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James I. Kaplan quoted in article "Judges Deal Blows to Shareholders Filing 'Nuisance' M&A Suits"

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American Banker

Below is an excerpt:

The Delaware Supreme Court, in a case involving the sale of jewelry retailer Zales to Signet Jewelers, ruled earlier this year that most fiduciary duty claims against a merger can be thrown out once shareholders approve the agreement. The case involved a claim that the directors of Zales should have commanded a better price.

The banking industry could benefit because lawyers will no longer be able to attack a deal's terms on the basis of board negligence, industry experts said.

"That kind of claim is gone," said James Kaplan, a lawyer at Quarles & Brady. "What remains are gross deficiencies in board procedures, which affected the information that shareholders got, and thus rendered the approval of the shareholders invalid."

Still, claims of poor disclosure have also been under pressure, industry experts said. Last year, Delaware judges, on at least four occasions, rejected settlements that only included added disclosure and attorneys' fees. Those rulings followed research that found no evidence that disclosure settlements influence how shareholders voted on a merger.

Originally published in American Banker, August 9, 2016


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