The Risks of Sounding All-Too-Dignified
Big news this morning: the JP Morgan/Bear Stearns merger agreement is being revised. The motivation? Apparently, a drafting error.
This, from a story about it in today’s New York Times:
One sentence was “inadvertently included,” according to a person briefed on the talks, which requires JPMorgan to guarantee Bear’s trades even if shareholders voted down the deal. That provision could have could allow Bear’s shareholders to seek a higher bid while still forcing JPMorgan to honor its guarantee, these people said.
When the error was discovered, Mr. Dimon, who was described by one participant as “apoplectic,” began calling his lawyers at Wachtell, Lipton, Rosen & Katz to seek a way to have the sentence modified, these people said. Finger pointing over the mistakes in the contracts began as bankers blamed the lawyers and vice versa.
According to Kenneth Adams of Adams Drafting, the error isn’t a big surprise:
. . . dysfunctional prose in M&A contracts greatly increases the likelihood of a mistake going unnoticed.
