A Continued Role for Strategic Litigation in Takeovers?

The Toll/Patrick takeover bid shows that court litigation may still have a strategic role to play in takeovers. This is despite the intention of the CLERP reforms in 2000 which were meant to banish court litigation to the dustbin of takeovers history on the basis that litigation creates delays and uncertainty which are not conducive to the efficient conduct of takeover bids.

The Toll/Patrick Experience

In the Toll/Patrick takeover, there was various litigation:

• brought by Patrick to break up the Pacific National joint venture

• against Toll’s nominees on the Pacific National board claiming they had breached their directors’ duties

• brought by Toll to overturn the ACCC’s decision that a successful takeover would lead to a substantial lessening of competition in breach of the mergers rule