When a board of directors considers a transaction in which some of the directors have a conflict of interest, it frequently creates a special committee of independent directors to evaluate the proposed transaction. Courts have encouraged the creation of these committees by applying a more protective standard of judicial review for “conflict” transactions that are approved by a special committee. However, courts have cautioned that only a truly independent and properly functioning committee would provide this benefit.
Because “conflict” transactions cut to the heart of directors’ legal duties and liabilities, special committees require experienced legal counsel. We regularly advise boards of directors on the need for, and creation of, special committees, and we regularly represent special committees once they are created.
We draw upon the skills of several of the firm’s departments, especially the Corporate & Financial Services and Litigation Departments. Our corporate lawyers assist special committees in analyzing and negotiating proposed transactions, advising such committees on their fiduciary duties and other legal issues relating to proposed transactions, and work to ensure that courts will view them as properly functioning committees. Our litigators work closely with our corporate lawyers to protect the independent directors and, if necessary, to defend them in any adversarial proceedings arising out of the matter.
Our work for special committees covers a broad array of matters, including: “going-private” transactions by controlling shareholders; issuances of stock to, and commercial transactions with, directors, officers and controlling shareholders; and efforts to explore strategic alternatives where insiders may be expected to present one of the alternatives.
Experience
Selected transactions include:
- The Special Committee of the Board of Directors of Xerox Holdings Corporation in the $542 million repurchase of shares from Carl C. Icahn and his affiliates.
- The Special Committee of the Board of Directors of Blockcap, Inc. in connection with Blockcap’s acquisition by Core Scientific Holding Co.
- The Special Committee of the Board of Directors of EMC Insurance Group Inc. in connection with Employers Mutual Casualty Company’s $356 million acquisition of all of the remaining shares of EMCI
- The Special Committee of the Board of Directors of AmTrust Financial Services, Inc. in its sale to Stone Point Capital, the CEO and the Karfunkel Family
- BMO Capital Markets, as financial advisor to the Special Committee of the Board of Directors of American Realty Capital – Retail Centers of America, Inc. (RCA) in connection with RCA’s agreement to merge with American Finance Trust, Inc. (AFIN) in an approximately $1.4 billion deal creating a retail-focused REIT
- The Special Committee of the Board of Directors of National Interstate Corporation in evaluating a proposal from a controlling shareholder
- The Special Committee of the Board of Directors for Arbor Realty Trust in connection with Arbor Realty Trust’s acquisition of Arbor Commercial Mortgage’s agency platform
- The Special Committee of the Board of Directors of Eurasia Drilling Company Limited (EDC) on the terms of a take-private transaction by management and certain core shareholders which valued EDC at approximately US$1.7 billion
- BMO Capital Markets, financial advisor to the Special Committee of the Board of Directors of Ashford, in connection with Ashford’s combination with Remington
- The Special Committee of the Board of Directors of WuXi PharmaTech Inc. in its $3.3 billion management-led leveraged buyout, one of the largest going private transactions of a Chinese-based, U.S. listed company
- BofA Merrill Lynch as financial advisor to the Special Committee of the Board of Directors of Pike Corporation in the sale of the company to Court Square Capital Partners in partnership with J.Eric Pike
- The Special Committee of the Board of Directors of Springleaf Holdings, Inc. in connection with the company’s sale of its interests in approximately $7.2 billion of non-core real estate assets and related servicing
- Arbor Realty Trust Special Committee in connection with a possible transaction
- The Special Committee of the Board of Directors of Israel-based Taro Pharmaceutical Industries Ltd. in connection with the proposed buyout bid by India-based Sun Pharmaceutical Industries Ltd.
- The Special Committee of M&F Worldwide Corp. in connection with its $483 million merger agreement with MacAndrews & Forbes Holdings Inc.
- Special Committee of the Board of Directors of Cablevision Systems Corporation in connection with its evaluation of strategic alternatives, including an evaluation and establishment of policy with respect to regular quarterly dividends or stock buybacks and exploration of spin-off of one or more businesses and other potential strategies
- Special Committee of the Board of Directors of Mediacom Communications Corporation in connection with its agreement to repurchase 30 percent of its outstanding shares from Shivers Investments, LLC
- Special Committee of the Board of Directors of Smith & Wollensky Restaurant Group Inc. in connection with sale to Patina Restaurant Group, LLC ($95 Million)
- Special Committee of outside directors of Amerivest Properties, Inc. in connection with possible sale of the company
- Special Committee of the Board of Directors of Universal American Financial Corp. in connection with a management buyout proposal ($1.06 Billion)
- Special Committee of the Board of Directors of Cablevision Systems Corporation in connection with proposed going private transaction by members of the controlling Dolan family
- Special Committee of the Board of Directors of Cablevision Systems Corporation in connection with proposed acquisition of VOOM satellite business by members of the controlling Dolan family
- The Special Committee of the Board of Time Warner Telecom Inc. in connection with various matters relating to Time Warner Telecom's largest controlling shareholders
- The Special Committee of Grubb & Ellis Realty Advisors, Inc., in connection with the proposed purchase of certain commercial real estate properties from its affiliate, Grubb & Ellis Company
- The Special Committee of the Board of Directors of Imperial Parking Corporation in connection with its exploration of strategic alternatives and ultimate sale to a party unrelated to its 31% stockholder. ($47 Million)
- Special Committee of the Board of Directors of Quintiles Transnational Corp. in connection with buyout proposal by Dr. Dennis Gillings, Chairman and 6% stockholder ($1.7 Billion)
- Special Committee of the Board of Directors of International Specialty Products in connection with going private proposal by parent, controlled by Sam Heyman, to acquire the approximately 19% interest held by the public ($130 Million)
- Intercompany Evaluation Committee of Global Crossing in connection with lending transactions between Global Crossing and its public subsidiary, Asia Global Crossing
- Special Committee of the Board of Directors of Bluelight.com in connection with going private proposal by parent, Kmart, to acquire the approximately 19% interest held by the public
- Intercompany Evaluation Committee of the Board of Trustees of Crescent Real Estate Equities Trust in restructuring transactions with its publicly-held affiliate, Crescent Operating, Inc., and with certain officers and directors
- Special Committee of the Board of Amkor Technology in connection with purchase of semiconductor fabrication plants in Korea from Korean company in which the family of Amkor’s Chairman and principal stockholder had substantial economic interests and management positions
- VERITAS Software Company in management buyout of Seagate Technology, Inc. (included representation of the Board of Directors of VERITAS as an affiliate of Seagate in 13e-3 transaction and in discussions with Seagate Special Committee)
- Management buyout groups in going private transactions of Knoll, Inc. and Western Beef, Inc., including in connection with establishment of and negotiation with Special Committees of those Boards
- MidAmerican Energy Holding Company in acquisition from the public of the minority interest in HomeServices.com
- MidAmerican Energy Services Holding Company in connection with buyout of company by management and Berkshire Hathaway
- Special Committee of the Board of Directors of Hartford Life, Inc. in connection with going private proposal by parent The Hartford Financial Services Group Inc. to acquire the approximately 18.5% interest held by the public ($1.1 billion)
- Warburg Pincus in connection with its going-private transaction involving The Cobalt Group
- The Special Committee of the Board of Directors of Sbarro, Inc. in connection with the acquisition of Sbarro by the Sbarro family ($390 Million)
- Juniper Financial in connection with a proposed financing from its controlling stockholders ($50 Million)
- Railworks in connection with a proposed management-led leveraged buyout
- USA Detergents in connection with a joint venture with Church & Dwight Co.
- The financial advisor (Peter J. Solomon) to Special Committee on its acquisition of Babbage’s Etc. LLC
- The Special Committee of the Board of Directors of The Manhattan Life Insurance Company in connection with its going private transaction*
*Matter handled by Willkie partner at his previous firm.