The executive also said most energy traders expected that Dynegy would obtain a much lower merger price because Enron had little or no room to fight a renegotiation.
Consequently, Shell is forced to rely on cash more than its rivals do in making acquisitions -- a particularly tough hurdle at a time when merger price tags carry big premiums for higher oil prices, bankers said.
In the recent Dell decision, Judge Travis Laster (who is the same judge in the ExamWorks case) made it clear that if the sale process was run improperly, then the merger price should not be used to make an appraisal rights award.
The board, in a proxy statement filed with the Securities & Exchange Commission, declared the merger price fair.
But Dynegy says it had a right to back out, a right which Enron acknowledged by agreeing to renegotiate the merger price by half.
While merger transactions frequently spur stockholder lawsuits challenging the fairness of the merger price and terms, going-private transactions are viewed as particularly fertile ground by the plaintiff's class action bar.
The merger price, which works out to $11.50/share, is, coincidentally, $.50/share more than Jana Partners said they could expect to get for the company by 2009.
(For those issues that were acquired during the course of our study, we calculated their performance up to the day they were acquired, using the acquisition or merger price).
The merger price represents a 29% premium for the U.S. firm, as the deal terms value American General at $49.52 per share, compared to $38.25 where it closed March 9.
eBay and GSI subsequently settled the suit, with GSI Shareholders receiving GSI $0.33 a share (separate from the $29.25 per share payout), bringing the total acquisition and merger price to roughly $3 billion.
