More lawyer shamelessness

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05/18/2010

I’ve written a couple times now about the trend of lawyers “investigating” deals made by public company boards.

It’s good to see that PeHub’s Dan Primack is with me on this and digging up new and different ways for lawyers to be shameless. From today’s PeHub email blast (to which you should subscribe, even if you don’t really care about the private equity markets, just because it’s so well written and interesting):

*** It’s become reflexive: Whenever a take-private buyout is announced, class-action law firms begin “investigating” whether the company’s board breached fiduciary duty to shareholders. Never mind if it was a competitive process that produced a 60% premium – suggest bad faith first and ask questions later.

But at least these vultures typically wait until the deal is actually announced. Not so with a law firm called Bower Piven, which yesterday announced that it has “commenced an investigation into potential breaches of fiduciary duty and other violations of state law by the Board of Directors of Pactiv Corp. in connection with the possible sale of Pactiv Corp. to Apollo Global Management LLC.”

Note the operative word is “possible.” Neither Apollo nor Pactiv have announced a transaction. All there has been is a WSJ article saying that Apollo has offered to buy the company – at a price higher than where Pactiv has traded for the past several years. And today there are reports that strategic players also are planning to make offers.

How on earth can you investigate a board’s breach of fiduciary duty when the board hasn’t decided to do anything yet?

I tried calling Bower Piven a few times yesterday, finally managing to reach Bower himself just shy of 5pm. He said he was running into a meeting, and would ring me back. He didn’t. Don’t really blame him. I wouldn’t want to explain such shameless behavior either…

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