Fight! Transatlantic Gets Sued By Bidder

August 15, 2011

Validus, which bid on Transatlantic before Warren Buffett waded into the process, sued Transatlantic for breach of fiduciary duty in connection with its negotiations with other bidders.

Does a target have a fiduciary duty to a bidder?  No.  But Validus sued as a stockholder based on the shares it acquired in anticipation of a transaction (shares are cheaper before a bid is announced).

It’s a tough argument, however, because Buffett’s bid for Transatlantic is much higher than Validus’ bid, making it an odd case to bring for the stockholders’ benefit.

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