Although we’re likely in the slow season for these sorts of moves now, I found two recent announcements on EDGAR. Dillard’s announced for Texas and Liberty Media announced a spin out for Liberty Live to Nevada.

Dillard’s DExit

Dillard’s recently announced that it would seek to depart Delaware for Texas. Its proxy notes that had began to consider options in response to “certain high-profile litigation outcomes in Delaware that involved companies with ‘controlling stockholders’ ​. . . such as the Company.” It also took into account recent state initiatives and local contacts.

Dillard’s launched a special committee to look at the issue and charged it “to consider whether the Company should remain incorporated in Delaware or reincorporate in either Nevada or Texas.” The special committee hired its own counsel, Vinson & Elkins LLP. Dillard’s was represented by Haynes and Boone, LLP. For Delaware law, the special committee consulted with Young Conaway Stargatt & Taylor, LLP.

Regrettably, I was not able to identify whether the special committee hired Nevada counsel. Vinson & Elkins has three different offices in Texas, but doesn’t have on in Nevada yet. It may be that they obtained advice from a Nevada firm, but the firm just didn’t make the proxy.

The Proxy explains that the Special Committee picked Texas because:

Texas’s statute-focused approach would likely foster more predictability than Delaware’s common-law approach, and that that predictability could be a competitive advantage for the Company in a time of business change in the Company’s industry. In addition, the Special Committee considered several non-legal factors in its deliberations, including but not limited to the Company’s relative geographical and business ties to Delaware, Nevada and Texas, recurring franchise tax liability and escheatment liabilities in Delaware, and the apparent increase in contingency fee-driven stockholder litigation in Delaware and the resulting increase in insurance premiums for director and officer insurance, particularly for controlled public companies like the Company. After discussion and consideration, the Special Committee members determined that reincorporating the Company in Texas was in the best interests of the Company and its stockholders[.]

It picked “Texas over Nevada in large part because of the Company’s significantly greater business operations in Texas.” Having a deep bench of Texas lawyers working the deal probably also qualifies as business ties to Texas. The ability to continue working with your preferred counsel seems a relevant factor. Clearly, I’m not buying enough menswear at my local Dillard’s to tip the balance here.

The Liberty Live Split Off

Liberty Media also announced that it would seek to split off Liberty Live as a Nevada corporation. The deal team includes O’Melveny & Myers LLP, Greenberg Traurig, LLP picked up “[c]ertain matters with respect to Nevada law,” and the “the U.S. federal income tax consequences of the Split-Off will be passed upon by Skadden, Arps, Slate, Meagher & Flom LLP.”

DEntry vs. DExit In Context

Although I’ve covered these two moves, I want to drop a note to soothe the Delaware bar and legislature. There were about 225 IPOs last year. I understand that about 80% of them picked Delaware as their state for incorporation. Even if the DExodus doubles, Delaware’s citizens aren’t likely to start paying sales taxes anytime soon.