Justia Mergers & Acquisitions Opinion Summaries

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The Supreme Court affirmed the ruling of the circuit court denying Petitioners’ motion for leave to file a second amended complaint and dismissing their pending amended complaint, holding that the circuit court did not err in concluding that, under controlling Delaware law, Petitioners lacked standing to pursue a derivative shareholder suit. Petitioners filed a derivative lawsuit alleging claims of breach of fiduciary duties against Massey Energy Company’s Board of Directors and corporate officers. Subsequently, faced with a potential merger between Massey and Alpha Natural Resources, Inc., Petitioners filed a motion for leave to file a second amended complaint seeking to add individual and class action claims on behalf of the shareholders themselves. After the merger, Respondents moved oi dismiss Petitioners’ amended complaint and motion for leave to file the proposed second amended complaint, arguing that, after the merger, Petitioners were no longer Massey shareholders and lacked standing to assert derivative claims, and that amending their complaint a second time would be futile. The circuit court dismissed the amended complaint and denied the motion for leave to file the second amended complaint. The Supreme Court affirmed, holding that there was no error in the circuit court’s order because Petitioners were no longer Massey shareholders. View "California State Teachers' Retirement System v. Blankenship" on Justia Law

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The Supreme Court reversed two orders of the circuit court unsealing an index of 349 documents and directing the Attorney General to produce eighty-nine of those documents. Steel of West Virginia, Inc. (Steel) brought this action to enforce its request for production of material under West Virginia’s Freedom of Information Act (FOIA). The Attorney General received the 349 documents at issue in connection with his investigative powers under the West Virginia Antitrust Act regarding the proposed merger of St. Mary’s Medical Center, Inc. and Cabell Huntington Hospital, Inc. The Attorney General and St. Mary’s contended that the index of the 349 documents and the eighty-nine documents to be produced were exempt from disclosure. The circuit court awarded the production of the index as a sanction against the Attorney General for sharing part of the index with the Federal Trade Commission. The Supreme Court held (1) the sanction was inappropriate; and (2) the eighty-nine documents were not subject to rpdocution because the statutory exemption set forth in W.Va. Code 29B-1-4, which incorporates the confidentiality provisions of the Antitrust Act. View "St. Mary's Medical Center, Inc. v. Steel of West Virginia" on Justia Law

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The Supreme Court reversed two orders of the circuit court unsealing an index of 349 documents and directing the Attorney General to produce eighty-nine of those documents. Steel of West Virginia, Inc. (Steel) brought this action to enforce its request for production of material under West Virginia’s Freedom of Information Act (FOIA). The Attorney General received the 349 documents at issue in connection with his investigative powers under the West Virginia Antitrust Act regarding the proposed merger of St. Mary’s Medical Center, Inc. and Cabell Huntington Hospital, Inc. The Attorney General and St. Mary’s contended that the index of the 349 documents and the eighty-nine documents to be produced were exempt from disclosure. The circuit court awarded the production of the index as a sanction against the Attorney General for sharing part of the index with the Federal Trade Commission. The Supreme Court held (1) the sanction was inappropriate; and (2) the eighty-nine documents were not subject to rpdocution because the statutory exemption set forth in W.Va. Code 29B-1-4, which incorporates the confidentiality provisions of the Antitrust Act. View "St. Mary's Medical Center, Inc. v. Steel of West Virginia" on Justia Law

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In this action arising out of a reclassification of the shares of NRG Yield, Inc. (“Yield”), a stockholder alleged that members of the Yield board breached their fiduciary duties by approving the reclassification and that NRG Energy, Inc. (“NRG”), which managed Yield’s daily affairs, breached its fiduciary duty by causing Yield to undertake the reclassification. The Court of Chancery dismissed the complaint for failure to state a claim for relief, holding (1) the reclassification was a conflicted transaction subject to entire fairness review; (2) the analytical framework articulated in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), applied to the reclassification; and (3) that framework was satisfied in this case from the face of the pleadings. View "IRA Trust FBO Bobbie Ahmed v. Crane" on Justia Law

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Plaintiff filed a verified complaint against West to inspect its books and records under Section 220 of the Delaware General Corporation Law (DGCL). The Delaware Court of Chancery held in this post-trial opinion that plaintiff has demonstrated, by a preponderance of the evidence, a credible basis from which the court can infer that wrongdoing related to the merger may have occurred. The court rejected West's argument that the Corwin doctrine would stand as an impediment to an otherwise properly supported demand for inspection under Section 220. The court explained that any contrary finding would invite defendants improperly to draw the court into adjudicating merits defenses to potential underlying claims in order to defeat otherwise properly supported Section 220 demands. Furthermore, the court should not prematurely adjudicate a Corwin defense when to do so might deprive a putative stockholder plaintiff of the ability to use Section 220 as a means to enhance the quality of his pleading. Therefore, the court ordered a judgment entered in favor of plaintiff and directed West to allow inspection of the books and records at issue. View "Lavin v. West Corp." on Justia Law

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The Court of Chancery dismissed a case brought by Plaintiff, a stockholder in The Fresh Market, alleging a breach of fiduciary duty by the Market’s directors and that Brett Berry, a former CEO and former vice chairman of the company’s board, aided and abetted that breach of fiduciary duty. The Market was acquired by an entity controlled by a private equity firm, and the founder of the Market rolled his equity ownership in the Market into the acquirer as part of the deal. The court held that because there was no coercion applied to the fully informed vote of the common stockholders ratifying the decision of the directors that the merger was in the stockholders’ best interest and the vote was adequately informed so as to serve as a ratification of the board’s decision, the matter must be dismissed. View "Morrison v. Berry" on Justia Law

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The Supreme Court affirmed in part and reversed and remanded in part the court of appeals’ reversal of the district court’s grant of Company’s motion to dismiss Shareholder’s class action challenge to a merger transaction. The district court concluded (1) some claims were derivative, rather than direct, and were therefore subject to the demand and pleading requirements of Minn. R. Civ. P. 23.09; and (2) Shareholder failed to comply with Rule 23.09. The court of appeals reversed with the exception of one claim, concluding that most of the claims were direct, and therefore, Rule 23.09 did not apply. The Supreme Court clarified the test for distinguishing between direct and derivative claims and held that the district court did not err in dismissing some claims but erred in dismissing others. View "In re Medtronic, Inc. Shareholder Litigation" on Justia Law

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DFC Global Corporation (“DFC”) provided alternative consumer financial services, predominately payday loans. The 2014 transaction giving rise to this appraisal action resulted in DFC being taken private by Lone Star, a private equity firm. DFC was a highly leveraged company. Its capital structure was comprised of about $1.1 billion of debt as compared to a $367.4 million equity market capitalization, 20 resulting in a debt-to-equity ratio of 300% and a debt-to-total capitalization ratio of 75%. In the years leading up to the merger, DFC faced heightened regulatory scrutiny in the US, UK and Canada. The parties challenged DFC’s valuation for merger purposes. The Delaware Supreme Court surmised DFC wanted the Court to establish a presumption that in certain cases involving arm’s-length mergers, the price of the transaction giving rise to appraisal rights was the best estimate of fair value. The Supreme Court declined to do so, which in the Court’s view had no basis in the statutory text, which gave the Court of Chancery in the first instance the discretion to “determine the fair value of the shares” by taking into account “all relevant factors.” The Supreme Court must give deference to the Court of Chancery if its determination of fair value has a reasonable basis in the record and in accepted financial principles relevant to determining the value of corporations and their stock. Ultimately, the Delaware Supreme Court reversed and remanded the Court of Chancery’s valuation, remanding for the Chancellor to reassess the weight he chooses to afford various factors potentially relevant to fair value, and he may conclude that his findings regarding the competitive process leading to the transaction, when considered in light of other relevant factors, such as the views of the debt markets regarding the company’s expected performance and the failure of the company to meet its revised projections, suggest that the deal price was the most reliable indication of fair value. View "DFC Global Corporation v. Muirfield Value Partners, L.P., et al." on Justia Law

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Appellants were minority stockholders in First Community Bank of Crawford County (FBC). After First Bank reached an agreement to merge with FCB, First Bank filed an application with the Arkansas State Banking Board. The Board subsequently approved the merger. Appellants filed a complaint seeking review of the Board’s decision, arguing (1) the Board did not adequately fulfill its duties under administrative law in reaching its decision, and (2) the statues and regulations followed by the Board unconstitutionally infringe on the due process and property rights of minority stockholders. The circuit court concluded that Appellants failed to preserve their substantive objections due to their failure to present these objections before the Board. The Supreme Court affirmed the dismissal of Appellants’ claims, holding that Appellants’ arguments were not preserved for judicial review. View "Booth v. Franks" on Justia Law

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The court affirmed the issuance of a permanent injunction enjoining the merger of Anthem and Cigna under Section 7 of the Clayton Act, 15 U.S.C. 18. The court held that the district court did not abuse its discretion in enjoining the merger based on Anthem's failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger in the fourteen Anthem states: the loss of Cigna, an innovative competitor in a highly concentrated market. The court also held that the district court did not abuse its discretion in enjoining the merger based on its separate and independent determination that the merger would have a substantial anticompetitive effect in the Richmond, Virginia large group employer market. View "United States v. Anthem" on Justia Law