The Cleveland, Ohio based mining company, Cliffs Natural Resources, has rescheduled its special shareholder meeting, called to approve its proposed merger with Alpha Natural Resources.
The company was known as Cleveland-Cliffs until last month, and it had planned to hold the special meeting on November 21.
Now they have set a new date -- almost a month later. The meeting will take place December 19, with a "record date" of November 19.
Ohio statutes require a supermajority of shareholders to approve of such a merger, so opponents can block this deal with 35%. Such opposition does exist, as those who've been following the matter along with me know.
My reading of the delay is that the management at Cliffs knows they don't yet have the votes to push this through. But they think they can persuade some of the dissidents to vote their way given the extra month they've now given themselves.
Alpha is unhappy. It has brought a lawsuit in Delaware seeking to obtain an order invalidating this re-scheduling. What gives there? Does Alpha want to push the deal through quickly? or do they want to kill the deal by holding the vote befoe any of the dissidents can be persuaded to change their views? (Seller's remorse?)
Showing posts with label Ohio corporate law. Show all posts
Showing posts with label Ohio corporate law. Show all posts
Wednesday, November 5, 2008
Monday, October 6, 2008
Cleveland-Cliffs Inc.
Cleveland-Cliffs, the Ohio-based operator of iron ore mines, announced Friday that its shareholders have voted decisively against a proposal by hedge fund Harbinger Capital -- a proposal that might have allowed Harbinger to block Cleveland-Cliffs' planned acquisitionof Alpha Natural Resources.
Harbinger requested approval from the other shareholders to increase its stake in the company from 15.57% to 33%. Ohio law requires such approval when one party passes the 20% threshold.
In a statement Friday, Cliffs' chairman Joseph Carrabba said that he was pleased that the non-Harbinger shareholders "voted to retain their right to provide meaningful input on the future strategic decisions of the Company."
The management victory is a time to reflect on a point sometimes neglected in popularizing accounts of the US based M&A world. It isn't all Delaware. Delaware obviously is of great importance, but there are major corporations that have chosen to charter themselves in other states, due in large part to the differences in the pertinent laws.
Ohio's statute in particular -- aimed overtly at protecting Ohio-based companies from unfriendly takeover -- made news back in 2003, when Northrop Grumman managed to overcome such obstacles and acquire the local company TRW. Ohio's response? -- to raise to bar again, by adding an anti-arb provision.
I would imagine that Ohio's statutes have been challenged in federal court at some point on the theory that they burden interstate commerce, thereby violating the "dormant" exercise of Congress' constitutional power in that area.
Commerce in the sense of the "dormant commerce clause doctrine" has generally meant something more tangible -- the act of moving objects into one state from another for sale there. But what about the handicapping of out-of-state investors in the way Ohio seems to have in mind? My suspicion (unconfirmed by any actual research into the question) is that challenges have been launched on this point, and they have failed.
If any of my alert readers know of litigation on this constitutional point, I'd be happy to hear of it. Thanks.
Harbinger requested approval from the other shareholders to increase its stake in the company from 15.57% to 33%. Ohio law requires such approval when one party passes the 20% threshold.
In a statement Friday, Cliffs' chairman Joseph Carrabba said that he was pleased that the non-Harbinger shareholders "voted to retain their right to provide meaningful input on the future strategic decisions of the Company."
The management victory is a time to reflect on a point sometimes neglected in popularizing accounts of the US based M&A world. It isn't all Delaware. Delaware obviously is of great importance, but there are major corporations that have chosen to charter themselves in other states, due in large part to the differences in the pertinent laws.
Ohio's statute in particular -- aimed overtly at protecting Ohio-based companies from unfriendly takeover -- made news back in 2003, when Northrop Grumman managed to overcome such obstacles and acquire the local company TRW. Ohio's response? -- to raise to bar again, by adding an anti-arb provision.
I would imagine that Ohio's statutes have been challenged in federal court at some point on the theory that they burden interstate commerce, thereby violating the "dormant" exercise of Congress' constitutional power in that area.
Commerce in the sense of the "dormant commerce clause doctrine" has generally meant something more tangible -- the act of moving objects into one state from another for sale there. But what about the handicapping of out-of-state investors in the way Ohio seems to have in mind? My suspicion (unconfirmed by any actual research into the question) is that challenges have been launched on this point, and they have failed.
If any of my alert readers know of litigation on this constitutional point, I'd be happy to hear of it. Thanks.
Sunday, August 24, 2008
Harbinger & Cleveland-Cliffs
Cleveland-Cliffs Inc., an iron ore and processing company, is opposing a hedge fund's efforts to increase its stake.
Under the law of the state of incorporation, Ohio, the hedge fund, Harbinger Capital, needs shareholder approval to acquire more than 20% of the company. Harbinger now has about 15.57% thereof, and says it wants to own more than the 20% threshold, but less than one third.
The reason for its interest in upping its stake? Harbinger believes that Cleveland-Cliffs is making a counter-productive strategic decision in buying Alpha Natural Resources, and it wants to be in a position to oppose that purchase effectively. The ALpha deal will require a two-thirds vote of shareholders in the acquiring company for approval, so by buying up to 1/3, Harbinger will make this very easy for itself.
Shareholders of record as of Sept. 2 will be able to vote at the meeting on Oct. 3, Cleveland-Cliffs said.
In its proxy materials asking its shareholders to vote against Harbinger's request, Cleveland-Cliffs unsurprisingly reiterated its view of the merits of the Alpha deal. It also said that the issue goes beyond that: Harbinger would acquire a veto on any other analogous transactions.
Under the law of the state of incorporation, Ohio, the hedge fund, Harbinger Capital, needs shareholder approval to acquire more than 20% of the company. Harbinger now has about 15.57% thereof, and says it wants to own more than the 20% threshold, but less than one third.
The reason for its interest in upping its stake? Harbinger believes that Cleveland-Cliffs is making a counter-productive strategic decision in buying Alpha Natural Resources, and it wants to be in a position to oppose that purchase effectively. The ALpha deal will require a two-thirds vote of shareholders in the acquiring company for approval, so by buying up to 1/3, Harbinger will make this very easy for itself.
Shareholders of record as of Sept. 2 will be able to vote at the meeting on Oct. 3, Cleveland-Cliffs said.
In its proxy materials asking its shareholders to vote against Harbinger's request, Cleveland-Cliffs unsurprisingly reiterated its view of the merits of the Alpha deal. It also said that the issue goes beyond that: Harbinger would acquire a veto on any other analogous transactions.
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