News Articles

In an article in the March/April edition of Deal Lawyer, Evelyn Cruz Sroufe, Scott Joachim and Brad Owens discuss lessons on competitive bidding in M&A transactions gleaned from NACCO Industries, Inc. v. Applica Incorporated. In NACCO, the Delaware Chancery Court refused to dismiss claims by NACCO, the unsuccessful bidder for Applica: (a) against Applica for breach of a merger agreement and (b) against a hedge fund buyer for common law fraud based on misstatements in its Section 13(d) filings. NACCO alleged that Applica management improperly favored a financial bidder over a strategic bidder in a competitive bidding war for Applica, that Applica management leaked confidential information to the competing hedge fund bidder, and that the competing bidder knowingly misstated its intention, in Section 13(d) filings reporting its accumulation of Applica shares, to amass a substantial stake in Applica at the pre-merger announcement price in order to achieve an insurmountable leg up in a bidding contest with NACCO. The article provides practical guidance both for boards of directors and officers of target companies and for competing bidders.