Delaware Court of Chancery Grants $1.2 Billion Damage Award

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On October 14, 2011, the Delaware Court of Chancery issued a post-trial opinion in a derivative action that challenged Southern Peru Copper Corporation's acquisition of Minera Mexico, S.A. de C.V., from Southern Peru's own controlling shareholder. The court found that defendants failed to meet their burden under the "entire fairness" standard of review and awarded $1.263 billion in damages.1 We believe this to be the largest single monetary award in Chancery Court history.

Background

At the time of the acquisition, Grupo Mexico, S.A.B. de C.V., was a controlling shareholder of Southern Peru, a NYSE-listed mining company. Grupo Mexico controlled 54.17 percent of Southern Peru's outstanding capital stock, which represented 63.08 percent of Southern Peru's voting power. Grupo Mexico also controlled 99.15 percent of Minera, a Mexican mining company. In February 2004, Grupo Mexico proposed to Southern Peru's board that it acquire Grupo Mexico's interest in Minera for 72.3 million shares of Southern Peru stock, which represented an equity value of approximately $3.05 billion in market value at that time.

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