UNITED STATES DISTRICT COURT 

DISTRICT OF NEW JERSEY 

IN RE: 

MEDCO/EXPRESS SCRIPTS MERGER 

LITIGATION Civil Action No. 

11-4211(DMC)(MF)

________________________________________________________________

Professor Guhan Subramanian’s Supplemental Declaration in Support of 

Plaintiff’s Motion for an Award of Attorneys’ Fees 

________________________________________________________________

James E. Cecchi 

Lindsey H. Taylor 

Donald A. Ecklund 

Zachary S. Bower 

CARELLA, BYRNE, CECCHI 

 OLSTEIN, BRODY & AGNELLO 

5 Becker Farm Road 

Roseland, New Jersey 07068 

(973) 994-1700 

Jay W. Eisenhofer 

Michael J. Barry 

Caitlin Moyna 

GRANT & EISENHOFER P.A. 

123 Justison Street

Wilmington, Delaware 19801 

(302) 622-7000 

Gerald Silk 

Mark Lebovitch 

Brett M. Middleton 

Jeremy Friedman 

BERNSTEIN LITOWITZ BERGER 

 & GROSSMANN LLP 

1285 Avenue of the Americas 

New York, NY 10019 

(212) 554-1400 

Attorneys for Plaintiff

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I, Guhan Subramanian, submit this supplemental declaration in the above 

captioned matter and in response to the Declaration of Kevin Dages submitted in 

connection with Defendants’ opposition to Plainitff’s Motion (“Dages”). I 

previously submitted to the Court the Declaration of Guhan Subramanian dated 

March 2, 2012 (“Declaration”). 

1. Mr. Dages incorrectly asserts that the range of acceptable attorneys’ 

fees in my Declaration is between $12.54 million and $96.03 million. Dages ¶ 

7(i). That is incorrect. Exhibit 3 of my Declaration provides the correct range, 

with fee estimates ranging from $15.3 million to $36.9 million. Thus, Mr. Dages’ 

conclusion that the range I calculated is too broad to be of any guidance to the 

Court is based on a range I did not recommend, and is simply wrong. 

2. Mr. Dages further asserts that I relied exclusively on the Delaware 

Chancery Court’s approach in In re Compellent Technologies, Inc. Shareholder 

Litigation, C.A. No. 6084, 2011 WL 6382523 (Del. Ch. Dec. 9, 2011) 

(“Compellent”). Dages ¶ 10. That is also incorrect. My Declaration relied on a 

methodology of simply summing up the various quantifiable benefits achieved by 

the settlement, an approach that was endorsed and applied in Compellent and 

more recently in In re Celera Corporation Shareholder Litigation, C.A. No. 

6304, 2012 WL 1020471 (Del. Ch. March 23, 2012).

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3. Mr. Dages asserts that the chance of a competing bid was "near-zero" 

because "no other potential buyer expressed an interest in acquiring Medco." 

Dages ¶ 14. This hindsight is contradicted by the fact that the Medco board 

identified at least two plausible counterparties, CVS Caremark and United 

Healthcare, but declined to contact either of them during the pre-signing phase. 

Corporate boards of directors generally do not consider – or disclose that they 

considered – potential counterparties that are not plausible. Mr. Dages’ conclusion 

of a “near-zero” probability of a competing bidder also ignores a host of qualitative 

factors I reference in my Declaration, including the fact that Medco lost its United 

Healthcare contract. See Declaration ¶¶ 35-39. 

4. Assuming that Mr. Dages’s “near-zero” probability that a topping 

bidder would emerge could be quantified as 2%, this would support a fee in the 

range of $6.1 million to $8.3 million.1

5. Mr. Dages’s proffered empirical evidence is based on a 

misunderstanding of how deal protection devices function. Mr. Dages believes 

that the probability that a topping bidder would emerge in response to a loosening 

of a particular deal protection will somehow vary depending on whether the 

modification of the deal protection was achieved through litigation or some other 

 

1

 Mr. Dages does not challenge the expected mark-up range I used in my Declaration, from 10%-

14%.

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means. Dages ¶¶ 16-18. Theoretical and empirical research supports the notion 

that deal protection devices deter the emergence of competing bidders, and that 

the tempering of those devices increases the likelihood of competing bidders. 

Mr. Dages provides no cogent reason why it would matter to a topping bidder 

that the modified deal protections were achieved through litigation, nor could he, 

because the method used to achieve the modifications would not impact the 

result, namely, a lower barrier for competing bidders to enter the negotiations. 

6. Even accepting arguendo Mr. Dages’ flawed starting point for his 

analysis, his conclusion that “in only 1 of the 607 announced transactions since 

2003 with a Transaction Value in excess of $1 billion was a reduction in 

termination fees followed by the emergence of a competing bidder,” Dages ¶ 17, 

is highly misleading because only 24 of the 607 transactions involved a reduction 

in termination fees, id. n.37. Therefore, Mr. Dages’ conclusion is clearly 

erroneous and should be disregarded. 

7. In addition, Mr. Dages reports that a topping bidder did emerge in 1 

of the 24 transactions that involved a reduction of a termination fee. Dages ¶ 17 

and n.37. This equates to a 4.2% probability that a topping bidder will emerge 

when there is a reduction in termination fees. Applying this figure yields a range 

of attorneys’ fees of $12.9 million - $17.5 million. 

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8. In summary, it is my opinion that the Dages Declaration not only 

fails to undermine the conclusions I reach in my Declaration, but in some 

instances, actually supports those conclusions. 

By: 

 GUHAN SUBRAMANIAN 

Dated: April 9, 2012 

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