About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

LOG IN
LOG IN


34 Law & Pol'y Int'l Bus. 627 (2002-2003)
Merger Breakup Fees: A Critical Challenge to Anglo-American Corporate Law

handle is hein.journals/geojintl34 and id is 637 raw text is: MERGER BREAKUP FEES: A CRITICAL CHALLENGE TO ANGLO-AMERICAN CORPORATE LAW HEATH PRICE TARBERT* TABLE OF CONTENTS I. INTRODUCTION .................................... 628 II. THE RISE OF DEAL PROTECTION DEVICES IN FRIENDLY MERGERS AND ACQUISITIONS .......................... 629 A. Reflections on the Role of the Target Company's Board ..... 630 B. Reasons for Protecting the Deal ..................... 631 C. Popular Approaches to Protecting the Deal. ............. 634 D. The Breakup Fee as a Deal Protection Device ............ 638 1. The Anatomy of a Breakup Fee ............... 639 2. How Breakup Fees Differ from Other Deal Protections ............................... 641 3. The International Breakup Fee Controversy ..... 642 III. THE CONFLICTING STANDARDS FOR BREAKUP FEES IN THE U NITED STATES .................................... 643 A. Delaware's Transactional M&A Methodology ......... 643 1. The Unocal Principle ....................... 646 2. The Revlon Duty ........................... 648 3. The Entire Fairness Review ................. 650 4. The Business Judgment Rule ................. 650 B. The M&A Business Judgment Rule .................. 651 C. The Voter Coercion Standard ....................... 656 D. The Bidder Preclusion Standard .................... 661 E. The Magic Number Standard ..................... 666 F. The Liquidated Damages Approach .................. 670 * Associate, Sullivan & Cromwell LLP. This article represents the views of the author only and not necessarily those of his law firm. B.S., Mount Saint Mary's College; J.D., University of Pennsylvania; M.St., Oxford University; S.J.D., University of Pennsylvania. The author would like to extend his gratitude to those who helped make this article possible. Chief among them is Professor Dan Prentice of Oxford University, whose continual encouragement and advice enabled him to focus on the most important challenges posed by breakup fees in the U.K. A special thanks is also owed to Professor Paul Davies of the London School of Economics and Professor Ben Pettet of University College London who reviewed the work and provided sound comments for improvement. The author is also indebted to the outstanding work performed by the editorial staff of Law & Policy in International Business.