A recent Cornerstone Research report reviewed ‘Shareholder Litigation Involving Acquisitions of Public Companies’ during 2015 and the first half of 2016. As the report indicates. the percentage of M&A deals valued over $100 million and challenged by shareholder litigation dropped below 90 percent in 2015 (84 percent) and in the first half of 2016 (64 percent) for the first time since 2009. The main reason for the decline is likely the rejection of a disclosure-only settlement by the Delaware Chancery Court in the Trulia case in January 2016.
It is possible that other jurisdictions will continue to allow disclosure-only settlements, so cases are being litigated more often in other jurisdictions, but it is unclear if this trend will continue. Also, most of the M&A litigation in 2015 and the first half of 2016 was filed in only one jurisdiction.
In addition, from 2009 to 2014, between 74 and 78 percent of M&A litigation was resolved before the deal closed (through settlement, withdrawal or dismissal), but in 2015 and the first half of 2016 those figures decreased to 57 percent and 56 percent, respectively.
It will be interesting to see how these trends develop.