Boston, MA – (NYSEPOST) – 04/03/2014 – In 1 of the last bench rulings before he become the Chief justice of Delaware Supreme Court- recently, Chancellor Leo E. Strine, Jr refused to approve the “disclosure-only” settlement that was related to the merger of Medicis Pharmaceutical Corp (NYSE:MRX) with Valeant Pharmaceuticals. It is very unusual for the Delaware courts to reject any settlements related to M&A litigation. A large percentage of these are generally based on the supplemental disclosures and they do not involve a raise in the merger consideration/ any other changes to terms of a merger agreement.
However, in Medicis Pharmaceutical Corp (NYSE:MRX), Chancellor Strine refused approval of this settlement since he believed that the supplemental disclosures didn’t support release of the claims that were being given by the stockholder-class. This settlement involved the $2.6B acquisition of Medicis Pharmaceutical Corp (NYSE:MRX), by Valeant Pharmaceuticals International. Upon announcement of this merger, certain putative class-action lawsuits had been filed in Delaware and Arizona.
After Medicis Pharmaceutical Corp (NYSE:MRX) filed the company’s proxy statement before the stockholders meeting, it had entered into the “disclosure-only” settlement with these plaintiffs. The supplemental-disclosures included this information relates to this merger. Medicis Pharmaceutical Corp (NYSE:MRX)’s management’s internal “probability-adjusted”-projections, had been more optimistic than internal projections that were included in their proxy statement but were not shared with Medicis Pharmaceutical Corp (NYSE:MRX)’s primary financial advisor for the purposes of valuation of analysis & fairness opinion.
There were some standstill agreements with some other potential buyers that were terminated upon execution of the Valeant- Medicis Pharmaceutical Corp (NYSE:MRX) merger agreement. Also, Medicis had engaged another financial advisor in connection with the separate transaction that was discussed in its proxy statement. There was also the matter of an explanation in relation to the emphasis that had been placed by Medicis Pharmaceutical Corp (NYSE:MRX)’s primary financial advisor on some valuation multiples.