IN THIS ISSUE
A Win for Deal Certainty, Delaware Court of Chancery Orders Closing of Cake Supplier Acquisition; Under Armour to Pay $9M to Settle SEC Charges Involving Disclosure Failures; First Circuit Upholds Decision Applying Federal Securities Laws to Solicitation of Foreign Investors; Delaware Court of Chancery Applies Business Judgment Rule in Dismissing Buyout Action Against Icahn.
On April 30, 2021, in
Snow Phipps Group, LLC v. KCake Acquisition, Inc. (Del. Ch.), Chancellor Kathaleen S. McCormick issued an order compelling affiliates of Kohlberg & Company, LLC to close their planned $550 million acquisition of DecoPac Holdings Inc., a supplier of cake decorations and technology for use in supermarket bakeries. Opening with a quote from Julia Childs (“A party without cake is just a meeting”), the court describes the decision as a “victory for deal certainty” and offers a detailed analysis of several common contractual provisions, and their operation, during the
To embed, copy and paste the code into your website or blog:
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 Delaware law or provided clarity or guidance on issues relevant to corporate and commercial litigation in Delaware. We present the decisions in no particular order. The list does not include every significant decision, but provides practitioners with an array of decisions on varied issues likely to affect business transactions or business litigation.
One:
AmerisourceBergen Corp. v. Lebanon Cty. Employees’ Ret. Fund, A.3d , 2020 WL 7266362 (Del. Dec. 10, 2020) (Traynor, Justice)
Business Law Prof Blog
The CliffsNotes version is that due to a dual-class voting structure, Shari Redstone was the controlling shareholder of CBS and Viacom, and for several years fought to combine the two companies. Her dreams were finally realized in 2019 when the two merged in a stock-for-stock deal. Former Viacom shareholders sued, alleging that this was a transaction in which a controlling stockholder – Redstone – stood on both sides, and that the deal sold out the Viacom shareholders to benefit CBS and Redstone.
Normally, of course, deals in which a controlling stockholder has an interest are subject to entire fairness scrutiny unless they are cleansed in the manner prescribed by
In 2014, the Delaware Supreme Court’s landmark
Kahn v. M&F Worldwide Corp.
MFW) decision established that the deferential business judgment standard of review could apply to controlling stockholder “squeeze-out” mergers under certain circumstances. Six necessary conditions must be satisfied for a transaction to obtain business judgment review under
MFW: (i) the transaction is conditioned
ab initio, or “from inception,” on the approval of a special committee and a majority-of-the-minority majority vote; (ii) the special committee is independent; (iii) the special committee is empowered to freely select its own advisers and to say no definitively; (iv) the special committee meets its duty of care in negotiating a fair price; (v) the vote of the minority is informed; and (vi) there is no coercion of the minority.