Vanderbilt Law Review

First Page



An attractive company that makes known its desire to find a merger partner or announces an agreement in principle to merge with another corporation is likely to receive multiple inquiries or multiple offers from acquisition-minded corporations. This Note examines various problems and duties confronting a publicly held company' that receives multiple merger inquiries and offers. The starting point for this analysis is one court's directive that a proxy statement soliciting shareholder approval of a merger recommended by management must disclose competing merger offers from third parties if such offers are "definitive" and "may" be more advantageous to the shareholders than the recommended merger. The attempts to define this disclosure requirement and to determine how management decides which offers merit disclosure raise related issues: the extent of management's duty to investigate each merger inquiry to a definitive point, the nature of the disclosure required,the relevance of the timing of the competing offer in relation to the progress toward shareholder voting on the earlier proposal, and the obligations arising from the typical agreement requiring the board of directors to use best efforts to obtain shareholder approval of a particular merger. From both a policy and a practical standpoint,the overriding problem is to determine the proper roles of the directors and shareholders in making the decision to merge.