Albert Carroll on Mergers

Chancery Determines Pharmaceutical Company Complied with Merger Agreement’s Requirement To Use Commercially Reasonable Efforts

Himawan v. Cephalon, Inc., C.A. No. 2018-0075-SG (Del. Ch. Apr. 30, 2024) - Stockholder representatives of an acquired corporation brought claims alleging that defendants had failed to use contractually-required...more

7/10/2024 / Breach of Contract , Merger Agreements , Mergers , Shareholders

Delaware Supreme Court Affirms Busted-Deal Decision and Attorneys’ Fees for Contingency Fee Based Representation

Energy Transfer LP v. The Williams Companies, Inc., No. 391, 2022 (Del. Oct. 10, 2023) - Busted-deal litigation is commonplace in Delaware and often requires Delaware courts to interpret provisions in merger agreements...more

2/20/2024 / Breach of Contract , Contract Terms , Merger Agreements , Mergers

Chancery Awards Mootness Fee Applying Recently Adopted Standard

Assad v. Botha, et al., C.A. No. 2022-0691-LWW (Del. Ch. Oct. 30, 2023) - Here, Vice Chancellor Will awarded a $100,000 mootness fee for “material—and unremarkable—disclosures” following the recently heightened mootness...more

2/9/2024 / Board of Directors , Breach of Duty , Fiduciary Duty , Mergers , Shareholders

2023 Delaware Corporate and Commercial Case Law Year in Review

This top ten list summarizes significant decisions of the Delaware Supreme Court and the Delaware Court of Chancery over the past calendar year. Our criteria for selection are that the decision either meaningfully changed...more

2/9/2024 / Board of Directors , Breach of Duty , Corporate Governance , Derivative Suit , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Chancery Denies Specific Performance in De-SPAC Transaction Based on Difficulty of Enforcement and Plaintiff’s Inequitable Conduct

26 Capital Acquisition Corp. v. Tiger Resort Asia Ltd., CA No. 2023-0128-JTL (Del. Ch. September 7, 2023) - Even where the parties have contractually agreed that specific performance is the preferred remedy for a breach,...more

1/18/2024 / Breach of Contract , Contract Terms , Merger Agreements , Mergers , Shareholders

Chancery Upholds Claims Against LLC Officers and Others Arising from Squeeze-Out of Minority Unitholders

Cygnus Opportunity Fund, LLC v. Washington Prime Group, LLC, C.A. No. 2022-0718-JTL (Del. Ch. Aug. 9, 2023) - An Indiana corporation reorganized via bankruptcy into a Delaware LLC, and a senior note holder negotiated for...more

1/2/2024 / Board of Directors , Breach of Duty , Contract Terms , Fiduciary Duty , Limited Liability Company (LLC) , Mergers

Chancery Finds Defendants Liable for Fraud Based on the Failure to Disclose Internal Billing Practices

NetApp Inc. v. Cinelli, C.A. No. 2020-1000-LWW (Del. Ch. Aug. 2, 2023) - This decision arose out of the sale of the company Cloud Jumper to NetApp, Inc. The seller’s management had been recording internal software use as...more

1/2/2024 / Breach of Contract , Contract Terms , Fraud , Mergers

Chancery Court Again Applies Entire Fairness to Claims Challenging SPAC Transaction

Laidlaw v. GigAcquisitions2, LLC, C.A. No. 2021-0821-LWW (Del. Ch. Mar. 1, 2023) - In the aftermath of a SPAC merger, the plaintiff (a public stockholder) brought claims for breaches of fiduciary duty against the SPAC's...more

8/23/2023 / Breach of Duty , Fiduciary Duty , Mergers , Special Purpose Acquisition Companies (SPACs)

Chancery Denies Motion to Dismiss Finding Primedia Argument Inapplicable

In Re Orbit/FR, Inc. Stockholders Litig., C.A. No. 2018-0340-SG (Del. Ch. January 9, 2023) - In In re Primedia, Inc. S’holders Litig., 67 A.3d 455 (Del. Ch. 2013), the Court examined whether a litigation asset being...more

4/25/2023 / Breach of Duty , Derivative Suit , Fiduciary Duty , Mergers , Motion to Dismiss , Shareholder Litigation

Chancery Upholds Claims Post-Merger

Harris v. Harris, C.A. No. 2019-0736-JTL (Del. Ch. Jan. 6, 2023) - Delaware law allows for two exceptions to the continuous stock ownership rule for stockholders to bring and maintain standing to assert derivative claims...more

4/6/2023 / Breach of Duty , Derivatives , Fiduciary Duty , Mergers , Stock Ownership

Chancery Finds Buzzfeed and Others Not Bound by Arbitration Provisions in Employment Agreements

Buzzfeed v. Anderson, C.A. No. 2022-0357-MTZ (Del. Ch. Oct. 28, 2022) - In 2021, Buzzfeed engaged in a SPAC transaction wherein its stock was converted into stock in Buzzfeed’s post-SPAC corporate form. An IPO followed. In...more

12/8/2022 / Breach of Duty , Bylaws , Fiduciary Duty , Forum Selection , Mergers

Delaware Supreme Court Explains Appraisal Rights and Finds Disclosure Violation Relating to Pre-Closing Dividend Contingent on a...

In re GGP, Inc. Stockholder Litig., C.A. No. 2018-0267 (Del. July 19, 2022) - Here, the defendants organized a merger so that a large majority of the total value of the merger would be granted as a pre-closing dividend to...more

10/11/2022 / Appraisal , Appraisal Rights , Dividends , Fair Market Value , Mergers , Shareholders

Chancery Addresses Fiduciary Duty Claims Involving Activist Investor

Goldstein v. Denner, C.A. No. 2020-1061-JTL (Del. Ch. May 26, 2022) - In this case, an activist investor and director was alleged to have concealed an eventual acquiror’s expression of interest while he leveraged that...more

10/4/2022 / Activist Investors , Board of Directors , Breach of Duty , Fiduciary Duty , Mergers , Shareholders

Chancery Dismisses All Claims in Stockholder Challenge to Cash-Out Merger Transaction

Harcum v. Lovoi, C.A. No. 2020-0398-PAF (Del. Ch. Jan. 3, 2022) - In Harcum, the Delaware Court of Chancery dismissed all claims brought in a stockholder suit alleging fiduciary breaches in connection with the $1 billion...more

4/29/2022 / Board of Directors , Breach of Duty , Controlling Stockholders , Duty of Loyalty , Fiduciary Duty , Mergers

Chancery Dismisses Time-Barred Complaint Against Zillow

Chertok v. Zillow, Inc., C.A. No. 2019-0849-LWW (Del. Ch. Oct. 18, 2021) - Plaintiffs, a former co-founder and director of NMD Interactive (“Chertok”) and an LLC that he managed, brought a breach of contract action against...more

1/25/2022 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Mergers , Statute of Limitations

CCLD Rejects Several Defenses to Insurance Coverage of a Settlement Paid By Investment Fund

Sycamore Partners Management, L.P. v. Endurance American Insurance Co., C.A. No. N18C-09-211 AML CCLD (Del. Super. Sept. 10, 2021) - Prior to the closing of a leveraged buyout of a company (the “Merger”) whereby the...more

11/23/2021 / Breach of Contract , Breach of Duty , Derivative Suit , Fiduciary Duty , Mergers , Shareholders

Delaware Supreme Court Upholds Contractual Waiver of Statutory Appraisal Rights

Manti Holdings, LLC, et al. v. Authentix Acquisition Co., Inc., No. 354, 2020 (Del. Sept. 13, 2021) - This decision arose out of the acquisition of Authentix Acquisition Company, Inc. and a subsequent appraisal proceeding...more

11/23/2021 / Appraisal , Appraisal Rights , Breach of Duty , Fair Market Value , Fair Valuation , Fiduciary Duty , Mergers , Shareholders

Chancery Rejects MFW Defense Based on Failure to Disclose That a Conflicted Controller Participated in Arbitration Proceedings...

Ligos v. Isramco, Inc., C.A. No. 2020-0435-SG (Del. Ch. Aug. 31, 2021) - Under MFW, a conflicted controller transaction may get the benefit of business judgment review when conditioned on two procedural protections...more

11/10/2021 / Board of Directors , Breach of Duty , Fiduciary Duty , Mergers , Shareholders

Chancery Rejects Inadequate Disclosure Contentions and Grants Corwin Dismissal

Kihm v. Mott, C.A. No. 2020-0938-MTZ (Del. Ch. Aug. 31, 2021) - Under the Corwin doctrine, a fully informed and uncoerced approval of a board decision by the corporation’s disinterested stockholders can downgrade an...more

11/1/2021 / Board of Directors , Breach of Duty , Conflicts of Interest , Controlling Stockholders , Corwin Doctrine , Fiduciary Duty , Mergers

Chancery Finds That the Standard of Review for the Conduct of a Shareholders’ Representative Turns Upon the Merger Agreement’s...

Houseman v. Sagerman, C.A. No. 8897-VCG (Del. Ch. July 20, 2021) - A merger agreement between a subsidiary of Healthport Technologies, LLC and Universata, Inc., gave the owners of 72 percent of Universata’s stock (the...more

9/8/2021 / Merger Agreements , Mergers , Shareholders , Subsidiaries

Chancery Finds Change in Product’s Medicare Reimbursement Rate Was Not A Material Adverse Effect Excusing Buyer From Closing

Bardy Diagnostics, Inc. v. Hill-Rom, Inc. C.A. No. 2021-0175-JRS (Del. Ch. Jul. 9, 2021) - Bardy manufactures a patch that measures heart rate. Its reimbursement rate for the patch had for years been set around $365 per...more

9/8/2021 / Breach of Contract , Material Adverse Effects , Medicare , Merger Agreements , Mergers

Chancery Upholds Fiduciary Duty Claims Arising Out Of Deal Involving an Alleged Control Group That Included Non-Stockholders and a...

In re Pattern Energy Grp. Inc. Stockholders Litig., C.A. No. 2020-0357-MTZ (Del. Ch. May 6, 2021) - This decision mostly denying a motion to dismiss examines several important issues in post-closing M&A fiduciary duty...more

7/6/2021 / Aiding and Abetting , Board of Directors , Breach of Duty , Controlling Stockholders , Duty of Loyalty , Entire Fairness Standard , Fiduciary Duty , Mergers

Superior Court Addresses Scope of Privilege Waiver in Dispute Involving The American Bottling Company, Coke, and Bodyarmor

The American Bottling Co. v. BA Sports Nutrition, LLC et. al, C.A. No: N19C-03-048-AML CCLD (Del. Super. Feb. 11, 2021) - Delaware courts generally uphold the attorney-client privilege, including by recognizing waivers...more

3/4/2021 / Breach of Contract , Mergers , Privilege Waivers , Tortious Interference

Delaware Corporate and Commercial Case Law Year in Review: 2020