Anatomy of a Merger Litigation

04 April 2012
Dr. Marcia Kramer Mayer and Douglas J. Clark, Esq., Managing Partner, Wilson Sonsini Goodrich & Rosati

When a press release gives official notice that a public company is to be sold, a lawsuit objecting to the deal typically is soon filed. The lawsuit names as defendants the target company, its board of directors, and the purchaser. The operative theory is that the target is being sold for too little and that the directors breached their fiduciary duties by agreeing to the sale, with the insidious help of the purchaser. The lawsuit seeks to stop the transaction from proceeding on the terms announced. In this article, NERA Senior Vice President Dr. Marcia Kramer Mayer and Wilson Sonsini Goodrich & Rosati Managing Partner Douglas J. Clark, Esq., closely examine a particular litigated merger, Broadcom Corporation's purchase of NetLogic Microsystems, Inc., from start to finish. Because there was nothing exceptional or unique about the deal, the litigation that ensued, or the outcome of that litigation, the reader can draw his or her own conclusions as to whether this activity creates value for stockholders or advances the cause of corporate governance.

This article first appeared on on 6 February 2012, and is used here with the permission of Corporate Board Member and NYSE Euronext.