Report on 2012 Takeover Litigation

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Based on an annual report authored by two university professors, Takeover Litigation 2012, litigation in 2012 continued at the same pace it did in 2011.  University of Notre Dame Assistant Professor of Finance, Matthew D. Cain and Moritz College of Law Associate Professor of Law and Finance, Steven M. Davidoff collaborated on the report. 

Based on their research, 91.7 of the 2012 transactions experienced litigation at a rate almost identical to 2011’s 91.4 percent.  This figure confirms the increasing trend of takeover litigation which is now brought at approximately 2.5 times the rate that it was in 2005. 

The number of complaints that were brought per transaction in 2012 were 5.0, which is identical to the lawsuits brought per claim in 2011.  Both years, 2012 and 2011 had the same number of lawsuits and roughly the same number of law firms and is an increase of the 2005, 2.2 lawsuits per transaction rate. 

Multi-jurisdictional litigation also remained relatively the same in 2012 at 50.6 percent compared to the 53 percent in 2011.  This rate confirms what is being described as the biggest takeover litigation phenomena, which jumped from 8.3 percent in 2005 to half of all of 2012’s transactions. 

“Disclosure only” settlements in 2012 increased 87.5 percent compared to 79.5 percent in 2011.  Other types of settlements such as an amendment to the merger agreement to reduce the termination fee and increases in consideration paid in the takeover decreased to 12.5 percent in 2012 from 20.5 percent in 2011. 

Average attorneys’ fee awards decreased substantially in 2012 to $716 thousand from $1.43 million in 2011.  Over the past six years, this is the lowest average rate for attorneys’ fee awards.  Considering that these averages are driven by a few significant settlements these numbers are not surprising.  The median fees for 2012 were $595 thousand compared to $580 thousand in 2011. 

“Disclosure only” average attorneys’ fee awards in 2012 increased to $526 thousand from $517 thousand in 2011.  Other types of settlements such as amendments to the merger agreement to reduce the termination fee and an increase in consideration attorneys’ fee awards decreased to $1.529 million from $4.397 million in 2011. 

The 2012 litigation that could be filed in Delaware was 46.7 percent which is slight decrease from 52.8 percent in 2011.  Delaware settled 76.9 cases in 2012 compared to 61.5 percent in 2008. 

Similar to the decline in average attorneys’ fees nationwide, Delaware also awarded less average attorneys’ fees at $1.26 million in 2012 down from $2.205 million in 2011.  “Disclosure only” settlements in Delaware increased to 87.5 percent from 64.3 percent in 2011.


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