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Thursday, June 19, 2008

Unethical Dealings by a Board Member?

Trustee Leon Black is in the news.

P.S. Here's more.

Posted by A.S. Erickson at 8:06 PM

Comments

Do you even understand what the story's about, or do you just blindly link to anything that includes negative words in teh same paragraph as the names of non-petition trustees?

Here's a bit more detail on the story:
http://www.bloomberg.com/apps/news?pid=20601087&sid=awgzX3HhqXuU&refer=home

This one has links to Hexion's press release and the complaint it filed in court.

http://dealbook.blogs.nytimes.com/2008/06/18/hexion-sues-huntsman-to-end-merger/

And no, putting a question mark at the end of the post title isn't an excuse for posting in ignorance.

Posted by Anonymous Anonymous — June 19, 2008 8:29 PM  

The alleged impropriety consists of the filing of a lawsuit to enforce Hexion's interpretation of a contract. I thought you Review types were sympathetic to that sort of thing.

Posted by Anonymous Anonymous — June 19, 2008 8:32 PM  

It seems that you have nothing better to do than attack trustees (except for the petition ones).

This (walking away, not the initial agreement)appears to be a necessary business decision, caused by matters totally beyond the control of either party, and allowed by the negotiated terms. Who to blame? - try those responsible for the escalated oil price (if they can be found). Just don't use this as an excuse for another unjustified attack on Dartmouth's "establishment".

Posted by Anonymous Anonymous — June 19, 2008 8:41 PM  

A necessary business decision. Just like Haldeman and company changing the names of the funds in the dark of night, or maybe like Haldeman saying "all shareholders must get paid the retiremant savings they were defrauded!" Then under Haldeman's leadership, Putnam Investments spends millions and millions of dollars in legal fees fighting in court not to pay a dime back to the thousands of prospective students ripped off and stuck in the Putnam Ohio College Savings Plan. Hey, business is business. How the in the world do you think he got the ten million to build his ethics center. Ethics, na. Earned it, not a chance.
Business baby, business.

Posted by Anonymous Anonymous — June 19, 2008 10:12 PM  

Pretty poor show by Leon Black. This is not the kind of language that gets bandied around in business every day:

-- Huntsman, which is based in Salt Lake City and run from The Woodlands, Texas, ``will fight Apollo vigorously on all fronts,'' company founder and Chairman Jon M. Huntsman said today in an e-mailed statement.

-- ``Our business has been considerably damaged during the nearly yearlong period that Apollo should have used to get this transaction closed,'' he said. ``Apollo's recent action in filing this suit represents one of the most unethical contract breaches I have observed in 50 years of business.''

-- Black and founding partner Josh Harris ``should be disgraced,'' the chairman said.

Posted by Anonymous Anonymous — June 19, 2008 10:21 PM  

Right. People in charge of companies that get sued almost never say things like that they will fight the suit "on all fronts."

And they certainly almost never criticize the character or actions of the people suing them in those sorts of terms.

And if people do use those words, it's clearly a reflection on the target of those words and not on the speaker.

Maybe these words aren't "bandied around in business every day," but when billions of dollars are at stake and a buyer company sues for permission to walk away from a $10.6 billion merger agreement because the target company has had a precipitous drop in value, it's not surprising to find some hard feelings.

I wouldn't expect to hear those words from Dick's Sporting Goods if I tried to return a set of golf clubs, but in this context it's hardly surprising and those who jump to conclusions about the character of Leon Black betray their bias and ignorance... unless they have some additional facts to share.

Posted by Anonymous Anonymous — June 19, 2008 10:41 PM  

1. Observe the comments policy.

2. I have no idea if Black was behaving unethically, which is why I put a question mark at the end of the title. Huntsman certainly thinks so, but, beyond that, who knows?

Posted by Blogger A.S. Erickson — June 19, 2008 11:39 PM  

Private Equity Groups, particularly mega-funds such as Apollo, KKR, Blackstone, etc., back out of deals all the time. Signing a contact to acquire a company is often not a guarantee, as the contracts usually contain any number of "outs" for the acquirer, including target company performance, financing contingencies, and breaches of representations and warranties.

Sounds like Huntsman is just a bitter owner of a family-owned business who feels like he got screwed over and is having a knee-jerk reaction. Folks who do an M&A for a living take this type of event in stride. Apollo will probably have to pay a hefty breakup fee for a busted merger (usually defined as a set, and significant, percentage of the deal value), but it doesn't sound like they did anything unethical here.

Posted by Blogger Daniel F. Linsalata — June 20, 2008 12:08 AM  

He's right, getting screwed over by hired legal guns is common practice. Screwing people over is good for the bottom line. Its just business baby, just dirty, stinking business. Unless of course your just a poor sucker with zero recourse, and nobodys watching...well almost nobody...then I guess it hurts. Oh well.

Posted by Anonymous Anonymous — June 20, 2008 8:45 AM  

The question mark in the headline should have followed a question about whether Black's company (not Black himself) breached a contract.

Despite what the guy is quoted as saying about "disgrace," there is a difference between contractual duties, which are owed to a buyer/seller, and the ethical duties Black owes (generally to his own corporation). Some people are saying the company violated the former, not the latter. The lawsuit against the Dartmouth board said the former, not the latter.

Posted by Anonymous hoppin' mad — June 20, 2008 9:54 AM  

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