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Technology Stocks : Silicon Motion Inc. (SIMO) -- Ignore unavailable to you. Want to Upgrade?

To: Anonymous895 who wrote (2708)	8/15/2023 8:59:14 AM
From: Elroy	Read Replies (1) \| Respond to of 2977

While he does cite precedents, he is not (I think??) a lawyer. So it's hard to tell if he is spouting off an uneducated opinion, or instead is stating a consensus legal view. His comments about limited damages completely surprised the inteviewer, and as a result did not get any detailed scrutiny. I've read some articles that say the opposite, and also that say the case he cites does NOT lead to his conlcusion, so ..... I'm left with "this is an interesting topic, but we need real legal advice" to determine it's validity. Logic says his view is wrong. That's persuasive to me. These agreements are written to prevent exactly what MXL did. I doubt MXL has just outsmarted SIMO because MXL has better lawyers. He seems to think MXL can just not follow the contract, and there is no meaningful penalty because SIMO the company remains SIMO the company, there's no real damage, just some legal expenses, so there's no penalty. Hard to believe. Why have a contract at all? If the seller does not want to accept such a contract, then they should either not write No Third Party Beneficiaries, or they should specifically carve out that the shareholder expectation damages are an exception in cases of Willful and Material Breach. I'm sure SIMO's lawyers (Latham and Watkins) are aware of this topic. They were the lawyers in the Conedison Case! I would imagine they wrote the contract to ensure shareholder damages are part of material breach damages, but lets see. The No Third Party Beneficiaries clause is included (as I understand it) to prevent SIMO shareholders individually or in a class action from suing MXL for breach. Hard to believe SIMO the company would give up the same $$ value since it has been taken away the right to pursue remedy from the shareholders. It's just very hard to believe..... As for the committed Wells Fargo financing, it ended with the deal cancellation. My information indicates that MXL can raise $3 billion cash to buy SIMO, but the terms would be onerous, but it is feasible. So I differ with him on that opinion as well. It's an interesting topic, though, and would explain why MXL isn't trading as if it may go bankrupt in a SIMO favorable ruling in Singapore arbitration. I think damages will follow Cayman law, so it's not clear that the two cases he cites apply. I don't know if there is any Cayman case history of this sort, but surely some buyer has breached a purchase agreement in the Cayman Islands previously (??), and ... what happened then? Don't know, but I'm sure the lawyers are researching it now. I also doubt Singapore arbitration takes years. Why? I think this case is not at all complicated. MXL is going to allege lots of nonsense, and lose. I doubt it takes a year. If you believe the podcast speaker, and the damages are only $160m break up fee + lawyer's fees, it's obviously a quick and easy case. If you don't believe the podcast view is correct, and it's $160m break up fee and legal fees AND damages, then the only compex part is assessing damages. Again, it's complicated (how much shareholder value was lost by not executing the contract?), but not time consuming. I am curious how Singapore arbitration decides this question if it is not clear in Cayman's law? To what do they default to?

To: Anonymous895 who wrote (2708)	8/15/2023 8:13:18 PM
From: Elroy	Read Replies (1) \| Respond to of 2977

This is the article I referenced earlier about shareholder loss being the best measure of damages, but it's just a legal opinion article, which presumably holds less weight than precedent. clsbluesky.law.columbia.edu The article references a "coming paper", which can be downloaded by following the links and registering. The paper says...... the clearest way to understand the issue is not that a corporation is claiming for its shareholders’ loss. Rather, in the context of a breached M&A agreement, the corporation’s loss is best assessed by its shareholders’ loss, since the consideration payable most accurately represents the value and substance of the corporation’s bargain. Furthermore, there is no reliable means of assessing the loss (or gain) to other constituencies such as employees, consumers, etc. Recognizing that price most accurately represents the corporation’s loss does not hinder the target’s directors from distributing the damages in whatever manner and to whichever constituents they deem to be in the corporation’s best interests. This is also in line with Canadian directors’ fiduciary duties that allow for consideration of the interests of nonshareholder constituencies. Consolidated Edison has also been severely criticized by commentators... former Delaware Chief Justice Leo Strine once informally commented that he disagreed with Consolidated Edison’s general thrust. He observed that restrictive third-party beneficiary provisions in merger agreements were “designed to deal with the cacophony that could arise with individual shareholders trying to enforce a contractual right” rather than “to deprive the corporation of remedies pursued in good faith by the directors on behalf of the stockholders.”115 Strine also noted that he was open to conceptualizing that a merger contract was negotiated by the directors for the benefit of the stockholders and, in order to honor the parties’ expectations, allowing the board to collect monetary damages suffered by the stockholders on their behalf It is possible to uphold exclusionary provisions that limit shareholders’ rights and, at the same time, still use loss of consideration damages as a remedy given that the quantification of damages is separate from the questions of standing to bring an action and to whom damages will be paid. An award in the amount that corresponds to the shareholders’ loss of consideration can be paid to a target corporation that brings an action against a buyer in breach.119 This would still respect any exclusions limiting shareholders’ rights since recognizing that a corporation’s loss is best approximated by the shareholders’ loss is altogether different from allowing a corporation to recover for the shareholders’ loss itself. Indeed, if we accept that the shareholders’ loss of consideration is the best indicator for a target’s loss as well, “it is then possible to reconcile the fact that shareholders are not actual third-party beneficiaries to a merger agreement with basic principles of contract damages.”120 Moreover, it is consistent with contract damages principles to allow recovery of the shareholders’ expectancy damages as the company’s own expectation damages. Yeah, it sounds like he thinks the Con Edison case was poorly decided (ie, wrong). Interesting. Now i wonder what ability or inclination does Singapore arbitration have to rule on the topic, using Cayman law which perhaps has no precedent of this sort, and to what extent (if any) Singapore arbitration is bound by US and Canadian precedent. Interesting!