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Fixed Fee Fairness Opinions - A One-Year Retrospective on InterOil


Lawyer Jamie van Diepen
Area Corporate and Commercial, Mergers and Acquisitions


Approximately one year ago, InterOil Corporation (“InterOil”) completed its highly publicized transaction with Exxon Mobil Corporation (“ExxonMobil”). In May of 2016, at the conclusion of an eight-month strategic review process, InterOil initially announced it reached an agreement to be acquired by Oil Search Limited (“Oil Search”). In June of 2016, InterOil received an unsolicited superior proposal from the largest oil and gas company in the world, ExxonMobil. The acquisition of InterOil was seemingly set to close in the fall of 2016 with the consummation of the superior proposal. However, InterOil’s former CEO, having lost a proxy contest to regain control of InterOil in June of 2016, challenged the transaction in court. In approving both the original transaction with Oil Search and the superior proposal from ExxonMobil, the board of InterOil received a fairness opinion from a financial advisor whose compensation was substantially contingent upon the transaction’s completion (i.e., the financial advisor was entitled to receive a “success fee”). In three subsequent decisions, the Supreme Court of Yukon and the Yukon Court of Appeal (which consists only of judges from the British Columbia Court of Appeal) disparaged the utility of fairness opinions from financial advisors entitled to a success fee.

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