Third party challenges are becoming larger stumbling blocks
to M&A in North America. Speakers Martine Turcotte and
Markus Koehnen brought the topic to life yesterday morning by
reflecting on a recent court battle in which they appeared
opposite one another.
Koehnen represented bondholders who challenged the proposed
sale of Bell Canada Enterprises (BCE), where Turcotte is the
chief legal officer, on the grounds the debt levels introduced
by the leveraged buyout would lose their bonds investment
The case was eventually decided in favour of BCE (you
dragged me through three levels of Canadian courts over nine
months, said Turcotte, shaking her finger at Koehnen),
but it raised questions over directors fiduciary
obligations to shareholders.
The ruling made clear that in M&A transactions the
boards overarching duty is still to act in
shareholders best interests, but that it must also act in
the best interest of the company as a whole.
This means that getting the best price is not always the
preeminent factor; and certainly not if the sale jeopardises
the companys future by overloading it with debt.
Co-chair Sánchez Solé joked that it was
necessary to seat the panellists apart and they played along by
shaking hands at the sessions start, but it didnt
stop them jibing at each other throughout the morning.