LAW 633 Lecture Notes - Lecture 20: Leveraged Buyout, Tender Offer, Control Premium
31 May 2020
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Mergers, surviving corporation gets all the assets and liabilities, both companies" stockholders must approve, must explain how price was derived or breach of duty of care/process. Van gorkom: former shareholders cease to own, leveraged buyout (lbo, managers borrow against the value of the company and will pay the bank back as it gains value. Managers receive a controlling share using outside capital. Faith, authority, waste) rule: facts: disney needed a new president because past died in helicopter crash and ceo/chair had heart surgery. They hired ovitz because he was very reputable and successful at creative artists. Ovitz had a successful business at creative artists, so he wanted downside protection for the loss of income by new job. Employment agreement gave ovitz 5 year contract with stock options and no-fault termination payment of remaining salary, . 5 million a year, immediate vesting of some options, Van gorkom: process: the process was deliberative and had supporting documentation.
