Justia Mergers & Acquisitions Opinion Summaries

Dell Inc. completed a merger that gave rise to appraisal rights. Fourteen appraisal petitioners were mutual funds sponsored by T. Rowe Price & Associates, Inc. (T. Rowe) or institutions that relied on T. Rowe to direct the voting of their shares (collectively, Petitioners). Petitioners held their shares through a custodial bank, which was a participant member in a trust company, which held Petitioners’ shares in the name of Cede & Co., which, for purposes of Delaware law, was the holder of record. Cede was constrained to vote Petitioners’ shares as T. Rowe directed and fulfilled its obligation through a chain of authorizations. Although T. Rowe opposed the merger, its voting system generated instructions to vote Petitioners’ shares in favor of it. Ultimately, Cede voted Petitioners’ shares in favor of the merger. Petitioners sought appraisal in favor of the merger. The Court of Chancery held (1) because the holder of record did not dissent as to the shares for which Petitioners sought appraisal, the dissenter requirement was not met of these shares; and (2) therefore, Petitioners’ shares did not qualify for appraisal, and Petitioners remained entitled to the merger consideration without an award of interest. View "In re Appraisal of Dell Inc." on Justia Law

Google Inc. and On2 Technologies, Inc. entered into a merger agreement in 2009. Thereafter, Plaintiff brought a class action on behalf of himself and other similarly situated On2 shareholders, alleging that On2’s board of directors had breached its fiduciary duty to its shareholders. Plaintiffs subsequently agreed with One2 and its directors to settle all claims with respect to the merger. After a hearing, Supreme Court found the settlement to be fair and in the best interest of the class members but refused to approve the settlement because it did not afford out-of-state class members of the opportunity to opt out, thereby prohibiting class members from pursuing any individual claims that are separate and apart from the class settlement. The Appellate Division affirmed. The Court of Appeals affirmed, holding that the lower courts properly refused to approve the proposed settlement because the settlement would deprive out-of-state class members of a cognizable property interest. View "Jiannaras v. Alfant" on Justia Law

In 2012, Defendant Kenneth Cole proposed a going-private merger of Kenneth Cole Productions, Inc. that was subject to approval by both a special committee of independent directors and a majority of the minority shareholders. Several shareholders, including Plaintiff, commenced separate class actions alleging breach of fiduciary duty by Cole and the directors. Although the shareholder vote occurred after an amended complaint was filed, 99.8 percent of the minority shareholders voted in favor of the merger. In the amended complaint, Plaintiff sought a judgment declaring that Cole and the directors had breached the fiduciary duties they owed to the minority shareholders, an award of damages to the class, and a judgment enjoining the merger. Supreme Court granted Defendants’ motion to dismiss. The Court of Appeals affirmed, holding (1) in reviewing challenges to going-private mergers, New York courts should apply the business judgment rule as long as certain shareholder-protective conditions are present; (2) if those measures are not present, the entire fairness standard should be applied; and (3) applying that standard to this case, the courts below properly determined that Plaintiff’s allegations did not withstand Defendants’ motions to dismiss. View "In re Kenneth Cole Prods., Inc." on Justia Law

Pursuant to a merger agreement, Sellers agreed to indemnity Buyer for the tax liabilities of the company being sold. The tax bills for indemnification purposes, however, were to be calculated as if certain deductions were not going be taken when both parties knew they would be. These deductions reduced the company’s tax liability to zero. After the merger, the company’s tax prepayments and credits were refunded in their entirety, thus benefitting Buyer. Because the calculation of the indemnity obligation was based on a counterfactual measure of tax liability, that calculation resulted in Sellers’ owing Buyer a substantial amount of liability. Buyer filed this complaint asserting claims for declaratory relief and breach of contract. At issue in this case was whether the prepayments and credits affected the tax indemnification obligation of Sellers. The district court entered judgment on the pleadings in favor of Sellers, concluding that the indemnification provision unambiguously required that the indemnity obligation be offset by the amount of the refunded prepayments and credits. The First Circuit vacated the judgment of the district court, holding that the indemnification provision was ambiguous as to how the tax refunds affect the indemnification obligation of Sellers. Remanded. View "Mercury Sys., Inc. v. S’holder Representative Servs., Inc." on Justia Law

In 2010, El Paso Corporation (“El Paso Parent”) sold member interests in three limited liability companies to El Paso Pipeline Partners, LP (“El Paso MLP”). At the time of the sale, El Paso Parent controlled El Paso MLP through its ownership of El Paso Pipeline GP Company, LLC, the sole general partner of El Paso MLP (“El Paso GP”). In 2015, the Court of Chancery issued a post-trial decision concluding that El Paso GP breached the limited partnership agreement governing El Paso MLP by causing El Paso MLP to buy the member interests (the “Fall Dropdown”). In 2012, Plaintiff brought this action challenging the Fall Droptown. While the litigation was pending, Kinder Morgan, Inc., acquired El Paso Parent and therefore indirectly owned and controlled El Paso GP. After trial, Kinder Morgan, El Paso Parent, El Paso MLP, and El Paso GP consummated a merger that ended El Paso MLP’s separate existence as a publicly traded entity. El Paso GP moved to dismiss this litigation, arguing that because Plaintiff styled his claim as derivative the closing of the merger meant that this case must be dismissed. The Court of Chancery denied El Paso GP’s motion to dismiss, holding that the merger did not extinguish Plaintiff’s standing to pursue the claim, and therefore, this Court can implement the liability award. View "In re El Paso Pipeline Partners, L.P. Derivative Litig." on Justia Law

SCOPE filed suit claiming that the acquisition of the Valenica Water Company by the Castaic Lake Water Agency was void under Government Code section 1090 and the Political Reform Act (PRA), Gov. Code 81000 et seq., because one of the Agency's ten directors - Keith Abercrombie- was Valencia's general manager at the time the acquisition was be negotiated. The trial court rejected SCOPE's conflict of interest claims. The court affirmed the trial court's decision, concluding that the express exception to section 1090 in the Agency’s enabling legislation applies to a contract to acquire a water company; the express exception to section 1090 also implicitly repeals (and thereby amends) the PRA’s applicability to such an acquisition; and the Legislature complied with the special requirements set forth in section 81012 for amending the PRA, which was originally enacted by voter initiative. View "Santa Clarita Org. v. Abercrombie" on Justia Law

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