module 11 discussion

.docx

School

Florida State University *

*We aren’t endorsed by this school

Course

MH 0230

Subject

Law

Date

Jan 9, 2024

Type

docx

Pages

2

Uploaded by monikameow

1. Roxanne should not push for High-Tech’s board of directors to accept the offer from Consolidator without delay because first of all, the offer itself is not binding. There is a possibility that Consolidator could go back and their word and cancel the deal. This would leave HiTech in a difficult position because one of the conditions in the acquisition is for HighTech to not ask other possible acquirers if they would also be interested. HiTech’s board of directors has a fiduciary responsibility to the stockholders, meaning they must act in the best interest of the shareholder and not management. So, before approving or even consideration any offer from Consolidator, the board should take the essential time to evaluate it and determine that it is in the shareholders' best interests. In the Van Gorkom case, “among other things, the board was criticized for not determining what the intrinsic value of the company was: a. For not seeking to obtain the best price for shareholders b. For not taking enough time to review the proposed transaction carefully, and c. For not seeking out expert advice (in this case, the opinion of an investment banker),” (PowerPoint Lecture Module 11). So, in this current situation Roxanne has only consulted with the CFO of HiTech, similarly to Van Gorkem, and is calling for an urgent meeting to sign an agreement without taking the time to get the opinion of an investment banker or anyone else on the board of directors. This is not something that should be rushed in any way, it should be an informed process. 2. Roxanne should not be comfortable in describing the $35 offered to as a fabulous acquisition price because she has not taken the time to have any expert advice or research on the price, as well as, HighTech hasn’t had an opportunity to reach out to other potential acquirors. Subsequent case law to Van Gorkom now requires companies to (1) undertake sufficient pre-announcement inquiry to identify other prospective acquirors who may be willing to pay more or (2) provide for a post-announcement market check that would not discourage higher bidders from coming forward,” (PowerPoint Lecture Module 11). I t is important to be warry in describing the offer as a "fabulous" price, as it may give Consolidator more power or leverage in the negotiations. 3. I do not think that HiTech should deal with Consolidator on an exclusive basis at this point without further deliberation, research, time and evaluation by the board of directors regarding other potential acquirors and also research and obtaining approval by experts on the value of the price per share. Like I said earlier if HighTech deals with Consolidator on an exclusive basis, since the offer from Consolidator is not binding, they can potentially back out leaving HighTech stuck. 4. Roxanne should push for a "friendly" merger with Consolidator. A “friendly" merger is going to be more cost effective than a hostile tender over. Also, a "friendly" merger will most likely lead to a higher price per share for the shareholders of HiTech. I believe that this is because the shareholders of HiTech will be more likely to approve a "friendly" merger than a hostile tender offer. Also shareholders of HiTech will typically receive a premium on their shares in a "friendly" merger, in contrast to a hostile tender offer, the shareholders of HiTech could not receive a premium on their shares, or its possible they
could receive a lower price per share than they would have received in a "friendly" merger.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help