Justia Mergers & Acquisitions Opinion Summaries

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Act), 15 U.S.C. 18a, added section 7A to the Clayton Antitrust Act of 1914, 15 U.S.C. 12 et seq., to establish notification and waiting requirements for large acquisitions and mergers. The principal purpose of the Act is to facilitate Government identification of mergers and acquisitions likely to violate federal antitrust laws before the proposed deals are consummated. In 2013, the FTC modified its reportable asset acquisition regulations to clarify that, even if patent holders retain limited manufacturing rights or co-rights, transfers of patent rights within the pharmaceutical industry constitute reportable asset acquisitions if all commercially significant rights are transferred. PhRMA filed suit challenging the FTC's Rule and the district court granted summary judgment in favor of the FTC. The court concluded that the Rule does not violate the plain terms of the Act; the court owes deference to the FTC because the contested rule embodies a permissible construction of the Act; and the Commission's action also survives review under the arbitrary and capricious standard. Because the FTC's action is supported by reasoned decisionmaking and PhRMA's claims are without merit, the court affirmed the judgment of the district court. View "Pharmaceutical Research v. FTC" on Justia Law

This action arose out of the stock-for-stock merger of Jefferies Group, Inc. and Leucadia National Corporation. After the transaction was announced, the first of seven actions challenging the proposed transactions as filed in New York state court. The case subsequently proceeded in Delaware. Before trial began, the parties reached an agreement-in-principle to settle the case. The settlement, which was formally approved by the Court of Chancery, resulted in a payment of $70 million to the Class. Delaware Counsel sought an award of attorneys’ fees and expenses, and New York Plaintiffs filed a motion for a share of the fee award. The Court of Chancery (1) held that Delaware Counsel was entitled to a fee award of $21.5 million, which equated to 23.5 percent of the gross value of the settlement; and (2) denied the New York Plaintiffs’ motion for a share of the fee award in this action, holding that the New York Plaintiffs failed to substantiate their contribution to the results achieved in the Delaware action. View "In re Jefferies Group, Inc. Shareholders 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

The FTC and the State filed suit alleging that the 2012 merger of two health care providers in Nampa, Idaho violated section 7 of the Clayton Act, 15 U.S.C. 18, and state law. The district court found that the merger violated section 7 and ordered divestiture. The court affirmed the judgment, concluding that the district court's determination that Nampa was the relevant geographic market was supported by the record; the district court did not clearly err in holding that plaintiffs established a prima facie case that the merger will probably lead to anticompetitive effects in the market; and defendant failed to rebut the prima facie case by demonstrating that efficiencies resulting from the merger would have a positive effect on competition. Therefore, in this case, the district court did not abuse its discretion in choosing divestiture. View "St. Alphonsus Med. Ctr. v. St. Luke's Health Sys." 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

Plaintiff, Cigna Health and Life Insurance Co., challenged Optum Services, Inc’s acquisition by merger, via Audax Holdings, Inc., of Audax Health Solutions, Inc. Plaintiff moved for judgment on the pleadings, arguing that certain provisions of the merger agreement were contrary to the Delaware General Corporation Law. Those provisions related to a release of claims, an indemnification requirement, and the appointment of a stockholder representative. The Court of Chancery granted the motion in part and denied it in part, holding (1) the release of claims lacks any force because the buyer attempted to impose that obligation in a contract lacking consideration; (2) the indemnification provision violates 8 Del. Cas. 251; and (3) Plaintiff failed to brief the stockholder representative issue sufficiently to support its request for judgment as a matter of law. View "Cigna Health & Life Ins. Co. v. Audax Health Solutions, Inc." on Justia Law

Dragon Systems, Inc. (Dragon), a voice recognition software company that faced a deteriorating financial situation, hired Goldman Sachs (Goldman) to provide financial advice and assistance in connection with a possible merger. In 2000, Lernout & Hauspie Speech Products N.V. (Lernout & Hauspie) acquired Dragon. When it was discovered that Lernout & Hauspie had fraudulently overstated its earnings, the merged company filed for bankruptcy, and the Dragon name and technology were sold from the estate. Plaintiffs, two groups of Dragon shareholders, filed suit against Goldman, alleging negligent and intentional misrepresentation, negligence, gross negligence, breach of fiduciary duty, and violations of Mass. Gen. Laws ch. 93A. A jury found in favor of Goldman on Plaintiffs’ common law claims, and district court found that Goldman had not violated chapter 93A. The First Circuit affirmed, holding (1) the district court correctly articulated the legal standard applicable to Plaintiffs’ chapter 93A claims and correctly applied that standard to its factual findings; and (2) Plaintiffs’ arguments that they were entitled to a new trial on their common law claims because of evidentiary errors and erroneous jury instructions were without merit. View "Baker v. Goldman, Sachs & Co." on Justia Law

After TPC Group Inc. announced its acquisition by First Reserve Corporation, SK Capital Partners, and their affiliates (collectively, the PE Group), Plaintiffs, shareholders of TPC, brought a class action against TPC, the TPC’s board of directors, and the PE Group (collectively, Defendants). Plaintiffs’ claims were later mooted, and the Court of Chancery awarded attorneys’ fees for the disclosures resulting from Plaintiffs’ efforts. At issue before the Court was whether Plaintiffs were entitled to attorneys’ fees for the increase in the merger price achieved between the commencement of this litigation and the acquisition’s closing under an amended merger agreement. The Court of Chancery denied Plaintiffs’ application for an award of attorneys’ fees and expenses for the increase in the merger price, concluding that Plaintiffs did not cause the price increase in any way. View "In re TPC Group Inc. S’holders Litig." 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