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LEGAL REPORT/M&A today's proxy battles T of Litigation, the media, and proxy advisory services can all play a big role in the shareholders' war on a company. BY DONALEE MOULTON he art of war has changed for shareholders and the companies they're look- ing to bring down or take over. The weapon of choice for many: proxy fights. "Three years ago this practice area really start- ed taking off. People thought it would be the new mergers and acquisitions. Time has shown it's taken its place with M&A," says Walied Soliman, a partner with Norton Rose OR LLP in Toronto. "It's useful because it's cheaper than buying [shares]," notes Jeff Barnes, a partner in Borden Ladner Gervais LLP's Toronto office. "You may be able to change the direction of the company without having to buy stock, [and] there has been less cash available over the last few years." Indeed, the shifting legal landscape reflects the shifting economic landscape. "The whole concept of shareholder activism leading to proxy battles is now an established feature," says Pat Koval, a partner with Torys LLP in Toronto. "For companies, if they dismissed the idea of proxy battles in the past, they shouldn't now. Activism is here to stay." Success on either side depends on developing a winning strategy, and many elements of the battle plan have changed. There are, for example, full and partial takeover bids. "It's a mixed strategy. That's fairly new in the mar- ket," says Barnes. "A lot of the people doing that are hedge funds. They may be looking for a relatively quick change in the business." Also new in the arsenal: the scorched- earth approach. "In this regard, a dissi- dent says whatever they want to put pressure on a management team. As a public company, a management team and board are limited in what they www.CANADIAN Lawyermag.com JUNE 2011 39 Jeff szuc Ne w w eapons