Holland & Knight LLP
MONTH-IN-BRIEF (Apr 2024)
Merger Objection Lawsuits Are a “Racket” Benefiting No One but Plaintiffs’ Lawyers
By Yelena Dunaevsky, Esq., SVP & Partner, Transactional Insurance
In an April 15, 2024, decision, the United States Court of Appeals for the Seventh Circuit took up the question of “mootness fees,” which companies in the middle of a merger or acquisition typically pay to make the plaintiffs’ lawyers who are threatening that merger or acquisition go away. The case came about when Akorn, Inc., asked its shareholders to approve a $4 billion merger with Fresenius Kabi AG. Six shareholders sued Akorn, claiming insufficient disclosure in the 226-page proxy statement. Akorn adjusted the disclosure, all the time stating that the supplemental disclosure demanded by plaintiffs was not at all additive to the original proxy statement. However, it paid $322,500 in plaintiffs’ attorney fees to make the lawsuit go away and to allow the merger to proceed as planned with the support of 99.9 percent of Akorn’s shareholders.