Justia Mergers & Acquisitions Opinion Summaries

In 2000, Trados Inc. obtained venture capital (VC) to support a growth strategy that could lead to an initial public offering. The VC firms received preferred stock and placed representatives on the Trados board of directors (the Board). Trados, however, failed to satisfy its VC backers. The Board subsequently adopted a management incentive plan (MIP) that compensated management for achieving a sale even if the sale yielded nothing for the common stock. In 2005, SDL plc acquired Trados for $60 million. The merger constituted a liquidation that entitled the preferred stockholders to a liquidation preference of $57.9 million. Without the MIP, the common stockholders would have received $2.1 million. With the MIP, the common stockholders received nothing. Plaintiff contended that instead of selling to SDL, the board had a fiduciary duty to continue operating Trados independently to generate value for the common stock. The Court of Chancery held that Defendants proved the decision to approve the merger was fair, as the common stock had no economic value before the merger, making it fair for its holders to receive in the merger the substantial equivalent of what they had before. Likewise, the fair value of the common stock for purposes of appraisal was zero. View "In re Trados Inc. S'holders Litig." on Justia Law

After Hermann Hospital merged with Memorial Hospital System, creating the Memorial Herman Hospital System (MHHS), the Administrator denied MHHS's request for a Medicare loss payment under 42 C.F.R. 413.134(l). The court joined all other circuits that have ruled on the issue by holding that statutory mergers must be bona fide sales in order to be eligible for a depreciation adjustment under 42 U.S.C. 413.134(l). The court found that substantial evidence supported the Administrator's conclusion that the merger at issue failed to constitute a bona fide sale and, therefore, affirmed the judgment of the district court. View "Memorial Hermann Hospital v. Sebelius" on Justia Law

Plaintiffs appealed from the district court's grant of judgment in favor of defendants. Plaintiffs brought claims of fraudulent misrepresentation, negligent misrepresentation, fraudulent concealment, and tortious interference with prospective economic advantage against defendants related to the auction of a company plaintiffs purchased. The court concluded that the district court, in its instructions to the jury, erred in its description of the English burden-shifting rule. Accordingly, the district court's order granting judgment for defendants on the fraudulent misrepresentation claim was vacated and the case was remanded for a new trial. The district court's dismissal of the negligent misrepresentation claim at summary judgment and of the fraudulent concealment claim as a matter of law were affirmed. View "Terra Firma Investments v. Citigroup" on Justia Law

A holding company (Company) whose equity was solely owned by Defendant owned forty-three percent of M&F Worldwide (MFW). Company offered to purchase the rest of the corporation's equity in a going private merger. The merger was conditioned on both independent committee approval and a majority-of-the-minority vote. A special committee was formed, which picked its own legal and financial advisors. After the committee successfully negotiated with Company to raise its bid by $1 per share, the merger was approved by the majority of the stockholders unaffiliated with the controlling stockholder (the minority stockholders). Company, Defendant, and other directors of MFW were sued by stockholders, who alleged that the merger was unfair. The Court of Chancery granted Defendants' motion for summary judgment, holding that when a controlling stockholder merger has, from the time of the controller's first overture, been subject to (i) negotiation and approval by a special committee of independent directors empowered to say no, and (ii) approval by an uncoerced, fully informed vote of majority of the minority investors, the business judgment rule standard of review applies, under which the Court was required to dismiss the challenge to the merger in this case. View "In re MFW S'holders Litig." on Justia Law

Polar Holding was sole shareholder of PMC, a company engaged in the petroleum-additive business. PMC was in default on a loan for which it had pledged valuable intellectual property as collateral, and Polar Holding was in the midst of an internal dispute between members of its board of directors regarding business strategy for PMC. One of the directors, Socia, formed a competing company, Petroleum, for the purpose of acquiring PMC’s promissory note and collateral from the holder of PMC’s loan. Petroleum brought suit against Woodward, an escrow agent in possession of PMC’s collateral, alleging that PMC was in default on the payment of its promissory note. Polar Holding and PMC intervened and filed counterclaims against Petroleum and a third-party complaint against additional parties, including Socia. Polar Holding and PMC allleged breach of fiduciary duty, civil conspiracy, and tortious interference. After PMC filed for bankruptcy, its claims became the property of the bankruptcy trustee. Polar Holding’s claims were later dismissed. The Sixth Circuit affirmed dismissal of a tortious interference claim as addressed by the district court, but reversed dismissal of a breach-of-fiduciary-duty claim against Socia and a civil-conspiracy claim against individual third-party defendants. View "Petroleum Enhancer, L.L.C. v. Woodward" on Justia Law

In 1995, two non-profit hospitals consolidated to form Pinnacle. Pinnacle subsequently submitted a Medicare reimbursement claim for the losses the hospitals had incurred through the sale of their depreciable assets in the consolidation. The Administrator denied Pinnacle's claim, and that order became the final decision of the Secretary. On Pinnacle's Administrative Procedure Act (APA), 42 U.S.C. 12101 et seq., challenge, the district court upheld the Secretary's decision in full. Because the Secretary's interpretation of the relevant Medicare regulations was not plainly erroneous or inconsistent with the regulation, the court concluded that the Secretary reasonably applied the bona fide sale requirement to a reimbursement request from a participant in a "statutory merger." The court also held that the Secretary's finding that the bona fide sale requirement applied to consolidations involving non-profit Medicare providers, like Pinnacle, was not plainly erroneous or inconsistent with the regulation. Finally, substantial evidence supported the Secretary's finding that Pinnacle did not satisfy the bona fide sale requirement. Accordingly, the court affirmed the district court's judgment. View "Pinnacle Health Hospitals v. Sebelius" on Justia Law

Central Laborers instituted this action under Section 220 of the Delaware General Corporation Law, Del. Code Ann. tit. 8, section 220, to compel News Corp. to produce its books and records related to its acquisition of Shine. The court held that Section 220 permitted a stockholder to inspect books and records of a corporation if the stockholder complied with the procedural requirements of the statute and then showed a proper purpose for the inspection. Section 220 required a stockholder seeking to inspect books and records to establish that such stockholder had complied with the form and manner of making demand for inspection of such documents. Central Laborers had not made that showing. Because Central Laborers' Inspection Demand did not satisfy the procedural requirements of Section 220, it did not establish its standing to inspect the books and records of News Corp. On that basis alone, and without reaching the issue of proper purpose, the court affirmed the judgment. View "Central Laborers Pension Fund v. News Corp." 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