Indeed, Daniel Batista, an M&A lawyer with Fasken Martineau DuMoulin LLP in Toronto, says he expects more target companies to consider private placements as a defensive tactic, so long as boards can demonstrate the share sale has a business purpose other than thwarting the unwanted bid.
“I think the regulators have clearly signaled that they are hesitant to use their public interest power to stop a private placement in this sort of context because they are concerned that they will be fettering the discretion of directors to act in accordance with their business judgment,” he said.