Justia Mergers & Acquisitions Opinion Summaries

Articles Posted in Corporate Compliance
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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

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This putative class action was before the court on an application for the approval of settlement of the class's claims for, among other things, breaches of fiduciary duty in connection with a merger of two publicly traded Delaware corporations. The target's largest stockholder, which acquired the vast majority of its shares after the challenged transaction was announced, objected to the proposed settlement. In addition, defendants' and plaintiffs' counsel disagreed about the appropriate level of attorneys' fees that should be awarded. The court certified the class under Rules 23(a), (b)(1), and (b)(2) with NOERS as class representative; denied BVF's request to certify the class on only an opt out basis; approved the settlement as fair and reasonable; and awarded attorneys' fees to plaintiffs' counsel in the amount of $1,350,000, inclusive of expenses. View "In re Celera Corp. Shareholder Litigation" on Justia Law

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Holston sued LanLogistics for breach of contract when LanLogistics never gave Holston an opportunity to match Gartlan's offer to purchase LanBox. Holston was a citizen of Florida and LanLogistics was incorporated in Delaware, maintaining its corporate headquarters in Miami, Florida. But by the time Holston filed suit, LanLogistics had dissolved and formally forfeited its authority to conduct business in Florida. At issue on appeal was the citizenship of a dissolved corporation for purposes of diversity jurisdiction and whether summary judgment was appropriately entered where there could have been a genuine issue of material fact. The court held that LanLogistics was only a citizen of Delaware and the court had subject matter jurisdiction where LanLogistics dissolved and formerly withdrew from business before Holston filed suit. The court reversed the district court's supplemental summary judgment order and remanded for a determination regarding the fair market value of each company in the package deal to identify the percentage of the purchase price used to purchase LanBox. View "Holston Investments Inc. B.V.I., et al. v. LanLogistics, Corp." on Justia Law

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This action arose out of the merger of American Surgical with merger Sub, a wholly-owned subsidiary of Holdings, which, in turn, was an affiliate of Great Point. Plaintiff brought this purported class action to challenge the merger and alleged that American's Surgical Board and its Control Group breached their fiduciary duties in connection with the merger. Plaintiff also alleged that the Purchasing Entities aided and abetted those breaches of fiduciary duty. The court granted defendants' motion to dismiss Cause of Action IV, which alleged that the Purchasing Entities aided and abetted the breaches of fiduciary duty committed by the members of the Control Group and Board. The court, however, denied the motion to dismiss as to Causes of Action I, II, and III. View "Frank v. Elgamel, et al." on Justia Law

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Stockholder plaintiffs sought a preliminary injunction to enjoin a merger between El Paso and Kinder Morgan. The CEO of El Paso undertook sole responsibility for negotiating the sale of El Paso to Kinder Morgan in the merger but did not disclose to El Paso's Board his interest in working with other El Paso managers in making a bid to buy El Paso's exploration and production (E&P) business. Further, the Board and management of El Paso relied in part on advice given by a financial advisor, Goldman Sachs, which owned 19% of Kinder Morgan and controlled two Kinder Morgan board seats. The court concluded that plaintiffs have a reasonable likelihood of success in proving that the merger was tainted by disloyalty. Because, however, there was no other bid on the table and the stockholders of El Paso, as the seller, have a choice whether to turn down the merger themselves, the balance of harms counseled against a preliminary injunction. Although the pursuit of a monetary damages award could not be likely to promise full relief, the record did not instill in the court the confidence to deny, by grant of an injunction, El Paso's stockholders from accepting a transaction that they could find desirable in current market conditions, despite the disturbing behavior that led to its final terms. View "In Re El Paso Corporation Shareholder Litigation" on Justia Law

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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

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This action was before the court on a motion to preliminarily enjoin an all-cash negotiated tender offer for all of the shares of a biopharmaceutical company. Plaintiffs, shareholders of the target company, claimed that the offer was for an unfair price and was the result of an unfair and flawed sales process. Plaintiffs also claimed that the solicitation materials recommending the tender offer contained materially false and misleading information. As a result, plaintiffs sought to have the tender offer enjoined before its consummation. The court concluded that plaintiffs have failed to show a reasonable likelihood that they would succeed in proving that the challenged transaction was unfair or that the directors breached their fiduciary duties of care or loyalty, including their disclosure obligations, in approving the transaction. Therefore, the court denied plaintiffs' motion to preliminarily enjoin the tender offer. View "In re Micromet, Inc. Shareholders Litigation" on Justia Law

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This case involved Bancorp's agreement to sell BankAtlantic to BB&T. Plaintiffs, institutional trustees, sued to enforce debt covenants that prohibited Bancorp from selling "all or substantially all" of its assets unless the acquirer assumed the debt. The evidence at trial established that Bancorp was selling substantially all of its assets, and BB&T had not agreed to assume the debt. The ensuing event of default would result in the debt accelerating. Bancorp could not pay the accelerated debt. Because this eventuality would inflict irreparable harm on plaintiffs, the court entered contemporaneously an order permanently enjoining Bancorp from consummating the sale. View "In re BankAtlantic Bancorp, Inc. Litigation" on Justia Law

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This matter involved a stockholders' suit over the proposed takeover of Delphi by TMH. Based upon the record, the court found that plaintiffs have demonstrated a likelihood of success on the merits at least with respect to the allegations against defendant. However, because the deal represented a large premium over market price, because damages were available as a remedy, and because no other potential purchaser had come forth or seemed likely to come forth to match, let alone best, the TMH offer, the court could not find that the balance of the equities favored an injunction over letting the stockholders exercise their franchise, and allowing plaintiffs to pursue damages. Therefore, the court denied plaintiff's request for a preliminary injunction. View "In re Delphi Financial Group Shareholder Litigation" on Justia Law

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Series C-1 preferred shareholders, claiming that the forced conversion of their shares was unlawful, sued Omneon in the Superior Court for breach of contract. Those shareholders, as plaintiffs, claimed that, because the conversion of their preferred shares was integral to Harmonic's acquisition of Omneon, the conversion was part of a "Liquidation Event" under Omneon's certificate of incorporation, that entitled the shareholders to the liquidation "preference" payable for their shares. The Superior Court granted summary judgment in favor of Omneon, holding that under the plain language of Omneon's certificate of incorporation, only one series of preferred stock - the Series A-2.2 - was legally entitled to a liquidation preference payout. The shareholders were not entitled to a liquidation payout because the Series C-1 preferred shares had been validly converted into common stock before the Omneon-Orinda merger took place. The court agreed and concluded that the conversion was not part of a "Liquidation Event" as defined by Omneon's charter. Therefore, the court affirmed the judgment. View "Berkeley VI C.V., et al. v. Omneon, Inc." on Justia Law