Davis Polk partner Phillip Mills discussed with Reuters the role of minority shareholder votes in deal negotiations and how controlling investors of companies may decide that the financial benefit of depriving minority shareholders of a deal veto outweighs the legal risks. The article notes that the shareholder vote can act as a corporate governance safeguard that reassures minority investors are getting a fair price, and protects companies’ stock market valuations from taking a hit on concerns a deal would undervalue them.

“(The shareholder vote) opens the door to an activist who can say, ‘I know you’re negotiating with the special committee, but now you’re going to negotiate with me, and I’m going to squeeze a second bite’,” Phillip explained.

“Endeavor’s $13 billion deal highlights push to sidestep minority shareholders,” Reuters (May 17, 2024) (subscription required) 

Copy link to share post