November 7, 2022


Case Studies

On September 1, 2005, Novartis A.G. announced a proposed transaction to purchase all the outstanding shares of Chiron Corporation it did not already own for $40.00 per share. (At the time of the announcement, Novartis already owned about 42% of Chiron’s outstanding common stock.)

In response, Chiron’s shareholders filed suits in California and Delaware challenging the offer. Barrack, Rodos & Bacine was appointed Lead Counsel for the plaintiffs in the California action, and the plaintiffs in both forums subsequently agreed to jointly prosecute the claims in California.

Extensive motion practice ensued and continued without interruption until settlement. On October 30, 2005, Chiron announced that it had entered into an agreement to effectuate a proposed merger, subject to the approval of Chiron’s independent shareholders for $45.00 per share. Plaintiffs’ counsel, led by Barrack, Rodos & Bacine, asserted that the increased offer by Novartis was still not adequate. Instead, Barrack, Rodos & Bacine demanded (i) that Novartis increase the price offered for Chiron shares; (ii) that Chiron obtain updated fairness opinions from its investment bankers; and (iii) that the proxy materials for the proposed transaction be improved by making additional disclosures to the Chiron shareholders.

As part of their aggressive efforts to vindicate the shareholders’ rights, Barrack, Rodos & Bacine asked the Court to schedule expedited preliminary injunction proceedings to seek to enjoin the merger transaction. In response to our arguments, the California court set a schedule for expedited preliminary injunction proceedings and rejected the motion of the Chiron Defendants’ motion to stay the proceedings.

After Chiron mailed a proxy for a special meeting of Chiron stockholders to vote on the proposed merger, Barrack, Rodos & Bacine filed an amended complaint charging defendants with breaches of fiduciary duty and making misleading disclosures in the proxy.

In preparation for the preliminary injunction, plaintiffs’ counsel, led by Barrack, Rodos & Bacine, conducted extensive, intense expedited discovery regarding the claims in the Complaint. This included the review of over 700,000 pages of documents in a matter of days in order to take or defend eleven fact and expert witnesses. Barrack, Rodos & Bacine then made an extensive factual submission, as well as filing further legal memoranda, seeking to enjoin the defendants from consummating the proposed merger. Working right up to the eve of the injunction hearing, we were able to negotiate a vastly improved agreement providing that Chiron’s shareholders would be paid $48.00 per share – which was $3 greater than the price Chiron’s management had already accepted and $8 greater than the initial offer. As a result of our efforts, Chiron’s shareholders received approximately $880 million more than Novartis had first proposed to pay to buy the company. Plaintiffs also secured the issuance of updated fairness opinions from Chiron’s investment bankers confirming that this new price to purchase Chiron’s shares was fair to the outside shareh.