Justia Mergers & Acquisitions Opinion Summaries

The Company, a developmental biopharmaceutical company, which has researched and developed a drug called NORTHERA, filed a class action alleging breaches of fiduciary duty against defendants in connection with the sale of Chelsea to Lundbeck through a tender offer and short-form merger (the Transaction). Plaintiffs contend that the Board acted in bad faith by instructing its financial advisors to ignore one set of projections in opining on the fairness of the Transaction, and by choosing to disregard a second set of projections before recommending the Transaction to Chelsea’s stockholders. The court granted defendants' motion to dismiss for failure to state a claim under Court of Chancery Rule 12(b)(6). The Board, after deliberation and in consideration of the sale of the Company, instructed its advisors not to consider projections that its assets would increase in value, years in the future, on speculation that the FDA would approve one of its products for currently-prohibited uses, or would remove a competing drug from the market altogether. Both sets of projections involved contingencies over which the Company had no control, and which might never come to pass. Such actions do not, on their face, plead a conceivable breach of the Directors loyalty-based duty to act in good faith. No other grounds conceivably leading to a finding of bad faith are pled. Accordingly, the court affirmed the judgment. View "In re Chelsea Therapeutics Int'l Ltd. Stockholders Litig." on Justia Law

Dell Inc. completed a merger that gave rise to appraisal rights. Fourteen appraisal petitioners were mutual funds sponsored by T. Rowe Price & Associates, Inc. (T. Rowe) or institutions that relied on T. Rowe to direct the voting of their shares (collectively, Petitioners). Petitioners held their shares through a custodial bank, which was a participant member in a trust company, which held Petitioners’ shares in the name of Cede & Co., which, for purposes of Delaware law, was the holder of record. Cede was constrained to vote Petitioners’ shares as T. Rowe directed and fulfilled its obligation through a chain of authorizations. Although T. Rowe opposed the merger, its voting system generated instructions to vote Petitioners’ shares in favor of it. Ultimately, Cede voted Petitioners’ shares in favor of the merger. Petitioners sought appraisal in favor of the merger. The Court of Chancery held (1) because the holder of record did not dissent as to the shares for which Petitioners sought appraisal, the dissenter requirement was not met of these shares; and (2) therefore, Petitioners’ shares did not qualify for appraisal, and Petitioners remained entitled to the merger consideration without an award of interest. View "In re Appraisal of Dell Inc." on Justia Law

Google Inc. and On2 Technologies, Inc. entered into a merger agreement in 2009. Thereafter, Plaintiff brought a class action on behalf of himself and other similarly situated On2 shareholders, alleging that On2’s board of directors had breached its fiduciary duty to its shareholders. Plaintiffs subsequently agreed with One2 and its directors to settle all claims with respect to the merger. After a hearing, Supreme Court found the settlement to be fair and in the best interest of the class members but refused to approve the settlement because it did not afford out-of-state class members of the opportunity to opt out, thereby prohibiting class members from pursuing any individual claims that are separate and apart from the class settlement. The Appellate Division affirmed. The Court of Appeals affirmed, holding that the lower courts properly refused to approve the proposed settlement because the settlement would deprive out-of-state class members of a cognizable property interest. View "Jiannaras v. Alfant" on Justia Law

In 2012, Defendant Kenneth Cole proposed a going-private merger of Kenneth Cole Productions, Inc. that was subject to approval by both a special committee of independent directors and a majority of the minority shareholders. Several shareholders, including Plaintiff, commenced separate class actions alleging breach of fiduciary duty by Cole and the directors. Although the shareholder vote occurred after an amended complaint was filed, 99.8 percent of the minority shareholders voted in favor of the merger. In the amended complaint, Plaintiff sought a judgment declaring that Cole and the directors had breached the fiduciary duties they owed to the minority shareholders, an award of damages to the class, and a judgment enjoining the merger. Supreme Court granted Defendants’ motion to dismiss. The Court of Appeals affirmed, holding (1) in reviewing challenges to going-private mergers, New York courts should apply the business judgment rule as long as certain shareholder-protective conditions are present; (2) if those measures are not present, the entire fairness standard should be applied; and (3) applying that standard to this case, the courts below properly determined that Plaintiff’s allegations did not withstand Defendants’ motions to dismiss. View "In re Kenneth Cole Prods., Inc." on Justia Law

In 2010, El Paso Corporation (“El Paso Parent”) sold member interests in three limited liability companies to El Paso Pipeline Partners, LP (“El Paso MLP”). At the time of the sale, El Paso Parent controlled El Paso MLP through its ownership of El Paso Pipeline GP Company, LLC, the sole general partner of El Paso MLP (“El Paso GP”). In 2015, the Court of Chancery issued a post-trial decision concluding that El Paso GP breached the limited partnership agreement governing El Paso MLP by causing El Paso MLP to buy the member interests (the “Fall Dropdown”). In 2012, Plaintiff brought this action challenging the Fall Droptown. While the litigation was pending, Kinder Morgan, Inc., acquired El Paso Parent and therefore indirectly owned and controlled El Paso GP. After trial, Kinder Morgan, El Paso Parent, El Paso MLP, and El Paso GP consummated a merger that ended El Paso MLP’s separate existence as a publicly traded entity. El Paso GP moved to dismiss this litigation, arguing that because Plaintiff styled his claim as derivative the closing of the merger meant that this case must be dismissed. The Court of Chancery denied El Paso GP’s motion to dismiss, holding that the merger did not extinguish Plaintiff’s standing to pursue the claim, and therefore, this Court can implement the liability award. View "In re El Paso Pipeline Partners, L.P. Derivative Litig." on Justia Law

Plaintiff obtained a $23 million judgment in New York against a New Jersey corporation ("Corporation") with its principal place of business in Massachusetts. Plaintiff sought to secure payment on that judgment by bringing suit in the District of Massachusetts against the Corporation’s president and its corporate parents, alleging that Defendants had looted BI of more than $18 million in assets in order to render it judgment-proof. Plaintiff later learned that one of BI’s corporate parents planned to merge with an Austrian subsidiary, which would place the company’s assets out of Plaintiff’s reach. The district court issued a temporary restraining order, later converted into a preliminary injunction, barring the merger. Defendant unsuccessfully moved to vacate the injunction and then appealed. While the appeal was pending, Defendants effected the merger. The district court issued civil contempt sanctions on Defendant for violating the court’s preliminary injunction order. The First Circuit affirmed, holding that the district court (1) did not exceed the bounds of its authority when it imposed the civil contempt sanctions; and (2) did not err when it declined to vacate the underlying preliminary injunction. View "AngioDynamics, Inc. v. Biolitec AG" on Justia Law

After David H. Murdock, the CEO and controlling stockholder of Dole Food Company, Inc., acquired all the shares of Dole common stock that he did not already own, Petitioners pursued their statutory right to an appraisal of their shares of Dole common stock. During discovery, Dole sought information about any valuations of Dole common stock that Petitioners prepared, reviewed, or considered when buying to selling Dole common stock or when seeking appraisal. Petitioners objected to the document requests. Dole subsequently served notices of deposition for each Petitioner pursuant to Court of Chancery Rule 30(b)(6) and identified the valuations as a topic of questioning. During the depositions, Petitioners’ counsel instructed the Rule 30(b)(6) witnesses not to testify about the valuations on the basis of relevance. Dole moved to compel production of the valuation-related information and for supplemental Rule 30(b)(6) depositions. The Court of Chancery granted the motion, holding that, under the circumstances, Petitioners’ failure to provide the discovery was not substantially justified. View "In re Appraisal of Dole Food Co., Inc." on Justia Law

In 2004, KKR & Co. LP (KKR) acquired KKR Financial Holdings LLC (KFN) in a stock-for-stock merger. Plaintiffs, stockholders of KFN, challenged the merger by filing a class action complaint, asserting breach of fiduciary duty claims against the members of the KFN board and KKR. The Court of Chancery dismissed the action for failure to state a claim for relief, holding (1) Plaintiffs’ fiduciary duty claim against KKR premised on the theory that KKR was a controlling stockholder of KFN failed, as KKR did not control the board of KFN when it approved the merger; and (2) Plaintiffs’ fiduciary duty claim against the directors of KFN failed because the board’s approval of the merger was subject to business judgment review. View "In re KKR Fin. Holdings LLC Shareholder Litig." on Justia Law

A class of stockholders of Rural/Metro Corporation (Rural) filed a class action against RBC Capital Markets, LLC (RBC) for aiding and abetting breaches of fiduciary duty by the board of directors of Rural in relation to a merger between Rural and Warburg Pincus, LLC. The post-trial decision held RBC liable to Plaintiffs but did not fix an amount of damages suffered by the class. This opinion quantified the amount of damages for which RBC was liable, setting the amount of RBC’s liability to the class at $75,798,550, which represented eighty-three percent of the total damages. The court also awarded pre- and post-judgment interest at the legal rate from June 30, 2011, until the date of payment. View "In re Rural/Metro Corp. Stockholders Litig." on Justia Law

First Citizens BancShares, Inc. (FC North), a bank holding company incorporated in Delaware and headquartered in Raleigh, North Carolina, adopted by forum selection bylaw (the “Forum Selection Bylaw”) the same day it announced it had entered into a merger agreement to acquire First Citizens Bancorporation, Inc. The Forum Selection Bylaw selected as the forum the federal or state courts of North Carolina instead of the state or federal courts of Delaware. The City of Providence filed complaints challenging as invalid the Forum Selection Bylaw and asserting various claims against the FC North board of directors concerning the proposed merger. The Court of Chancery granted Defendants’ motions to dismiss both complaints for failure to state a claim, holding (1) the Forum Selection Bylaw is facially valid; and (2) it is not unreasonable, unjust, or inequitable to enforce the Forum Selection Bylaw in this case. View "City of Providence v. First Citizens Bancshares, Inc." on Justia Law