Recent Practical Effects of “Just Saying No”


In the past few months, we have seen an increasing number of hostile or unsolicited M&A bids where boards of directors of target companies have resisted bidders’ advances. Traditionally, the board-friendly Delaware approach, epitomized by its “just say no” jurisprudence, has made hostile bids both risky and uncertain. Nevertheless, hostile and unsolicited mergers and acquisitions so far this year have been at their highest levels worldwide since 2007, according to Thomson Reuters data. Including withdrawn deals like Pfizer’s US$118 billion bid for AstraZeneca, unsolicited deals comprised approximately 20 percent of worldwide M&A so far this year, which is the highest percentage in eight years.

Responsibilities of the board of directors of a company incorporated in Delaware and most other US jurisdictions are measured primarily by the business judgment rule, a fundamental corporate principle that essentially defers to the decision-making process of the directors themselves and that, absent special circumstances such as personal gain, presumes the propriety of the directors’ actions. The business judgment rule generally applies to the board’s consideration of an unsolicited or hostile offer, including the decision to engage in discussions with bidders, negotiate terms and, ultimately, accept or reject the unsolicited or hostile offer. The board of directors, as a general rule, has no fiduciary duty to negotiate |with third parties, or to sell the corporation, simply because a premium price is offered, if the board makes a good faith, informed decision that its actions are in the corporation’s best interests...

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Written by:


White & Case LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.