When companies engage in multiple merger discussions, it can be unclear what they should and shouldn’t disclose to investors regarding those talks. A recent appellate decision touched on those issues in a complicated case.
On May 11, the 10th Circuit Court of Appeals ruled that an energy company with a pending merger didn’t have a duty to disclose the discussions it was having meanwhile with a competitor on a separate merger, which would have threatened the pending deal. The 10th Circuit therefore affirmed the district court’s dismissal of a lawsuit that claimed the company misled investors by omission. While the case, Employees’ Retirement System of The State Of Rhode Island v. The Williams Companies, is mostly isolated to its set of facts, it is a reminder to public companies and their counsel of the litigation that can spring from a web of M&A discussions.