For BCE buyers, this U.S. signal is loud and clearI think the deal will finally go throught.!
That means that Teachers' lead lawyers at Goodmans LLP may soon be staring into the legal abyss and advising whether it makes sense to follow the lead of Bain and Thomas H. Lee and drop a $35-billion legal bomb on the banks. They may have little choice. If the banks resist closing and the BCE deal falls apart, Teachers and its partners could be on the hook for a $1-billion break fee that must be paid to the telecom company if the deal craters.
The problem for Teachers is that there are no Texas juries and no legal legends such as Mr. Jamail in Canada. There is, however, one high-stakes takeover lawsuit on Canada's deal history books that should give the pension fund some comfort.
British conglomerate Allied-Lyons PLC turned Canada's clubby business community on its ear in 1986 when it sued the Reichmann family for $9-billion in damages for resisting a promised deal. Allied-Lyons alleged the Reichmanns had improperly directed its newly acquired subsidiary Hiram Walker Resources Ltd. to renege on an earlier deal to sell its liquor business to Allied-Lyons.
"Enough is enough," Allied-Lyons chairman Sir Derrick Holden-Brown harrumphed during a Toronto press conference after it launched the lawsuit. Faced with a monster lawsuit, the Reichmanns rushed backed to the table and agreed within a month to sell control of Hiram Walker-Gooderham & Worts to Allied-Lyons.
Explaining the about-face, former Reichmann executive Marshall Cohen offered an observation in 1986 that bankers to Clear Channel and BCE would do well to revisit.
"Lawsuits are not fun and you never know how they will come out," he said.
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