Report: Most M&A Litigation Settlements Fail to Net Money Recovery for Shareholders

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April 15 --Out of the settled class and other suits filed in response to mergers and acquisitions deals in 2013, only 2 percent produced monetary returns for shareholders, according to a new report by Cornerstone Research.  

The report, “Settlements of Shareholder Litigation Involving Mergers and Acquisitions--Review of 2013 M&A Litigation,” is the second part of a two-part series analyzing litigation challenging M&A deals valued over $100 million.

Attorneys' Fees Down

According to the second report, released April 15, monetary settlements in litigation related to M&A deals were “rarer in 2013 than in prior years.”

Additionally, the average plaintiff attorneys' fees in 2013 dropped to $1.1 million from $1.4 million 2011 and 2012.

Further, average plaintiff attorneys' fees in “disclosure-only settlements” dropped from $513,000 in 2012 to $500,000 in 2013.

The second report also found that in 2013, the Delaware Chancery Court reduced the fees requested by an average of 20 percent, compared to a 10 percent reduction in other courts.

Further, the percentage of Delaware-incorporated target companies settling in the Delaware Chancery Court decreased in 2013--with the Chancery Court being the “approving court” in 41 percent of such settlements in 2013, compared to more than 50 percent in 2012 and 2011.

The first report, published by Cornerstone in March, found that shareholders challenged more than 94 percent of M&A deals valued over $100 million in 2013, compared to 90 percent in 2010 and 93 percent in 2011 and 2012 (15 CLASS 394, 4/11/14). Among other findings, the first report found that there were 612 M&A suits filed in 2013, 62 percent of which, were multijurisdictional.

Both reports were authored by Cornerstone Research Principal Olga Koumrian.


The newest report is at http://www.cornerstone.com/getattachment/7bd80347-124b-4b69-add5-575e33c3f61b/Settlements-of-Shareholder-Litigation-Involving-Me.aspx.