Justia Mergers & Acquisitions Opinion Summaries

The Second Circuit vacated the district court's dismissal of plaintiff's complaint, based on forum non conveniens grounds, alleging claims for damages under federal and state law in connection with a ʺgoing private mergerʺ by which certain controlling defendants purchased American Depositary Shares (ADSs) from Dangdang's minority shareholders.The court held that the district court abused its discretion by failing to consider the forum selection clause contained in the relevant documents and its impact on the forum non conveniens analysis. The court rejected defendants' claim that plaintiffs waived their reliance on the forum selection clause by failing to raise the issue in the district court. The court also held that remand to the district court was necessary for the district court to consider the scope and enforceability of the forum selection clause. View "Fasano v. Li" on Justia Law

At issue in this dissenters’ rights case was the methods by which a trial court may determine the “fair value” of shares of a dissenting shareholder under Tennessee’s dissenters’ rights statutes, Tenn. Code Ann. 48-23-101, et seq.The Supreme Court overruled Blasingame v. American Materials, Inc., 654 S.W.2d 659 (Tenn. 1983), to the extent Blasingame implicitly mandates use of the Delaware Block method for determining the fair value of a dissenting shareholder’s stock and adopted the more open approach set forth in Weinberger v. UOP, Inc., 457 A.2d 701, 712-13 (Del. 1983), which departs from the Delaware Block method and permits fair value to be determined by using any technique or method that is generally acceptable in the financial community and admissible in court.Defendant minority shareholders were forced out of a corporation as a result of a merger. The corporation sought a determination as to the fair value of the minority shareholders’ stock. The trial court may have based its decision to discredit the testimony of the dissenting shareholders’ expert on the basis that Blasingame compelled use of the Delaware Block method to determine stock value. The Supreme Court remanded the case to the trial court to reconsider its valuation determination in light of this decision to partially overrule Blasingame. View "Athlon Sports Communications, Inc. v. Duggan" on Justia Law

At issue was the availability of appraisal rights under section 262 of the Delaware General Corporation Law.Section 262 affords stockholders of Delaware corporations a statutory remedy for appraisal of their shares under certain circumstances. The statute provides that appraisal rights shall be available only for the shares of stock of a “constituent corporation” in a merger or consolidation, and the process for determining a stockholder’s entitlement to appraisal contemplates that the stockholder will relinquish its shares in the merger of consolidation. In the instant case, Dr. Pepper Snapple Group, Inc. and Keurig Green Mountain, Inc. agreed to combine their businesses. Dr Pepper stated that Dr Pepper stockholders would not have appraisal rights under section 262 in connection with the proposed transaction. Two stockholder plaintiffs filed this action challenging that decision. The Court of Chancery held (1) the term “constituent corporation” as used in section 262 means an entity actually being merged or combined and not the parent of such an entity, and therefore, Dr Pepper’s stockholders do not have a statutory right to appraisal under section 262(b) because Dr Pepper is not a constituent corporation; and (2) Dr Pepper stockholders are not entitled to appraisal because they are retaining their shares in connection with the proposed transaction. View "City of North Miami Beach General Employees’ Retirement Plan v. Dr Pepper Snapple Group, Inc." on Justia Law

Mass. Gen. Laws ch. 156C, 60(b) provides the exclusive remedy for dissenting members of a limited liability company that has voted to merge, so long as the merger is undertaken in accordance with Mass. Gen. Laws ch. 156C, 59-63.In this case, a member of a limited liability company (LLC) conducted a merger in breach of his fiduciary and contractual duties. The judge granted equitable relief. At issue was whether distribution of dissenting members’ interest in the LLC is the exclusive remedy of minority shareholders who objected to the merger and whether the judge erred in declining to rescind the merger. The Supreme Court held (1) where, as here, a merger was not conducted in compliance with Mass. Gen. Laws ch. 156C, 63, the remedy provided by Mass. Gen. Laws ch. 156C, 60(b) providing for distribution of dissenting members’ interest is not exclusive; (2) the trial judge did not abuse his discretion in fashioning an equitable remedy in this case, as rescission of the merger would be complicated and inequitable; and (3) the portion of the trial judge’s decision that increased Plaintiff’s interest in the merged LLC to five percent is remanded because there was no basis in the record for that figure. View "Allison v. Eriksson" on Justia Law

Mass. Gen. Laws ch. 156C, 60(b) provides the exclusive remedy for dissenting members of a limited liability company that has voted to merge, so long as the merger is undertaken in accordance with Mass. Gen. Laws ch. 156C, 59-63.In this case, a member of a limited liability company (LLC) conducted a merger in breach of his fiduciary and contractual duties. The judge granted equitable relief. At issue was whether distribution of dissenting members’ interest in the LLC is the exclusive remedy of minority shareholders who objected to the merger and whether the judge erred in declining to rescind the merger. The Supreme Court held (1) where, as here, a merger was not conducted in compliance with Mass. Gen. Laws ch. 156C, 63, the remedy provided by Mass. Gen. Laws ch. 156C, 60(b) providing for distribution of dissenting members’ interest is not exclusive; (2) the trial judge did not abuse his discretion in fashioning an equitable remedy in this case, as rescission of the merger would be complicated and inequitable; and (3) the portion of the trial judge’s decision that increased Plaintiff’s interest in the merged LLC to five percent is remanded because there was no basis in the record for that figure. View "Allison v. Eriksson" on Justia Law

The Supreme Court affirmed the ruling of the circuit court denying Petitioners’ motion for leave to file a second amended complaint and dismissing their pending amended complaint, holding that the circuit court did not err in concluding that, under controlling Delaware law, Petitioners lacked standing to pursue a derivative shareholder suit.Petitioners filed a derivative lawsuit alleging claims of breach of fiduciary duties against Massey Energy Company’s Board of Directors and corporate officers. Subsequently, faced with a potential merger between Massey and Alpha Natural Resources, Inc., Petitioners filed a motion for leave to file a second amended complaint seeking to add individual and class action claims on behalf of the shareholders themselves. After the merger, Respondents moved oi dismiss Petitioners’ amended complaint and motion for leave to file the proposed second amended complaint, arguing that, after the merger, Petitioners were no longer Massey shareholders and lacked standing to assert derivative claims, and that amending their complaint a second time would be futile. The circuit court dismissed the amended complaint and denied the motion for leave to file the second amended complaint. The Supreme Court affirmed, holding that there was no error in the circuit court’s order because Petitioners were no longer Massey shareholders. View "California State Teachers' Retirement System v. Blankenship" on Justia Law

In this action arising out of a reclassification of the shares of NRG Yield, Inc. (“Yield”), a stockholder alleged that members of the Yield board breached their fiduciary duties by approving the reclassification and that NRG Energy, Inc. (“NRG”), which managed Yield’s daily affairs, breached its fiduciary duty by causing Yield to undertake the reclassification. The Court of Chancery dismissed the complaint for failure to state a claim for relief, holding (1) the reclassification was a conflicted transaction subject to entire fairness review; (2) the analytical framework articulated in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), applied to the reclassification; and (3) that framework was satisfied in this case from the face of the pleadings. View "IRA Trust FBO Bobbie Ahmed v. Crane" on Justia Law

Plaintiff filed a verified complaint against West to inspect its books and records under Section 220 of the Delaware General Corporation Law (DGCL). The Delaware Court of Chancery held in this post-trial opinion that plaintiff has demonstrated, by a preponderance of the evidence, a credible basis from which the court can infer that wrongdoing related to the merger may have occurred. The court rejected West's argument that the Corwin doctrine would stand as an impediment to an otherwise properly supported demand for inspection under Section 220. The court explained that any contrary finding would invite defendants improperly to draw the court into adjudicating merits defenses to potential underlying claims in order to defeat otherwise properly supported Section 220 demands. Furthermore, the court should not prematurely adjudicate a Corwin defense when to do so might deprive a putative stockholder plaintiff of the ability to use Section 220 as a means to enhance the quality of his pleading. Therefore, the court ordered a judgment entered in favor of plaintiff and directed West to allow inspection of the books and records at issue. View "Lavin v. West Corp." on Justia Law

The Court of Chancery dismissed a case brought by Plaintiff, a stockholder in The Fresh Market, alleging a breach of fiduciary duty by the Market’s directors and that Brett Berry, a former CEO and former vice chairman of the company’s board, aided and abetted that breach of fiduciary duty. The Market was acquired by an entity controlled by a private equity firm, and the founder of the Market rolled his equity ownership in the Market into the acquirer as part of the deal. The court held that because there was no coercion applied to the fully informed vote of the common stockholders ratifying the decision of the directors that the merger was in the stockholders’ best interest and the vote was adequately informed so as to serve as a ratification of the board’s decision, the matter must be dismissed. View "Morrison v. Berry" on Justia Law

The Supreme Court affirmed in part and reversed and remanded in part the court of appeals’ reversal of the district court’s grant of Company’s motion to dismiss Shareholder’s class action challenge to a merger transaction. The district court concluded (1) some claims were derivative, rather than direct, and were therefore subject to the demand and pleading requirements of Minn. R. Civ. P. 23.09; and (2) Shareholder failed to comply with Rule 23.09. The court of appeals reversed with the exception of one claim, concluding that most of the claims were direct, and therefore, Rule 23.09 did not apply. The Supreme Court clarified the test for distinguishing between direct and derivative claims and held that the district court did not err in dismissing some claims but erred in dismissing others. View "In re Medtronic, Inc. Shareholder Litigation" on Justia Law