Shopping During Extended Store Hours: From No Shops to Go-Shops - The Development, Effectiveness, and Implications of Go-Shop Provisions in Change of Control Transactions
53 Pages Posted: 18 Oct 2007 Last revised: 9 Mar 2012
This is the first scholarly article to explore the recent prevalence of go-shop provisions in merger agreements. Unlike no shop provisions which prevent target companies from actively soliciting proposals post-signing, go-shops allow the active solicitation of superior proposals. In effect, go-shops move the pre-signing auction process to post-signing, when deal protection devices act to prevent third parties from bidding. This Article examines the development and effectiveness of go-shops and contends that since the Delaware Supreme Court's landmark holding in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. that directors have a duty to obtain the highest price for stockholders, Delaware courts have consistently failed to take affirmative steps to promote the maximization of stockholder value. Despite the seminal ruling in Revlon, the courts have sidestepped the question as to whether the sale methods utilized, including an exclusive reliance on no shops and go-shops, adequately maximizes stockholder value. In essence, this Article argues that the rise of the go-shop signals the death of the movement toward a more pure bidding process signaled by Revlon.
Keywords: go-shops, no shops, post-signing market checks, auctions, market canvass, Revlon
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