Justia Mergers & Acquisitions Opinion Summaries

Petitioner and Ajmal Khan, principal of Verus Investment Holdings, purchased securities in a company to arbitrage a merger between that company and another company (the trade). Petitioner and Khal used Verus' account at Jefferies & Co. and Winton Capital Holding to complete the purchase. After the merger, Jefferies wired to Verus the original investment and profits attributable to the Winton funds. Verus wired the investment money to Winton and the profits to Doris Lindbergh, a friend of Petitioner. Tax authorities later informed Jefferies it owed withholding tax on the trade. Pursuant to an arbitration clause in an agreement between Jefferies and Verus, Jefferies commenced an arbitration against Verus for the unpaid taxes. Verus, in turn, asserted thirty-party arbitration claims against Petitioner, Lindbergh, and others for their share of the taxes. After a hearing, Supreme Court determined that nonsignatories Petitioner and Lindbergh could not be compelled to arbitrate. The Appellate Division reversed, concluding that Petitioner should be estopped from avoiding arbitration because he knowingly exploited and received direct benefits from the agreement between Jefferies and Verus. The Court of Appeals reversed, holding that Petitioner did not receive a direct benefit from the arbitration agreement and could not be compelled to arbitrate. View "Belzberg v. Verus Invs. Holdings Inc." on Justia Law

Plaintiff, an Iowa citizen with a home health care business, merged his business with other home health care providers to form Auxi, Inc., a Delaware corporation. After the merger, ACS acquired control of Auxi and then sold Auxi to HHC. Auxi did not inform plaintiff of the sale and plaintiff received no compensation for his shares of Auxi stock. Plaintiff filed suit against ACS claiming breach of fiduciary duty and breach of contract. The court concluded that plaintiff pleaded insufficient facts to support a claim that ACS breached its fiduciary duties as a majority shareholder; although plaintiff's complaint alleged damages, it contained no facts identifying the existence of a contract between ACS and plaintiff or its terms; and plaintiff pleaded no facts suggesting that the alleged contract between ACS and HHC manifested an intent to benefit him. Accordingly, the court affirmed the district court's dismissal of both claims. The court also concluded that the district court did not abuse its "considerable discretion," in concluding that it was not required to allow plaintiff to amend the post-judgment complaint where plaintiff never sought to amend until after dismissal, despite being on notice of the need to amend. View "Horras v. American Capital Strategies, Ltd." on Justia Law

This case arose when Martin Marietta sought to purchase all of Vulcan's outstanding shares (Exchange Offer). At issue was the meaning of confidentiality agreements entered into by both parties. The court found in favor of Vulcan on its counterclaims for breach of the non-disclosure agreement (NDA) (Count I), and the joint defense and confidentiality agreement (JDA)(Count II), and against Martin Marietta on its claim that it did not breach the NDA (Count I). Martin Marietta shall be enjoined for a period of four months from prosecuting a proxy contest, making an exchange or tender offer, or otherwise taking steps to acquire control of Vulcan shares or assets. During that period, it is also enjoined from any further violations of the NDA and JDA. Vulcan shall submit a conforming final judgment within five days, upon approval as to form by Martin Marietta. View "Martin Marietta Materials, Inc. v. Vulcan Materials Co." on Justia Law

RAA appealed from a final judgment of the Superior Court that dismissed its complaint pursuant to Rule 12(b)(6). RAA's complaint alleged that Savage told RAA, one of several potential bidders for Savage, at the outset of their discussions that there was "no significant unrecorded liabilities or claims against Savage," but then during RAA's due diligence into Savage, Savage disclosed three such matters, which caused RAA to abandon negotiations for the transactions. The complaint contended that had RAA known of those matters at the outset, it never would have proceeded to consider purchasing Savage. Therefore, according to RAA, Savage should be liable for the entirety of RAA's alleged $1.2 million in due diligence and negotiation costs. The court held that, under Paragraphs 7 and 8 of the non-disclosure agreement (NDA), RAA acknowledged that in the event no final "Sale Agreement" on a transaction was reached, Savage would have no liability, and could not be sued, for any allegedly inaccurate or incomplete information provided by Savage to RAA during the due diligence process. The court also held that RAA could not rely on the peculiar-knowledge exception to support its claims. Finally, the court held that, when Savage and RAA entered into the NDA, both parties knew how the non-reliance clauses had been construed by Delaware courts. Accordingly, the court affirmed the judgment. View "RAA Management, LLC v. Savage Sports Holdings, Inc." on Justia Law

Plaintiffs brought their Verified Complaint asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing against defendant. J.P.Morgan also asserted a claim for attorneys' fees and costs under an option agreement that J.P. Morgan and defendant entered into, which was the contract central to the dispute. Defendant moved to dismiss pursuant to Court of Chancery Rule 12(b)(6). The court held that J.P. Morgan has failed to state a claim that defendant breached the express terms of the Option Agreement and therefore, defendant's motion to dismiss was granted as to Count I. Defendant's motion to dismiss was denied as to Count II because J.P. Morgan's allegations, taken together, were sufficient to state a claim of the implied covenant. Finally, defendant's motion to dismiss was denied as to Count III where J.P. Morgan could eventually be the prevailing party in this action. View "JPMorgan Chase & Co. v. American Century Co." on Justia Law

This was a class action brought on behalf of the common unit holders of a publicly-traded Delaware limited partnership. In March 2011, the partnership agreed to be acquired by an unaffiliated third party at a premium to its common units' trading price. The merger agreement, which governed the transaction, also provided for a separate payment to the general partner to acquire certain partnership interests it held exclusively. The court concluded that defendants' approval of the merger agreement could not constitute a breach of any contractual or fiduciary duty, regardless of whether the conflict committee's approval was effective. The court also found that the disclosures authorized by defendants were not materially misleading. Therefore, plaintiffs could not succeed on their claims under any reasonable conceivable set of circumstances and defendants' motion to dismiss was granted. View "In re K-Sea Transportation Partners L.P. Unitholders Litigation" on Justia Law

This derivative action challenged a series of related-party transactions. Defendants moved for judgment on the pleadings, contending that laches barred the bulk of the claims. Defendants were partly right, laches barred the challenges to certain stock options granted in 2004 and 2005. Laches also barred a portion of the challenge to compensation received under certain employment agreements and rent-free sublease. With respect to these claims, the doctrine applied to the extent the compensation was paid and rent-free space provided before March 18, 2008. The doctrine did not apply to the extent that compensation was paid and rent-free space provided on or after March 18, 2008. On a final set of claims, the court granted plaintiffs leave to replead because although the complaint alleged facts sufficient to invoke the doctrine of equitable tolling, the pleading failed to identify when plaintiffs subsequently found out about the self-dealing transactions. View "Buerger, et al. v. Apfel, et al." on Justia Law

In 2010, BLGH entered into an agreement with enXco to sell BLGH's renewable energy business, Beacon, to enXco. The Unit Purchase Agreement that governed the sale of Beacon (UPA) called for a purchase price of $12 million, plus a "bonus payment" to BLGH if certain conditions were met. The sale of Beacon took place and BLGH was paid $12 million. A dispute arose, however, over whether BLGH was entitled to the additional bonus payment. enXco claimed that no bonus payment was legally due. BLGH responded by filing a Superior Court action against enXco for breach of contract. The Superior Court granted summary judgment to enXco, holding that no bonus payment was owed to BLGH under the UPA. The court reversed and held that the Superior Court erred as a matter of law in granting summary judgment to enXco where the transaction "outlined" in the letter of intent met the requirements of Section 1.7 of the UPA, triggering BLGH's right to a bonus payment, and nothing more was required by the UPA for BLGH to become legally entitled to the bonus payment. View "BLGH Holdings LLC v. Enxco LFG Holding, LLC" on Justia Law

Petitioner, former CEO of Fitracks, sought advancements from Fitracks for attorneys' fees and expenses incurred defending claims in litigation in the underlying action. Aetrex sued petitioner in the underlying action and Aetrex is currently the parent corporation of Fitracks, having acquired Fitracks by triangular merger in 2008. Because Aetrex's claims in the underlying action arose out of representations made by petitioner in his capacity as CEO of Fitracks, petitioner was entitled to advancements for the underlying action. Therefore, summary judgment was granted in favor of petitioner and against Fitracks on the issues of liability for advancements in the underlying action and indemnification for this proceeding. View "Danenberg v. Fitracks, Inc." on Justia Law

Plaintiffs sought a preliminary injunction against the acquisition of Compellant by Dell. The parties settled after significant discovery but before merits briefing or a hearing. The settlement consideration consisted of modifications to the deal protections in the merger agreement, including the rescission of a stockholder rights plan adopted in connection with the transaction, and six supplemental disclosures. Plaintiffs applied for a fee of $6 million and defendants argued for not more than $1.25 million. In addressing the fee application, and thus to estimate the value of the resulting benefits conferred by the settlement, the court relied primarily on four studies that measured market-wide rates of topping bid activity and the incremental value generated by multiple bidders. The court also evaluated the benefits conferred by the supplemental disclosures. In total, the court awarded $2.4 million. View "In re Compellent Technologies, Inc. Shareholder Litigation" on Justia Law