955
Note: Regulation of Control Sales After Feldmann
959
pt. V
MERGERS AND ACQUISITIONS
Introduction
965
Section A
The Move to Merge
967
Andrade, Mitchell, and Stafford, New Evidence and Perspectives on Mergers
967
Note: Mergers and Value Creation
971
Section B
Accounting and Taxes
979
1.
Accounting for Mergers---Purchase, Pooling, and Accounting for Goodwill
979
(A).
Purchase Versus Pooling
980
(B).
Revised Purchase Treatment
981
Financial Accounting Standards Board Summary of Statement No. 141, Business Combinations
981
Questions
984
Financial Accounting Standards Board Summary of Statement No. 142, Goodwill and Other Intangible Assets
984
Note: Testing Goodwill for Impairment
986
2.
Tax Treatment of Mergers
987
Carney, Mergers & Acquisitions: Cases and Materials (2d ed. 2007)
987
Section C
Formal Aspects of Merger
992
1.
The Mechanics of the Process
992
(A).
Classical Mergers
992
(1).
Stock for Stock Merger
992
(2).
Small Scale Merger
992
(3).
Classical Merger with Cash Consideration
993
(4).
Parent Subsidiary Mergers
993
(B).
Sale of Assets---An Alternative to the Classical Merger
994
Hollinger, Inc. v. Hollinger International, Inc.
995
(C).
Share Purchase and Share Exchange
1001
(D).
Triangular Mergers
1002
(E).
De Facto Mergers
1003
Farris v. Glen Alden Corp
1003
Note: A Pennsylvania Triangular Merger
1009
Hariton v. Arco Electronics, Inc.
1010
Note: Other Consequences of De Facto Merger
1015
Note: Successor Liability
1017
2.
Appraisal
1017
Thompson, Exit, Liquidity, and Majority Rule: Appraisal's Role in Corporate Law
1017
Note: Reform
1021
Section D
The Merger Agreement
1022
Volk, Leicher & Koloski, Negotiating Business Combination Agreements---The "Seller's" Point of View
1022
IBP, Inc. v. Tyson Foods, Inc.
1024
Hexion Specialty Chemicals, Inc. v. Huntsman Corp
1036
Note: MACs
1058
Section E
Fairness and Disclosure
1060
1.
Freeze---Outs and Buyouts: Fair Dealing, Fair Price, and the Appraisal Remedy
1062
(A).
Freeze---Outs
1062
(1).
Alternative Perspectives
1063
Brudney & Chirelstein, Fair Shares in Corporate Mergers and Takeovers
1063
Easterbrook and Fischel, Corporate Control Transactions
1067
(2).
Fiduciary Duties
1073
(a).
business purpose
1073
Coggins v. New England Patriots Football Club, Inc.
1074
Note: Business Purpose and Fairness
1079
(b).
fair dealing and fair price
1079
Weinberger v. UOP, Inc.
1079
Note: On Remand
1093
Note: Market Price as a Measure of the Value of Subsidiary Stock
1094
Note: Clarifying Weinberger
1095
Note: Kahn v. Lynch Communication Systems
1099
In re Siliconix Incorporated Shareholders Litigation
1103
Glassman v. Unocal Exploration Corp.
1111
In re Pure Resources, Inc., Shareholders Litigation
1114
Subramanian, Fixing Freezeouts
1122
Note: The Siliconix Cases
1127
(3).
Appraisal Exclusivity
1130
Note: Interrelations Between Fairness Claims and Appraisal Actions
1134
(B).
Management Buyouts
1137
In re Topps Co. Shareholders Litigation
1138
Note: Umpiring the Going Private Process
1147
Note: The Fairness Opinion
1151
2.
The Duty of Care
1152
Cede & Co. v. Technicolor, Inc.
1153
Note: The Remand in Cede v. Technicolor
1162
Note: The Duty of Care and Merger Negotiations
1164
Note: The Duty of Care and Asset Sales
1166
3.
Enhanced Scrutiny
1167
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.
1167
Note: The Unocal Background
1171
Note: Mills v. Macmillan
1173
Note: The Revlon Standard
1176
Paramount Communications Inc. v. QVC Network Inc.
1178
Note: The "Revlon" Duty After Paramount
1195
Omnicare, Inc. v. NCS Healthcare, Inc.
1197
Note: Lockups
1205
Note: Comments on the Delaware Cases
1210
Lyondell Chemical Company v. Ryan
1211
Note: Lear Corporation
1218
4.
Disclosure Duties
1219
(A).
State Fiduciary Law
1219
Emerald Partners v. Berlin
1220
Emerald Partners v. Berlin
1224
Note: Further Proceedings
1225
Note: The Status of the Fiduciary Duty to Disclose
1225
(B).
Federal Disclosure Rules: The Materiality of Soft Information
1231
Starkman v. Marathon Oil Co.
1233
Basic Incorporated v. Levinson
1243
Note: Misrepresentations, Silence, Mergers and Other Soft Information
1259
Note: Materiality and Context
1261
Note: Sources of Legal Obligations to Disclose on the Part of Non-Transactors
1262
APPENDICES
A.
Financial Contract Forms
1
Best Buy Indenture
11
Best Buy Supplemental Indenture
82
Note Purchase Agreement
109
Equinox Subordination Provisions
167
Preferred Stock Charter Provisions
181
TARP Preferred Stock
193
TARP Warrant
207
Masco Corp. Notes Conversion Provisions
224
National Venture Capital Association Term Sheet
239
National Venture Capital Association Voting Agreement
254
Agreement and Plan of Merger
281
B.
State Corporate Codes
1
Provisions of the Revised Model Business Corporation Act
5
Provisions of the Delaware and New York Statutes
33
C.
The Bankruptcy Code
1
D.
Provisions of the Federal Securities Laws and Rules Promulgated Thereunder
1
E.
Sections of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
1
F.
Tables
1
Index
1