Medtronic announced plans to acquire Covidien for $42.9 billion earlier this month, which a proposed stockholder class action alleges breaches of fiduciary duty. Richard Taxman, the plaintiff, is seeking to halt the acquisition.
The transactions was designed to “preclude a fair sales process for the company and lock out competing bidders,” including a no-solicitation clause, according to the lawsuit reported in Mass Device. The agreement also requires Covidien notify Medtronic before providing confidential company information to competing bidders, even if the Board determines the competing bid is “reasonably likely to lead to a superior proposal.”
At the same time, Covidien is required to give Medtronic information about competing proposals and a “matching rights” provision.
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