Shareholder objections to mergers have become commonplace, requiring many companies to settle lawsuits for millions of dollars. Last October, Del Monte Foods agreed to settle such litigation for $89 million. This April, Delphi Financial Group agreed to a $49 million settlement.
Litigation can be effective in protecting shareholder interests in some deals, but questioning every deal seems to impose excessive costs on the companies involved and their shareholders. Shareholder plaintiffs now challenge virtually every large merger. According to a study by Cornerstone Research and Robert M. Daines, companies that were sold for more than $100 million in 2010 and 2011 reported more than 1,500 lawsuits filed against them and the directors of the target companies.